senate Bill S7449A

Enacts various legislation designed to make college more affordable for the citizens of the state

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 18 / May / 2012
    • REFERRED TO RULES
  • 25 / May / 2012
    • AMEND (T) AND RECOMMIT TO RULES
  • 25 / May / 2012
    • PRINT NUMBER 7449A
  • 30 / May / 2012
    • ORDERED TO THIRD READING CAL.970
  • 04 / Jun / 2012
    • PASSED SENATE
  • 04 / Jun / 2012
    • DELIVERED TO ASSEMBLY
  • 04 / Jun / 2012
    • REFERRED TO HIGHER EDUCATION

Summary

Enacts various legislation designed to make college more affordable for the citizens of the state.

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Bill Details

Versions:
S7449
S7449A
Legislative Cycle:
2011-2012
Current Committee:
Assembly Higher Education
Law Section:
Tax Law
Laws Affected:
Amd §§606 & 612, Tax L; amd §§680 & 655, add Art 14-B §§697 - 699, §355-d, Ed L; amd §98-a, add Art 15-A §§225 - 234-c, §99-u, St Fin L; amd §301, add Art 6 §§601 - 603, Fin Serv L

Sponsor Memo

BILL NUMBER:S7449A

TITLE OF BILL:

An act
to amend the tax law, in relation to providing a tax credit for
allowable college expenses (Part A);
to amend the education law and the state finance law, in
relation to the student loan linked deposit act
(Part B); to amend the financial services
law, in relation to the truth in student lending clearinghouse
program; and to amend the financial services law and the education law,
in relation to the student lending transparency program (Part C); and
to amend the education law, in relation to the creation of the New York
state tuition savings program; to amend the state finance law, in
relation to establishing the New York state pre-pay tuition fund;
and to amend the tax law, in relation to reducing distributions from
the New York state pre-pay tuition savings program from adjusted gross
income (Part D)

PURPOSE OR GENERAL IDEA OF BILL:

This bill would create a new program, entitled the College
Affordability Program, in order to establish tax credits, a linked
deposit low-cost student loan program, and a student lending
transparency program to assist families in New York State to better
afford a college education.

SUMMARY OF SPECIFIC PROVISIONS:

Part A: The Stay in New York Tax Credit

This bill would amend section 606 of the Tax Law to establish the Stay
in New York Tax Credit. In order to retain the graduates from New
York colleges and universities, such credit would allow college
graduates a credit equal to their college expenses over four years.
This credit would be capped at $3,000 per year, and would apply to
those graduates who live and work in New York, subsequent to
graduation, and complete community service while they are attending
college.

The Tuition Tax Credit

This bill would further amend section 606 of the Tax Law to improve
New York's Tuition Tax Credit. In order to increase college
affordability, the current tuition tax credit would be amended to:

o Double the amount of qualified college expenses that can be claimed
from $10,000 to $20,000 over five years;

o Double the maximum amount of the credit allowed from $400 to $800
over five years; and

o Index the qualified expenses and credit to the rate of inflation of
the Higher Education Price Index.

Part B: The Student Loan Linked Deposit Program

This bill would additionally add a new article 15-A to the State
Finance Law to establish the Student Loan Linked Deposit Program.
Modeled off of the highly successful linked deposit program for
economic development, this new student loan program would provide
low-cost student loans by means of authorizing the comptroller to
place state deposits with participating lenders at a decreased
interest rate, in order to offer students reduced rate student loans,
at up to 3 points below market rates.

This Part would designate $100 million dollars for this program, with
repaid loan amounts revolving back into available deposits and loans.
Loans would be available for students of in state colleges, for
qualified educational expenses (tuition, fees, books, supplies, room
and board), in the maximum amount of $7,500 per academic year, and a
maximum total amount of $30,000.

Part C: The Student Lending Transparency Program

This bill would also add a new Article 6 to the Financial Services
Law, and a new Article 14-8 to the Education Law, to establish a
Student Lending Transparency Program. Pursuant to this program, the
Department of Financial Services would be required to compile data on
student loans for the purpose of comparing loan rates and repayment
plans. The superintendent would be required to take such data and
create a list of private lenders who provide the best loan rates and
repayment options on student loans, and place such list on an easily
accessible website with links to the Higher Education Services
Corporation's website as well as the websites of other colleges and
universities. The list and the website maintained by the department
would be updated monthly.

Pursuant to this Part, colleges and Universities would further be
required to provide prospective and newly enrolled students with
clearly outlined and easy to understand information pertaining to the
total cost of attendance at their institution. Such information would
include the total amount of debt, and the payments thereon, the
student would incur.

Part D: The Pre-Paid Tuition Program

This bill would also add a new sections 355-d of the education law,
and 99-u of the state finance law, and amend section 612 of the tax
law, to establish a New York State Pre-pay tuition savings program.
Such program would allow participants to prepay college tuition at

SUNY or CUNY institutions by paying one third of the annual total
cost of their college education for a period of twelve years.
Payments would be made through a fund administered by the
Comptroller, in consultation with the Chancellor of the State
University of New York and the Chancellor of the City University of
New York.

JUSTIFICATION:

The cost of a college education is becoming more and more a financial
burden unable to be borne by a college student during their college
tenure. As a result parents or students are either forced to bear
crushing financial circumstances or incur huge amounts of debt in
order to obtain a college education.

Since the enactment of the tuition tax credit/deduction in SFY
2000-01, tuition and fees at public and private colleges throughout
the State have increased by over 47 percent. However, the amount of
tuition expenses that a taxpayer can claim as a credit or deduction
has not.

Accordingly this bill seeks to address this problem, through a three
part program. First, tax credits to make paying college tuition more
affordable for those who are educated and stay in New York State,
second lower cost student loans through a linked deposit student loan
program, and third, increased transparency and information to allow
consumer students to shop more wisely when purchasing a college
education.

In the new age of global competitiveness, it is especially important
for our state to provide the educational opportunities necessary for
the people of New York to succeed. Higher education opens the doors
of opportunity, and this bill will permit many more people to not
only open the door, but also walk through it, without an unbearable
cost or debt burden that will impair their future.

By its terms this bill seeks to ensure that rapidly escalating tuition
costs don't place the dreams of an outstanding higher education
out-of-reach for hardworking, middle class families across our State.
It seeks to offer New York's young graduates an opportunity to better
manage their finances when they leave college and begin their
careers. By its terms, this bill will help lower the cost of a higher
education for middle class families and students, encourage young New
Yorkers to stay and begin their careers here at home in the Empire
State, and reduce overall higher education expenditures by
encouraging students to graduate more quickly and with less
outstanding debt.

PRIOR LEGISLATIVE HISTORY:
This is a new bill

FISCAL IMPLICATIONS:

Part A: The Stay in New York Tax Credit and the improved Tuition Tax
Credit will save taxpayers $212 million by 2016.

Part B: The Linked Deposit Student Loan Program provides for a $100
million investment of state deposits.

Part C: None Noted

Part D: None noted, as participant contributions would cover the cost
of the program.

EFFECTIVE DATE:
This act shall take effect immediately provided, however, that the
applicable effective date of Parts A through D of this act shall be
as set forth in the last section of such Parts; with Part A taking
effect immediately and applying to taxable years beginning on or
after January 1, 2012, and provided, however, that section one of
Part A shall apply to taxable years beginning on or after January 1,
2013; and with Part B taking effect on the 180th day after it shall
have become a law, provided however that effective immediately, the
addition, amendment and/or repeal of any rules or regulations
necessary for implementation is authorized and directed to be made
and completed on or before such effective date; with Part C taking
effect on the 180th day after it shall have become a law; and with
Part D taking effect one year after it shall have become a law,
except that the Comptroller, in consultation with the Chancellor of
the State University of New York and the Chancellor of the City
University of New York, may immediately promulgate all rules and
regulations necessary for the timely implementation of this act.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7449--A

                            I N  S E N A T E

                              May 18, 2012
                               ___________

Introduced  by  Sen. LAVALLE -- read twice and ordered printed, and when
  printed to be  committed  to  the  Committee  on  Rules  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN  ACT  to amend the tax law, in relation to providing a tax credit for
  allowable college expenses (Part A); to amend the  education  law  and
  the  state finance law, in relation to the student loan linked deposit
  act (Part B); to amend the financial services law, in relation to  the
  truth  in  student  lending  clearinghouse  program;  and to amend the
  financial services law and the  education  law,  in  relation  to  the
  student lending transparency program (Part C); and to amend the educa-
  tion  law,  in  relation to the creation of the New York state tuition
  savings program; to amend the state finance law, in relation to estab-
  lishing the New York state pre-pay tuition fund; and to amend the  tax
  law,  in  relation  to  reducing distributions from the New York state
  pre-pay tuition savings program from adjusted gross income (Part D)

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. This act enacts into law components of legislation relating
to  college affordability.   Each component is wholly contained within a
Part identified as Parts A  through  D.  The  effective  date  for  each
particular provision contained within such Part is set forth in the last
section  of  such  Part. Any provision in any section contained within a
Part, including the effective date of the part, which makes reference to
a section "of this act", when used in connection  with  that  particular
component,  shall  be  deemed  to  mean  and  refer to the corresponding
section of the Part in which it is found. Section three of this act sets
forth the general effective date of this act.

                                 PART A

  Section 1. Section 606 of the tax law  is  amended  by  adding  a  new
subsection (u) to read as follows:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15934-03-2

S. 7449--A                          2

  (U)  STAY  IN  NEW  YORK  CREDIT. (1) GENERAL. (A) A RESIDENT TAXPAYER
SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY  THIS  ARTICLE  FOR
ALLOWABLE  COLLEGE  EXPENSES. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO
TWENTY-FIVE PERCENT OF ALLOWABLE COLLEGE EXPENSES, CAPPED AT THREE THOU-
SAND DOLLARS. THE CREDIT SHALL BE ALLOWED ONLY IN THE FIRST TAXABLE YEAR
SUBSEQUENT  TO THE TAXPAYER'S COMPLETION OF A COURSE OF STUDY LEADING TO
THE GRANTING OF A BACCALAUREATE DEGREE AND IN EACH  OF  THE  NEXT  THREE
TAXABLE YEARS.
  (B) IN ORDER TO QUALIFY FOR THE CREDIT, THE ELIGIBLE TAXPAYER SHALL:
  (I)  HAVE  COMPLETED  THE COURSE OF STUDY LEADING TO THE GRANTING OF A
BACCALAUREATE DEGREE FROM AN INSTITUTION OF HIGHER EDUCATION WITHIN FOUR
YEARS FROM THE COMMENCEMENT OF SUCH COURSE OF STUDY. PROVIDED,  HOWEVER,
IF  THE  ELIGIBLE TAXPAYER WAS EMPLOYED IN EXCESS OF THREE HUNDRED HOURS
PER SEMESTER, THE ELIGIBLE TAXPAYER SHALL HAVE COMPLETED THE  COURSE  OF
STUDY  LEADING  TO  THE  GRANTING  OF A BACCALAUREATE DEGREE WITHIN FIVE
YEARS FROM THE COMMENCEMENT OF SUCH COURSE OF STUDY;
  (II) BE EMPLOYED FULL-TIME WITHIN THE STATE; AND
  (III) HAVE COMPLETED TWENTY HOURS OF COMMUNITY SERVICE PER SEMESTER OF
ENROLLMENT IN AN INSTITUTION OF HIGHER EDUCATION. PROVIDED, HOWEVER, FOR
THOSE ELIGIBLE TAXPAYERS WHO HAVE  BEEN  GRANTED  DEGREES  WITHIN  THREE
YEARS  OF  THE  EFFECTIVE  DATE OF THIS SUBSECTION, SUCH TAXPAYERS SHALL
COMPLETE THE COMMUNITY SERVICE WITHIN THE FIRST TAXABLE  YEAR  IN  WHICH
THE CREDIT IS CLAIMED.
  (C)  FOR ELIGIBLE TAXPAYERS WHO ENROLL IN A COURSE OF STUDY LEADING TO
THE GRANTING OF A POST BACCALAUREATE OR OTHER GRADUATE DEGREE IMMEDIATE-
LY FOLLOWING THE RECEIPT OF A BACCALAUREATE DEGREE, THE CREDIT SHALL  BE
ALLOWED   IN  THE  FIRST  TAXABLE  YEAR  SUBSEQUENT  TO  THE  TAXPAYER'S
COMPLETION OF SUCH DEGREE OR WHEN SUCH TAXPAYER CEASES TO BE ENROLLED IN
SUCH COURSE OF STUDY AND  IN  EACH  OF  THE  NEXT  THREE  TAXABLE  YEARS
PROVIDED ALL OTHER QUALIFICATIONS OF THIS SUBSECTION ARE MET.
  (2) ALLOWABLE AND QUALIFIED COLLEGE EXPENSES. FOR THE PURPOSES OF THIS
CREDIT:
  (A)  THE TERM "ALLOWABLE COLLEGE EXPENSES" SHALL MEAN THE TOTAL AMOUNT
OF QUALIFIED COLLEGE  EXPENSES  INCURRED  BY  THE  TAXPAYER  DURING  THE
TAXPAYER'S  ENROLLMENT IN A COURSE OF STUDY LEADING TO THE GRANTING OF A
BACCALAUREATE DEGREE FROM AN INSTITUTION OF HIGHER EDUCATION.
  (B) THE TERM "QUALIFIED  COLLEGE  EXPENSES"  SHALL  MEAN  THE  TUITION
REQUIRED FOR THE ENROLLMENT OR ATTENDANCE OF THE TAXPAYER AT AN INSTITU-
TION  OF  HIGHER  EDUCATION.    PROVIDED, HOWEVER, TUITION PAYMENTS MADE
PURSUANT TO THE RECEIPT OF ANY SCHOLARSHIPS OR FINANCIAL  AID  SHALL  BE
EXCLUDED FROM THE DEFINITION OF "QUALIFIED COLLEGE EXPENSES".
  (3)  INSTITUTION OF HIGHER EDUCATION. FOR THE PURPOSES OF THIS CREDIT,
THE TERM "INSTITUTION OF HIGHER EDUCATION" SHALL MEAN ANY INSTITUTION OF
HIGHER EDUCATION LOCATED IN THE STATE, RECOGNIZED AND  APPROVED  BY  THE
REGENTS,  OR  ANY SUCCESSOR ORGANIZATION, OF THE UNIVERSITY OF THE STATE
OF NEW YORK OR ACCREDITED BY A NATIONALLY RECOGNIZED ACCREDITING  AGENCY
OR  ASSOCIATION ACCEPTED AS SUCH BY THE REGENTS, OR ANY SUCCESSOR ORGAN-
IZATION, OF THE UNIVERSITY OF THE STATE OF NEW YORK,  WHICH  PROVIDES  A
COURSE  OF  STUDY  LEADING  TO  THE GRANTING OF A POST-SECONDARY DEGREE,
CERTIFICATE OR DIPLOMA.
  (4) REFUNDABILITY. THE CREDIT UNDER THIS SUBSECTION SHALL  BE  ALLOWED
AGAINST  THE  TAXES IMPOSED BY THIS ARTICLE FOR THE TAXABLE YEAR REDUCED
BY THE CREDITS PERMITTED BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE  TAX
AS SO REDUCED, THE TAXPAYER MAY RECEIVE, AND THE COMPTROLLER, SUBJECT TO
A  CERTIFICATE OF THE COMMISSIONER, SHALL PAY AS AN OVERPAYMENT, WITHOUT
INTEREST, THE AMOUNT OF SUCH EXCESS.

S. 7449--A                          3

  S 2. Subparagraph (A) of paragraph 2 of subsection (t) of section  606
of  the  tax law, as amended by section 1 of part N of chapter 85 of the
laws of 2002, is amended to read as follows:
  (A)  The  term  "allowable  college  tuition  expenses" shall mean the
amount of qualified college tuition expenses of eligible  students  paid
by  the  taxpayer  during  the  taxable year[,]. THE AMOUNT OF QUALIFIED
COLLEGE TUITION EXPENSES SHALL BE limited [to] AS FOLLOWS:  FOR  TAXABLE
YEARS  BEGINNING  AFTER TWO THOUSAND AND BEFORE TWO THOUSAND TWELVE, ten
thousand dollars for each such student; FOR TAXABLE YEARS  BEGINNING  IN
TWO THOUSAND TWELVE, TWELVE THOUSAND DOLLARS FOR EACH STUDENT; FOR TAXA-
BLE  YEARS BEGINNING IN TWO THOUSAND THIRTEEN, FOURTEEN THOUSAND DOLLARS
FOR EACH STUDENT; FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND  FOURTEEN,
SIXTEEN  THOUSAND  DOLLARS FOR EACH STUDENT; FOR TAXABLE YEARS BEGINNING
IN TWO THOUSAND FIFTEEN, EIGHTEEN THOUSAND DOLLARS FOR EACH STUDENT; AND
FOR TAXABLE YEARS BEGINNING AFTER TWO THOUSAND FIFTEEN, TWENTY  THOUSAND
DOLLARS PER STUDENT;
  S  3.  Paragraph 4 of subsection (t) of section 606 of the tax law, as
added by section 1 of part DD of chapter 63 of  the  laws  of  2000,  is
amended to read as follows:
  (4)  Amount of credit. [If allowable college tuition expenses are less
than five thousand dollars, the amount of the credit provided under this
subsection shall be equal to the applicable percentage of the lesser  of
allowable  college tuition expenses or two hundred dollars. If allowable
college tuition expenses are five thousand dollars or more,  the  amount
of  the  credit  provided  under  this  subsection shall be equal to the
applicable percentage of the allowable college tuition  expenses  multi-
plied by four percent.]
  THE  AMOUNT  OF  THE CREDIT SHALL BE DETERMINED IN ACCORDANCE WITH THE
FOLLOWING SCHEDULES:
  (A) FOR TAXABLE YEARS BEGINNING AFTER  TWO  THOUSAND  AND  BEFORE  TWO
THOUSAND TWELVE:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN FIVE THOUSAND DOLLARS     THE APPLICABLE PERCENTAGE OF THE
                                    LESSER OF ALLOWABLE COLLEGE TUITION
                                    EXPENSES OR TWO HUNDRED DOLLARS
FIVE THOUSAND DOLLARS OR MORE       THE APPLICABLE PERCENTAGE OF
                                    ALLOWABLE COLLEGE TUITION EXPENSES
                                    MULTIPLIED BY FOUR PERCENT
  (B) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND TWELVE:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN SIX THOUSAND DOLLARS      THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR TWO HUNDRED
                                    FORTY DOLLARS
SIX THOUSAND DOLLARS OR MORE        THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  (C) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND THIRTEEN:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN SEVEN THOUSAND DOLLARS    THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR TWO HUNDRED
                                    EIGHTY DOLLARS
SEVEN THOUSAND DOLLARS OR MORE      THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  (D) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND FOURTEEN:

S. 7449--A                          4

IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN EIGHT THOUSAND DOLLARS    THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR THREE HUNDRED
                                    TWENTY DOLLARS
EIGHT THOUSAND DOLLARS OR MORE      THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  (E) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND FIFTEEN:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN NINE THOUSAND DOLLARS     THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR THREE HUNDRED
                                    SIXTY DOLLARS
NINE THOUSAND DOLLARS OR MORE       THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  (F) FOR TAXABLE YEARS BEGINNING AFTER TWO THOUSAND FIFTEEN:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN TEN THOUSAND DOLLARS      THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR FOUR HUNDRED
                                    DOLLARS
TEN THOUSAND DOLLARS OR MORE        THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  Such  applicable  percentage  shall be twenty-five percent for taxable
years beginning in two thousand one, fifty  percent  for  taxable  years
beginning  in  two  thousand two, seventy-five percent for taxable years
beginning in two thousand three and  one  hundred  percent  for  taxable
years beginning after two thousand three.
  S 4. Subsection (t) of section 606 of the tax law is amended by adding
a new paragraph 4-a to read as follows:
  (4-A)  INFLATION  ADJUSTMENT.  (A)  FOR  TAXABLE YEARS BEGINNING IN OR
AFTER TWO THOUSAND SIXTEEN, THE DOLLAR AMOUNTS IN  SUBPARAGRAPH  (A)  OF
PARAGRAPH  TWO AND PARAGRAPH FOUR OF THIS SUBSECTION SHALL BE MULTIPLIED
BY ONE PLUS THE INFLATION ADJUSTMENT.
  (B) THE INFLATION  ADJUSTMENT  FOR  ANY  TAXABLE  YEAR  SHALL  BE  THE
PERCENTAGE,  IF  ANY,  BY WHICH THE HIGHER EDUCATION PRICE INDEX FOR THE
ACADEMIC FISCAL YEAR ENDING IN THE IMMEDIATELY  PRECEDING  TAXABLE  YEAR
EXCEEDS  THE  HIGHER  EDUCATION PRICE INDEX FOR THE ACADEMIC FISCAL YEAR
ENDING JUNE, TWO THOUSAND FIFTEEN. FOR THE PURPOSES OF  THIS  PARAGRAPH,
THE  HIGHER EDUCATION PRICE INDEX MEANS THE HIGHER EDUCATION PRICE INDEX
PUBLISHED BY THE COMMONFUND INSTITUTE.
  (C) IF THE PRODUCT OF THE AMOUNTS IN SUBPARAGRAPHS (A) AND (B) OF THIS
PARAGRAPH IS NOT A MULTIPLE OF FIVE  DOLLARS,  SUCH  INCREASE  SHALL  BE
ROUNDED TO THE NEXT MULTIPLE OF FIVE DOLLARS.
  S 5. This act shall take effect immediately and shall apply to taxable
years  beginning  on  or  after January 1, 2012; provided, however, that
section one of this act shall apply to taxable  years  beginning  on  or
after January 1, 2013.

                                 PART B

  Section 1. Legislative findings and declaration of purpose. The legis-
lature  hereby  finds  that the costs of completing higher education for
residents of the state of New York are increasing at a rate significant-
ly faster than the rate of inflation. Paying out of  pocket  has  become
increasingly  difficult  for  families  and  students seeking to improve

S. 7449--A                          5

their educational and economic prospects. An affordable  college  educa-
tion  has  become  increasingly  inaccessible to large numbers of middle
class families in the state, for  whom  financial  resources,  including
state  grants  and scholarships, are either limited or unavailable. Many
families and students have no choice but to turn to the private  lending
market in order to finance their higher education.
  Compounding  the  problem  is the fact that typical interest rates for
student loans offered through the private lending market are  relatively
high when compared to interest rates for other purposes, such as a mort-
gage  or  automobile.  Additionally,  the average student loan debt upon
graduation is more than $26,000 per student in the state.  Reducing  the
debt  burden  that  students endure upon graduating college has become a
critical public policy goal.
  As increasing the share of the state's population that undertakes  and
completes  higher  education is also a desirable public policy goal, and
an individual's decision to complete a program of  postsecondary  educa-
tion  typically reaps economic and social rewards to the individual, the
legislature hereby declares that it is in the best interest of the state
to create a student loan linked deposit program whereby the  state  will
subsidize private lenders to provide reduced-rate loans to students.
  S 2. Paragraph c of subdivision 1 of section 680 of the education law,
as  added by chapter 622 of the laws of 2008, is amended and a new para-
graph d is added to read as follows:
  c. To enter into cooperative agreements, subject to  the  approval  of
the  board  of trustees and the director of the budget, with other enti-
ties, including, but not limited to, other states, the  federal  govern-
ment,  and  post-secondary  institutions,  to establish, administer, and
operate federal student aid programs. Notwithstanding the provisions  of
paragraphs  a  and b of this subdivision, the corporation is authorized,
pursuant to such cooperative agreements, to provide federal student  aid
services  to  students  and  families  who are not residents of New York
state[.]; AND
  D. TO ADMINISTER AND OPERATE A STUDENT  LOAN  LINKED  DEPOSIT  PROGRAM
PURSUANT TO ARTICLE FIFTEEN-A OF THE STATE FINANCE LAW.
  S  3. Subdivision 2 of section 98-a of the state finance law, as added
by chapter 705 of the laws of 1993, is amended to read as follows:
  2. Notwithstanding any provision of law to the contrary, investment of
bond proceeds and other funds not immediately required may  be  invested
by  the  comptroller  in  linked deposits pursuant to article fifteen OR
ARTICLE FIFTEEN-A of this chapter. If any moneys  are  invested  by  the
comptroller  in  linked  deposits pursuant to article fifteen OR ARTICLE
FIFTEEN-A of this chapter, the comptroller  shall  compute  the  monthly
earnings  for  all  funds,  other  than  the general fund, as if no such
moneys had been invested in such linked deposits.
  S 4. The state finance law is amended by adding a new article 15-A  to
read as follows:
                              ARTICLE 15-A
                     STUDENT LOAN LINKED DEPOSIT ACT
SECTION 225.   SHORT TITLE.
        226.   DEFINITIONS.
        227.   ESTABLISHMENT  AND  PURPOSE;  STUDENT LOAN LINKED DEPOSIT
                 PROGRAM AUTHORIZATION.
        228.   RESPONSIBILITIES OF THE PRESIDENT, COMPTROLLER AND SUPER-
                 INTENDENT.
        229.   RELEASE FROM LINKED DEPOSITS.
        230.   LINKED STUDENT LOANS.

S. 7449--A                          6

        231.   INTEREST RATE FOR LINKED LOANS; NO LENDER'S FEES.
        232.   APPLICATION PROCEDURE.
        233.   REPAYMENT PERIODS FOR LINKED STUDENT LOANS.
        234.   LIABILITY; EARLY REPAYMENT AND WITHDRAWAL.
        234-A. MONITORING AND REPORT.
        234-B. PROMOTION OF PROGRAM.
        234-C. RULES AND REGULATIONS.
  S  225.  SHORT  TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
THE "STUDENT LOAN LINKED DEPOSIT ACT".
  S 226. DEFINITIONS. WHEN USED IN  THIS  ARTICLE,  UNLESS  A  DIFFERENT
MEANING CLEARLY APPEARS FROM THE CONTEXT, THE FOLLOWING TERMS SHALL HAVE
THE FOLLOWING MEANINGS:
  1. "AUTHORIZED DEPOSITOR" MEANS THE COMPTROLLER WITH RESPECT TO LINKED
DEPOSITS MADE BY THE COMPTROLLER.
  2. "COMPTROLLER" MEANS THE COMPTROLLER OF THE STATE OF NEW YORK.
  3. "DEPARTMENT" MEANS THE DEPARTMENT OF FINANCIAL SERVICES.
  4.  "ELIGIBLE  RECIPIENT"  MEANS  AN  INDIVIDUAL THAT HAS SUCCESSFULLY
APPLIED FOR A LINKED STUDENT LOAN AND MET ALL REQUIREMENTS PRESCRIBED BY
THE PRESIDENT AND A LENDING INSTITUTION FOR RECEIPT OF A LOAN.
  5. "LENDER" MEANS:
  (A) ANY COMMERCIAL BANK WHICH IS OR SHALL BECOME AN APPROVED DEPOSITO-
RY OF STATE FUNDS UNDER THE PROVISIONS OF SECTION ONE  HUNDRED  FIVE  OF
THIS CHAPTER AND WHICH AGREES TO PARTICIPATE IN THE PROGRAM; OR
  (B) ANY THRIFT WHICH AN AUTHORIZED DEPOSITOR DETERMINES IS ELIGIBLE TO
ACCEPT  LINKED  DEPOSITS  BASED  UPON CRITERIA APPLIED BY THE AUTHORIZED
DEPOSITOR IN MAKING DETERMINATIONS UNDER SECTION  ONE  HUNDRED  FIVE  OF
THIS  CHAPTER,  AND WHICH AGREES TO PARTICIPATE IN THE PROGRAM, PROVIDED
THAT ANY LINKED DEPOSIT IN SUCH THRIFT SHALL  BE  SECURED  IN  THE  SAME
MANNER  AS MONEYS DEPOSITED PURSUANT TO SECTION ONE HUNDRED FIVE OF THIS
CHAPTER AND SUCH THRIFTS SHALL PLEDGE ASSETS OR FURNISH  OTHER  SECURITY
SATISFACTORY  IN  FORM  AND  AMOUNT  TO THE AUTHORIZED DEPOSITOR FOR THE
REPAYMENT OF MONEYS.
  6. "LINKED DEPOSIT" MEANS A DEPOSIT PLACED WITH A LENDER BY THE  COMP-
TROLLER  FOR A PERIOD OF FOUR YEARS AT THE LINKED DEPOSIT INTEREST RATE,
PROVIDED THE LENDER AGREES TO:
  (A) LEND THE EQUIVALENT VALUE OF SUCH DEPOSIT TO AN ELIGIBLE RECIPIENT
AT THE INTEREST RATE PROVIDED IN SECTION TWO HUNDRED THIRTY-ONE OF  THIS
ARTICLE; AND
  (B)  PERMIT  THE  DEPOSIT  TO  BE  COMPRISED OF A SERIES OF NINETY DAY
DEPOSITS EACH BEARING AN INTEREST  RATE  EQUAL  TO  THE  LINKED  DEPOSIT
INTEREST RATE FIXED AT THE TIME THE ORIGINAL DEPOSIT IS PLACED.
  THIS  ARTICLE  AND  THE RELATED STATUTES THAT REFER TO THIS ARTICLE DO
NOT GRANT THRIFTS ELIGIBILITY TO ACCEPT PUBLIC FUNDS  OR  PUBLIC  MONEYS
FROM  PUBLIC  ENTITIES  FOR  INVESTMENT  PURPOSES.  A  LINKED DEPOSIT IS
INTENDED TO ENABLE A LENDER TO MAKE A LINKED LOAN TO AN ELIGIBLE RECIPI-
ENT AND SUCH DEPOSIT EARNS A YIELD LOWER THAN POSTED RATES IN  ORDER  TO
ACCOMPLISH THE GOALS OF THIS ARTICLE.
  7.  "LINKED  DEPOSIT INTEREST RATE" MEANS FOR A LINKED DEPOSIT MADE IN
CONNECTION WITH A LINKED LOAN TO AN ELIGIBLE RECIPIENT A FIXED  RATE  OF
INTEREST  WHICH  IS THREE HUNDRED BASIS POINTS BELOW THE LENDER'S POSTED
FOUR YEAR CERTIFICATE OF DEPOSIT RATE OR, IF THE LENDER DOES NOT OFFER A
FOUR YEAR CERTIFICATE OF DEPOSIT, IS THREE HUNDRED  BASIS  POINTS  BELOW
THE  AVERAGE  STATEWIDE  RATE  FOR  FOUR YEAR CERTIFICATES OF DEPOSIT AS
DETERMINED BY THE SUPERINTENDENT OF FINANCIAL SERVICES.   IN  THE  EVENT
THAT  THE  LENDER'S POSTED FOUR YEAR CERTIFICATE OF DEPOSIT RATE, OR THE
AVERAGE STATEWIDE RATE FOR FOUR YEAR CERTIFICATES OF DEPOSIT  ARE  BELOW

S. 7449--A                          7

THREE  HUNDRED  BASIS POINTS, THE LINKED DEPOSIT INTEREST RATE SHALL NOT
BE LESS THAN ZERO.
  8.  "LINKED  LOAN"  MEANS  A LOAN MADE TO AN ELIGIBLE RECIPIENT, IN AN
AMOUNT EQUAL TO A LINKED DEPOSIT AND BEARING INTEREST FOR THE FIRST FOUR
YEARS AT THE INTEREST RATE PROVIDED IN SECTION TWO HUNDRED THIRTY-ONE OF
THIS ARTICLE.
  9. "PRESIDENT" MEANS THE PRESIDENT OF THE  HIGHER  EDUCATION  SERVICES
CORPORATION.
  10. "PROGRAM" MEANS THE STUDENT LOAN LINKED DEPOSIT PROGRAM.
  11. "QUALIFIED EDUCATIONAL EXPENSES" MEANS THE ACTUAL OR EXPECTED COST
OF A STUDENT'S HIGHER EDUCATION, WHICH SHALL INCLUDE THE FULL QUARTERLY,
SEMESTERLY  OR  ANNUAL  COST OF TUITION, FEES, BOOKS, SUPPLIES, ROOM AND
BOARD.
  12. "THRIFT" MEANS ANY SAVINGS BANK OR SAVINGS AND  LOAN  ASSOCIATION,
FEDERAL SAVINGS BANK OR FEDERAL SAVINGS AND LOAN ASSOCIATION.
  S  227. ESTABLISHMENT AND PURPOSE; STUDENT LOAN LINKED DEPOSIT PROGRAM
AUTHORIZATION.  THE  STUDENT  LOAN  LINKED  DEPOSIT  PROGRAM  IS  HEREBY
CREATED.    THE PURPOSE OF THE PROGRAM IS TO MAKE AVAILABLE TO RESIDENTS
OF NEW YORK STATE REDUCED RATE LOANS THAT WILL ASSIST IN  THE  FINANCING
OF  AN  IN-STATE COLLEGE EDUCATION. THE COMPTROLLER IS HEREBY AUTHORIZED
TO USE ANY MONEYS OF THE STATE THE COMPTROLLER IS AUTHORIZED  TO  INVEST
PURSUANT  TO  SECTION  NINETY-EIGHT-A OF THIS CHAPTER AS LINKED DEPOSITS
FOR THE PROGRAM.   NOT MORE THAN ONE HUNDRED  MILLION  DOLLARS  OF  SUCH
MONEYS SHALL BE ON DEPOSIT PURSUANT TO THE PROGRAM AT ANY GIVEN TIME.
  S  228. RESPONSIBILITIES OF THE PRESIDENT, COMPTROLLER AND SUPERINTEN-
DENT. 1. THE PRESIDENT SHALL ADMINISTER THE PROGRAM PURSUANT TO  SECTION
TWO  HUNDRED  THIRTY-TWO  OF  THIS ARTICLE, INCLUDING ALL DECISIONS WITH
RESPECT TO THE APPLICATION AND USE OF THE PROGRAM FOR  ELIGIBLE  RECIPI-
ENTS;  MARKET  AND  PROMOTE  THE PROGRAM PURSUANT TO SECTION TWO HUNDRED
THIRTY-FOUR-B OF THIS ARTICLE; AFTER CONSULTING WITH THE COMPTROLLER AND
THE SUPERINTENDENT OF FINANCIAL SERVICES, ISSUE  RULES  AND  REGULATIONS
FOR  THE  OPERATION OF THE PROGRAM PURSUANT TO SECTION TWO HUNDRED THIR-
TY-FOUR-C OF THIS ARTICLE.
  2. THE COMPTROLLER'S RESPONSIBILITIES FOR THE PROGRAM SHALL BE LIMITED
TO:  PURSUANT TO SECTIONS TWO HUNDRED TWENTY-SEVEN AND TWO HUNDRED THIR-
TY-TWO OF THIS ARTICLE, PLACING MONEYS ON DEPOSIT AT THE REQUEST OF  THE
PRESIDENT  FOR THE PURPOSES OF THE PROGRAM AND ADMINISTERING SUCH DEPOS-
ITS IN ACCORDANCE WITH SECTIONS NINETY-EIGHT-A AND ONE HUNDRED  FIVE  OF
THIS  CHAPTER  AND  WITH  THE  COMPTROLLER'S ESTABLISHED PROCEDURES; AND
ENTERING INTO DEPOSIT AGREEMENTS WITH LENDERS PURSUANT  TO  SECTION  TWO
HUNDRED THIRTY-TWO OF THIS ARTICLE.
  3.  THE  SUPERINTENDENT'S  RESPONSIBILITIES  FOR  THE PROGRAM SHALL BE
LIMITED TO MARKETING AND PROMOTING THE PROGRAM PURSUANT TO  SECTION  TWO
HUNDRED THIRTY-FOUR-B OF THIS ARTICLE.
  S  229.  RELEASE  FROM  LINKED  DEPOSITS. THE AUTHORIZED DEPOSITOR MAY
PERMIT FUNDS RELEASED FROM A LINKED DEPOSIT RELATING TO A LINKED LOAN TO
BE MADE AVAILABLE FOR ADDITIONAL LINKED DEPOSITS UNDER THIS PROGRAM.
  S 230. LINKED STUDENT LOANS. LINKED STUDENT LOANS  SHALL  BE  MADE  BY
LENDERS  PURSUANT  TO THE PROGRAM ONLY TO ELIGIBLE RECIPIENTS FOR QUALI-
FIED EDUCATIONAL EXPENSES. A LINKED LOAN SHALL BE LIMITED TO  A  MAXIMUM
AMOUNT  OF  SEVEN  THOUSAND  FIVE  HUNDRED DOLLARS PER ACADEMIC YEAR. AN
ELIGIBLE RECIPIENT MAY RECEIVE NO MORE THAN ONE LINKED LOAN PER ACADEMIC
YEAR. DURING THE LIFE OF THE LINKED LOAN PROGRAM, THE  TOTAL  AMOUNT  OF
MONEY THAT AN ELIGIBLE RECIPIENT CAN BORROW FROM THE LINKED STUDENT LOAN
PROGRAM SHALL BE THIRTY THOUSAND DOLLARS. THE CREDIT DECISION FOR MAKING
A  LINKED LOAN SHALL BE MADE SOLELY BY THE LENDER, PROVIDED HOWEVER THAT

S. 7449--A                          8

SUCH LENDER SHALL ENSURE THAT AN ELIGIBLE RECIPIENT  COMPLIES  WITH  THE
PROVISIONS OF THIS ARTICLE, INCLUDING ANY RULES OR REGULATIONS ISSUED BY
THE  PRESIDENT. NOTWITHSTANDING THE LENGTH OF THE TERM OF A LINKED LOAN,
THE  LINKED DEPOSIT RELATING TO THE LINKED LOAN SHALL BE FOR A PERIOD OF
NOT MORE THAN FOUR YEARS.
  S 231. INTEREST RATE FOR LINKED LOANS; NO  LENDER'S  FEES.  1.  LINKED
LOANS  MADE  TO  ELIGIBLE RECIPIENTS SHALL BEAR INTEREST AT A FIXED RATE
EQUAL TO THREE PERCENTAGE POINTS BELOW THE FIXED INTEREST RATE THE LEND-
ER WOULD HAVE CHARGED FOR THE LOAN IN THE ABSENCE OF  A  LINKED  DEPOSIT
BASED  ON  ITS USUAL CREDIT CONSIDERATIONS. LENDERS SHALL CERTIFY TO THE
PRESIDENT THAT THE RATE TO BE CHARGED ON A LINKED LOAN IS THREE PERCENT-
AGE POINTS BELOW THE INTEREST RATE THE LENDER WOULD HAVE CHARGED FOR THE
LOAN IN THE ABSENCE OF A LINKED DEPOSIT.
  2. LENDERS WHO MAKE LOANS PURSUANT TO THE PROGRAM SHALL NOT  BE  ENTI-
TLED  TO  CHARGE  ANY DISCOUNT, POINTS, ORIGINATION FEES, HANDLING FEES,
SERVICE CHARGES, REFINANCING FEES OR PENALTIES OR ANY CHARGE OTHER  THAN
THOSE NORMALLY CHARGED AND IN SUCH AMOUNTS NORMALLY CHARGED BY THE LEND-
ER FOR LOANS OF THE TYPE BEING MADE WITHOUT REGARD TO THE PROGRAM.
  S 232. APPLICATION PROCEDURE. 1. THE PRESIDENT, WITH THE ASSISTANCE OF
THE  SUPERINTENDENT  OF  THE  DEPARTMENT, SHALL ESTABLISH PROCEDURES AND
OTHER REQUIREMENTS FOR PARTICIPATION IN THE PROGRAM, AND SHALL PROVIDE A
SIMPLIFIED APPLICATION FORM TO  THE  PARTICIPATING  LENDERS  FOR  LINKED
DEPOSITS.    SUCH FORM SHALL REFLECT THE QUALIFYING INFORMATION REQUIRED
BY THIS ARTICLE FOR ELIGIBLE LOAN RECIPIENTS.   UPON COMPLETION  OF  ANY
APPLICATION FOR A LINKED DEPOSIT, THE LENDER SHALL SEND THE APPLICATION,
TOGETHER  WITH  THE  INTEREST  RATE  CERTIFICATION  REQUIRED PURSUANT TO
SECTION TWO HUNDRED THIRTY-ONE OF THIS ARTICLE,  TO  THE  PRESIDENT  WHO
SHALL EITHER APPROVE OR REJECT THE APPLICATION WITHIN TWENTY-EIGHT DAYS.
THE  PRESIDENT  SHALL EVALUATE EACH APPLICATION BASED UPON THE FOLLOWING
CRITERIA:
  (A) THE EXTENT TO WHICH SUCH LOAN WOULD REDUCE THE LONG-TERM  COST  OF
FINANCING A STUDENT'S HIGHER EDUCATION;
  (B)  THE  LIKELIHOOD OF THE STUDENT SUCCESSFULLY COMPLETING HIS OR HER
HIGHER EDUCATION AND REPAYING THE LOAN WITHIN A TIMELY MANNER; AND
  (C) SUCH OTHER CRITERIA AS THE PRESIDENT DEEMS RELEVANT.
  2. IF THE DEPOSIT APPLICATION IS APPROVED BY THE PRESIDENT, HE OR  SHE
SHALL  NOTIFY AN AUTHORIZED DEPOSITOR THAT A DETERMINATION HAS BEEN MADE
THAT THE APPLICATION SATISFIES THE REQUIREMENTS OF THIS ARTICLE, AND THE
PRESIDENT SHALL REQUEST THE AUTHORIZED DEPOSITOR TO DEPOSIT  FUNDS  WITH
THE LENDER IN ACCORDANCE WITH SECTION NINETY-EIGHT-A OF THIS CHAPTER AND
WITH  THE  AUTHORIZED  DEPOSITOR'S ESTABLISHED PROCEDURES. SUCH DEPOSITS
SHALL BE SECURED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  ONE
HUNDRED  FIVE OF THIS CHAPTER, AND LENDERS RECEIVING SUCH DEPOSITS SHALL
SATISFY, IN THE SOLE JUDGMENT OF THE AUTHORIZED DEPOSITOR,  ALL  COLLAT-
ERAL  AND  OTHER REQUIREMENTS GENERALLY APPLIED BY THE AUTHORIZED DEPOS-
ITOR TO FUNDS INVESTED BY IT.  THE NOTIFIED AUTHORIZED DEPOSITOR AND THE
LENDER SHALL ENTER INTO A WRITTEN DEPOSIT AGREEMENT. IN NO  EVENT  SHALL
ANY  DEFECT IN ANY SUCH AGREEMENT BE ASSERTED AS A DEFENSE BY A BORROWER
ON A LINKED LOAN MADE PURSUANT TO THE PROGRAM.
  S 233. REPAYMENT PERIODS FOR LINKED STUDENT LOANS. THE PRESIDENT SHALL
REQUIRE THAT LINKED STUDENT LOANS ISSUED THROUGH THE PROGRAM OFFER FLEX-
IBLE REPAYMENT OPTIONS, INCLUDING THE OPTION OF AN  INCOME-BASED  REPAY-
MENT PLAN.  SUCH REPAYMENT OPTIONS MAY, IF THE PRESIDENT DEEMS IT ADVIS-
ABLE,  BE  CONSISTENT WITH THE REPAYMENT TERMS STIPULATED BY THE WILLIAM
D. FORD FEDERAL DIRECT LOAN PROGRAM AUTHORIZED PURSUANT TO 20 USC  CHAP-
TER 28, SUBCHAPTER IV, PART C.

S. 7449--A                          9

  S 234. LIABILITY; EARLY REPAYMENT AND WITHDRAWAL. NOTHING CONTAINED IN
THIS  ARTICLE  SHALL IMPOSE LIABILITY ON THE STATE OR ANY OF ITS DEPART-
MENTS OR EMPLOYEES FOR PAYMENT OR DELAYS IN PAYMENT OF THE PRINCIPAL  OR
INTEREST  OF  A  LINKED  LOAN. ANY DELAY IN PAYMENTS OR ANY DEFAULT ON A
LINKED  LOAN SHALL IN NO WAY AFFECT THE LINKED DEPOSIT AGREEMENT BETWEEN
THE LENDER AND THE AUTHORIZED  DEPOSITOR.  HOWEVER,  IN  THE  EVENT  THE
INTEREST  RATE OF THE LINKED LOAN SHALL BE INCREASED AS A CONSEQUENCE OF
DEFAULT OR RENEGOTIATION, OR THE LOAN SHALL BE CHARGED OFF,  THE  LENDER
SHALL GIVE THE AUTHORIZED DEPOSITOR PROMPT NOTICE OF SUCH EVENT, AND THE
AUTHORIZED  DEPOSITOR  SHALL THEREAFTER WITHDRAW THE LINKED DEPOSIT UPON
NOT LESS THAN SEVEN DAYS' PRIOR WRITTEN NOTICE TO THE LENDER. UPON EARLY
REPAYMENT OF A LINKED LOAN, THE LENDER SHALL WITHIN THIRTY DAYS GIVE THE
AUTHORIZED DEPOSITOR NOTICE OF SUCH EARLY REPAYMENT, AND THE  AUTHORIZED
DEPOSITOR  SHALL  THEREAFTER  WITHDRAW  THE LINKED DEPOSIT UPON NOT LESS
THAN SEVEN DAYS' PRIOR WRITTEN NOTICE TO THE LENDER,  AND  THE  INTEREST
RATE  PAYABLE  ON THE LINKED DEPOSIT FROM THE DATE OF EARLY REPAYMENT OF
THE LINKED LOAN TO THE DATE OF WITHDRAWAL OF THE LINKED DEPOSIT SHALL BE
THE INTEREST RATE UPON WHICH THE LINKED DEPOSIT INTEREST RATE WAS CALCU-
LATED WITHOUT REGARD TO THE APPLICABLE BASIS POINT REDUCTION.
  S 234-A. MONITORING AND REPORT. 1. THE  PRESIDENT  SHALL  MONITOR  THE
ACTIVITIES  OF PARTICIPATING LENDERS AND LOAN RECIPIENTS AND MAY REQUIRE
PERIODIC REPORTS OR OTHER INFORMATION THE PRESIDENT DEEMS NECESSARY FROM
PARTICIPATING LENDERS AND LOAN RECIPIENTS ON THE STATUS  OF  THE  LINKED
LOANS  TO  ENSURE  COMPLIANCE WITH THE PROVISIONS AND THE INTENT OF THIS
ARTICLE.
  2. ON OR BEFORE DECEMBER FIRST, TWO THOUSAND  FOURTEEN,  AND  ANNUALLY
THEREAFTER  THE  PRESIDENT  SHALL  SUBMIT TO THE GOVERNOR, THE TEMPORARY
PRESIDENT OF THE SENATE AND THE SPEAKER OF THE ASSEMBLY A REPORT REGARD-
ING THE ACTIVITIES OF THE PROGRAM. SUCH REPORT SHALL CONTAIN A STATEMENT
OF THE COST OF THE PROGRAM TO THE STATE, CONSIDERED AS A WHOLE,  BECAUSE
OF REDUCED RATES ON FUNDS INVESTED IN LINKED DEPOSITS. SUCH REPORT SHALL
ALSO INCLUDE, BUT SHALL NOT BE LIMITED TO, THE NUMBER AND TYPE OF LINKED
LOANS  UNDER THE PROGRAM AND THE AMOUNT THEREOF; THE NUMBER AND TYPES OF
LENDERS MAKING LINKED LOANS AND OF INDIVIDUALS RECEIVING  LINKED  LOANS;
THE  GEOGRAPHIC  DISTRIBUTION  OF SUCH LENDERS AND RECIPIENTS, INCLUDING
THE STEPS TAKEN TO ENSURE GEOGRAPHIC DIVERSITY AMONG PARTICIPATING LEND-
ERS, AS WELL AS ANY INFORMATION THE PRESIDENT DETERMINES USEFUL IN EVAL-
UATING THE BENEFITS OF THE PROGRAM.
  S 234-B. PROMOTION OF PROGRAM. THE DEPARTMENT, WITH THE ASSISTANCE  OF
OTHER  APPROPRIATE  STATE  AGENCIES,  SHALL  ACTIVELY MARKET AND PROMOTE
AWARENESS OF THE PROGRAM IN ALL GEOGRAPHICAL AREAS OF  THE  STATE  AMONG
COMMERCIAL BANKS, THRIFTS AND OTHER APPROPRIATE BANKING ORGANIZATIONS.
  S  234-C.  RULES AND REGULATIONS. THE PRESIDENT SHALL, IN CONSULTATION
WITH THE COMPTROLLER  AND  THE  SUPERINTENDENT  OF  FINANCIAL  SERVICES,
PROMULGATE RULES AND REGULATIONS NECESSARY AND REASONABLE FOR THE OPERA-
TION OF THE PROGRAM.
  S 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law, provided however that effective immediately,
the addition, amendment and/or repeal of any rules or regulations neces-
sary  for  implementation  of  the foregoing sections of this act on its
effective date is authorized and directed to be made and completed on or
before such effective date.

                                 PART C

S. 7449--A                         10

  Section 1. Paragraphs 6 and 7 of subsection (c) of section 301 of  the
financial services law, as added by section 1 of part A of chapter 62 of
the  laws of 2011, are amended and a new paragraph 8 is added to read as
follows:
  (6)  providing  technical assistance to local governments and not-for-
profits in the development of consumer protection measures with  respect
to financial products and services; [and]
  (7)   continuing   and  expanding  the  detection,  investigation  and
prevention of insurance fraud[.]; AND
  (8) ESTABLISHING AND ADMINISTERING THE "STUDENT  LENDING  TRANSPARENCY
PROGRAM" PURSUANT TO ARTICLE SIX OF THIS CHAPTER.
  S  2.  The financial services law is amended by adding a new article 6
to read as follows:
                                ARTICLE 6
                  STUDENT LENDING TRANSPARENCY PROGRAM
SECTION 601. DEFINITIONS.
        602. STUDENT LENDING TRANSPARENCY PROGRAM.
        603. RULES AND REGULATIONS.
  S 601. DEFINITIONS. THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEAN-
INGS WHEN USED IN THIS ARTICLE:
  A. "PRIVATE STUDENT LOANS" SHALL MEAN  A  PRIVATE  LOAN  ISSUED  BY  A
PRIVATE  LENDING INSTITUTION FOR THE PURPOSES OF PAYING FOR OR FINANCING
HIGHER EDUCATION EXPENSES.
  B. "PRIVATE LENDING INSTITUTIONS" OR "PRIVATE LENDERS" SHALL MEAN  ANY
PRIVATE  ENTITY  THAT  ITSELF  OR  THROUGH  AN AFFILIATE MAKES AVAILABLE
STUDENT LOANS TO PAY FOR OR FINANCE HIGHER EDUCATION EXPENSES.
  C. "STUDENT BORROWER" SHALL MEAN ANY INDIVIDUAL WHO BORROWS MONEY FROM
A PRIVATE LENDING INSTITUTION TO FINANCE HIGHER EDUCATION EXPENSES.
  D. "HIGHER EDUCATION EXPENSES" SHALL INCLUDE THE FOLLOWING:
  (I) TUITION AND FEES;
  (II) BOOKS AND SUPPLIES; AND
  (III) ROOM AND BOARD.
  S 602. STUDENT LENDING TRANSPARENCY  PROGRAM.  1.  THE  SUPERINTENDENT
SHALL  ESTABLISH  A  PROGRAM  TO COMPILE DATA RELATED TO PRIVATE STUDENT
LOANS FOR THE PURPOSE OF COMPARING PRIVATE LENDING INSTITUTION'S STUDENT
LOAN INTEREST RATES AND REPAYMENT PLANS, INCLUDING POLICIES RELATING  TO
DEFERMENT AND FORBEARANCE, DEFAULT POLICIES AND PENALTIES, AND ANY OTHER
INFORMATION  THAT  THE  SUPERINTENDENT DEEMS RELEVANT FOR THE PURPOSE OF
CREATING A LIST OF PRIVATE LENDERS WHO PROVIDE THE LOWEST RATES AND BEST
REPAYMENT OPTIONS ON STUDENT LOANS. SUCH LIST SHALL BE CREATED AND MAIN-
TAINED BY THE SUPERINTENDENT OR HIS DESIGNEE AND SHALL BE PLACED  ON  AN
EASILY  ACCESSIBLE  WEBSITE THAT SHALL BE MADE AVAILABLE TO BE LINKED TO
THE WEBSITE OF THE HIGHER EDUCATION  SERVICES  CORPORATION  PURSUANT  TO
SUBDIVISION  THIRTEEN OF SECTION SIX HUNDRED FIFTY-FIVE OF THE EDUCATION
LAW AND TO COLLEGES AND UNIVERSITIES WEBSITES PURSUANT TO  ARTICLE  14-B
OF THE EDUCATION LAW.
  2. SUCH WEBSITE SHALL BE UPDATED ON A MONTHLY BASIS TO ENSURE THAT THE
STUDENT  LOAN INFORMATION IS CURRENT AND ACCURATE. THE SUPERINTENDENT OR
HIS OR HER DESIGNEE SHALL COMPILE A LIST OF THE  TOP  TEN  BEST  PRIVATE
LENDING INSTITUTIONS BASED UPON RATES AND POLICIES THAT ARE MOST FAVORA-
BLE  TO  THE  STUDENT BORROWER. THE SUPERINTENDENT MAY ALSO CONSIDER THE
PRIVATE LENDING INSTITUTIONS POLICIES FOR ALLOWING A STUDENT BORROWER TO
BORROW MORE THAN TEN PERCENT OVER SUCH STUDENT BORROWER'S TOTAL COST  OF
HIGHER EDUCATION EXPENSES WHEN DETERMINING IF A PRIVATE LENDING INSTITU-
TION  SHOULD  BE  PLACED ON SUCH LIST. INFORMATION PERTAINING TO LENDING
INSTITUTIONS THAT DO NOT MAKE THE TOP TEN LIST SHALL ALSO BE  POSTED  ON

S. 7449--A                         11

SUCH WEBSITE AND THOSE LENDING INSTITUTIONS THAT PROVIDE THE WORST RATES
AND STRICTEST REPAYMENT OPTIONS SHALL BE CLEARLY INDICATED.
  S  603. RULES AND REGULATIONS. THE SUPERINTENDENT SHALL PROMULGATE ALL
RULES AND REGULATIONS NECESSARY FOR THE IMPLEMENTATION OF THIS ARTICLE.
  S 3. Section 655 of the education law  is  amended  by  adding  a  new
subdivision 13 to read as follows:
  13. TO CREATE A LINK ON THE CORPORATION'S WEBSITE TO THE DEPARTMENT OF
FINANCIAL  SERVICES  WEBSITE  PURSUANT TO SUBDIVISION ONE OF SECTION SIX
HUNDRED TWO OF THE FINANCIAL SERVICES LAW.
  S 4. The education law is amended by adding a new article 14-B to read
as follows:
                              ARTICLE 14-B
                  STUDENT LENDING TRANSPARENCY PROGRAM
SECTION 697. CREATION OF PROGRAM.
        698. ACCESS TO INFORMATION.
        699. LINKS TO DEPARTMENT OF FINANCIAL SERVICES.
  S 697. CREATION OF PROGRAM. THE STUDENT LENDING  TRANSPARENCY  PROGRAM
IS HEREBY ESTABLISHED TO ENSURE THAT NEW YORK STATE COLLEGES PROVIDE THE
MOST ACCURATE AND TRANSPARENT INFORMATION WITH REGARD TO STUDENT LOANS.
  S  698.  ACCESS TO INFORMATION. NOTWITHSTANDING ANY OTHER LAW, RULE OR
REGULATION TO THE CONTRARY,  NEW  YORK  STATE  COLLEGES  AS  DEFINED  IN
SECTION  SIX HUNDRED ONE OF ARTICLE THIRTEEN OF THE EDUCATION LAW, SHALL
BE REQUIRED THROUGH THEIR FINANCIAL AID OFFICES TO PROVIDE  TO  PROSPEC-
TIVE OR NEWLY ACCEPTED STUDENTS AND PARENTS CLEARLY OUTLINED AND EASY TO
UNDERSTAND  INFORMATION  PERTAINING  TO  THE TOTAL COST OF ATTENDANCE AT
THEIR INSTITUTION, THE APPROXIMATE OR ACTUAL TOTAL AMOUNT  OF  FINANCIAL
AID  THEY  WOULD  RECEIVE  FROM  SUCH INSTITUTION AND THE APPROXIMATE OR
ACTUAL TOTAL AMOUNT OF STUDENT LOAN DEBT THEY WOULD ACCUMULATE OVER  THE
COURSE  OF  FOUR  YEARS  IF  THEY ATTENDED SUCH COLLEGE. THE INFORMATION
PROVIDED MUST ALSO INCLUDE STUDENT LOAN RATES, INFORMATION ON  REPAYMENT
PLANS  AND  DEFAULT  RATES  AND  THE  ACTUAL COST OF THE AVERAGE MONTHLY
PAYMENT THAT WOULD BE REQUIRED UPON GRADUATION  WHEN  SUCH  LOANS  WOULD
BECOME DUE.
  S  699.  LINKS  TO  DEPARTMENT  OF  FINANCIAL SERVICES. NEW YORK STATE
COLLEGES THAT  MAINTAIN  AN  OFFICIAL  COLLEGE  WEBSITE  SHALL  ALSO  BE
REQUIRED  TO  ADD  A LINK ON EACH OF THEIR WEBSITES TO THE DEPARTMENT OF
FINANCIAL SERVICES  WEBSITE  ON  STUDENT  LENDING  TRANSPARENCY  CREATED
PURSUANT TO ARTICLE SIX OF THE FINANCIAL SERVICES LAW.
  S 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law.

                                 PART D

  Section 1.  The education law is amended by adding a new section 355-d
to read as follows:
  S  355-D.  NEW  YORK  STATE  PRE-PAY TUITION SAVINGS PROGRAM.   1. FOR
PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE  THE  FOLLOWING
MEANINGS:
  A.  "PARTICIPANT"  SHALL MEAN A NEW YORK STATE RESIDENT WHO ENROLLS AN
ELIGIBLE CHILD AND MAKES PAYMENTS ON BEHALF OF SUCH ELIGIBLE CHILD,  AND
SHALL  INCLUDE  BUT  NOT  BE  LIMITED TO SUCH ELIGIBLE CHILD'S PARENT OR
GUARDIAN.
  B. "ELIGIBLE CHILD" SHALL MEAN A CHILD FIVE YEARS OF AGE OR OLDER, WHO
IS ENROLLED IN THE NEW YORK STATE PRE-PAY TUITION PROGRAM BY  A  PARTIC-
IPANT.

S. 7449--A                         12

  C.  "THE  FUND"  SHALL  MEAN  THE  NEW YORK STATE PRE-PAY TUITION FUND
ESTABLISHED BY SECTION NINETY-NINE-U OF THE STATE FINANCE LAW.
  D. "TOTAL COST OF EDUCATION" SHALL MEAN THE AVERAGE SYSTEM-WIDE YEARLY
TOTAL  COST OF A FOUR YEAR EDUCATION AT THE STATE UNIVERSITY OF NEW YORK
INCLUDING TUITION, ROOM AND BOARD AND ALL APPLICABLE FEES.  DURING  EACH
YEAR  OF  PARTICIPATION, THE TOTAL COST OF EDUCATION SHALL BE CALCULATED
BASED UPON THE CURRENT YEAR'S COST UNTIL THE FINAL PAYMENT IS MADE.
  2. THE NEW YORK STATE PRE-PAY TUITION SAVINGS PROGRAM IS HEREBY ESTAB-
LISHED AND SHALL BE CONTROLLED AND ADMINISTERED BY THE  NEW  YORK  STATE
COMPTROLLER  OR  HIS OR HER DESIGNEE IN CONSULTATION WITH THE CHANCELLOR
OF THE STATE UNIVERSITY OF NEW YORK (SUNY) OR HIS OR  HER  DESIGNEE  AND
THE  CHANCELLOR  OF THE CITY UNIVERSITY OF NEW YORK (CUNY) OR HIS OR HER
DESIGNEE.
  3. A.  A PARTICIPANT MAY ENROLL AN ELIGIBLE CHILD  BEGINNING  AT  FIVE
YEARS  OF  AGE AND PAY ONE-THIRD OF THE COST OF THE TOTAL COST OF EDUCA-
TION EACH YEAR FOR THE DURATION OF TWELVE CONSECUTIVE YEARS.
  B. A PARTICIPANT MAY ENROLL AN ELIGIBLE CHILD BEGINNING AT  SIX  YEARS
OF  AGE  AND  PAY ONE-THIRD OF THE TOTAL COST OF EDUCATION EACH YEAR FOR
THE DURATION OF TWELVE YEARS.
  C. IF A PARTICIPANT ENROLLS AN ELIGIBLE CHILD AT AGE SEVEN  OR  THERE-
AFTER, YEARLY PAYMENTS SHALL BE DETERMINED BY THE SUNY CHANCELLOR OR HIS
OR  HER  DESIGNEE  AND  APPROVED  BY THE STATE COMPTROLLER OR HIS OR HER
DESIGNEE BASED UPON A FORMULA THAT CONSIDERS THE CHILD'S AGE AT THE TIME
OF ENROLLMENT AND EVENLY DIVIDES THE YEARLY AVERAGE TOTAL COST OF A FOUR
YEAR SUNY EDUCATION BUT ENSURES THAT THE LAST PAYMENT WILL  BE  RECEIVED
WITHIN  THE CALENDAR YEAR WHEN THE ELIGIBLE CHILD GRADUATES OR IS SCHED-
ULED TO GRADUATE HIGH SCHOOL.
  D. (1) UPON ENROLLMENT OF AN ELIGIBLE  CHILD  INTO  THE  PROGRAM,  THE
PARTICIPANT  SHALL  RECEIVE  A BILL FROM THE STATE COMPTROLLER OR HIS OR
HER DESIGNEE CLEARLY STATING THE TOTAL COST OF EDUCATION FOR THAT  YEAR,
AND THE MONTHLY PAYMENT AMOUNT DUE TO BE DEPOSITED IN THE FUND, PROVIDED
HOWEVER,  THAT AT ANY TIME WITHIN SUCH YEAR, THE TOTAL COST OF EDUCATION
FOR THAT YEAR MAY BE PAID IN FULL WITHOUT PENALTY.
  (2) PROVIDED FURTHER HOWEVER, THAT A PAYMENT PLAN OTHER  THAN  MONTHLY
BILLING  MAY  BE  ESTABLISHED BASED ON RULES AND REGULATIONS PROMULGATED
PURSUANT TO SUBDIVISION FOUR OF THIS SECTION.
  E. (1) PAYMENTS DEPOSITED INTO THE FUND  SHALL  NOT  BE  ELIGIBLE  FOR
WITHDRAWAL  AT  ANY  TIME BEFORE THE ELIGIBLE CHILD FOR WHOM THE PARTIC-
IPANT IS PAYING, REACHES THE AGE OF HIGH SCHOOL GRADUATION  OR  THE  AGE
WHEN SUCH CHILD SHOULD HAVE GRADUATED.
  (2)  UPON  THE  ELIGIBLE  CHILD REACHING THE AGE OF HIGH SCHOOL GRADU-
ATION, THE PARTICIPANT MAY CHOOSE TO WITHDRAW  THE  TOTAL  BALANCE  THAT
SUCH  PARTICIPANT  PAID  INTO  THE FUND AND NO LONGER PARTICIPATE IN THE
PROGRAM.
  F. (1) UPON SUBMISSION OF THE LAST PAYMENT, THE ACTUAL COST OF WHAT  A
TWO  YEAR  PROGRAM  AT  SUNY, A TWO YEAR PROGRAM AT CUNY AND A FOUR YEAR
PROGRAM AT CUNY  WOULD  HAVE  COST  IN  EACH  YEAR  THAT  A  PARTICIPANT
COMPLETED  PAYMENTS  FOR THE FIRST YEAR, THE SECOND YEAR, THE THIRD YEAR
AND THE FOURTH YEAR OF THE TOTAL COST OF EDUCATION, SHALL BE CALCULATED.
  (2) THE ACTUAL COST SHALL BE CALCULATED IN  THE  SAME  MANNER  AS  THE
TOTAL  COST  OF  EDUCATION  BY THE COMPTROLLER OR HIS OR HER DESIGNEE IN
CONSULTATION WITH THE SUNY CHANCELLOR OR HIS OR  HER  DESIGNEE  AND  THE
CUNY CHANCELLOR OR HIS OR HER DESIGNEE.
  G. ONCE AN ELIGIBLE CHILD HAS GRADUATED HIGH SCHOOL OR HAS REACHED THE
AGE  OF  SUCH  CHILD'S SCHEDULED HIGH SCHOOL GRADUATION, AND IT HAS BEEN

S. 7449--A                         13

DETERMINED THAT ALL REQUIRED PAYMENTS HAVE BEEN DEPOSITED INTO THE FUND,
THE PARTICIPANTS HAVE THE FOLLOWING OPTIONS:
  (1)  SUNY.  (I)  IF  A  PARTICIPANT'S  ELIGIBLE  CHILD  APPLIES TO, IS
ACCEPTED TO, AND ENROLLS IN A FOUR YEAR DEGREE  PROGRAM  AT  SUNY,  THEN
SUCH  ELIGIBLE CHILD'S FINANCIAL OBLIGATIONS HAVE BEEN MET TO ATTEND FOR
THE DURATION OF FOUR CONSECUTIVE YEARS IN  SUCH  SUNY  PROGRAM  AND  THE
COMPTROLLER OR HIS OR HER DESIGNEE SHALL SUBMIT PAYMENTS TO SUCH COLLEGE
AND  PROVIDE  ANY  REFUNDS  DUE TO THE PARTICIPANT, BASED UPON RULES AND
REGULATIONS ESTABLISHED PURSUANT TO SUBDIVISION FOUR OF THIS SECTION.
  (II) (A) IF A PARTICIPANT'S ELIGIBLE CHILD APPLIES TO,  GETS  ACCEPTED
TO,  AND  ENROLLS  IN  A  TWO  YEAR  PROGRAM AT SUNY, THEN SUCH ELIGIBLE
CHILD'S FINANCIAL OBLIGATIONS HAVE BEEN MET  TO  ATTEND  AND  THE  COMP-
TROLLER OR HIS OR HER DESIGNEE SHALL SUBMIT PAYMENTS TO SUCH COLLEGE AND
SHALL PROVIDE A REFUND TO THE PARTICIPANT FOR THE DIFFERENCE BETWEEN THE
COST  OF  A  TWO  YEAR  PROGRAM AND THE FOUR YEAR PROGRAM FOR WHICH THEY
PAID, INCLUDING ANY ADDITIONAL REFUNDS DUE TO  THE  PARTICIPANT,  CALCU-
LATED  UPON  SUBMISSION OF THE PARTICIPANT'S LAST PAYMENT AND BASED UPON
RULES AND REGULATIONS ESTABLISHED PURSUANT TO SUBDIVISION FOUR  OF  THIS
SECTION.
  (B)  AT  THAT TIME, SUCH PARTICIPANT SHALL HAVE THE OPTION TO WITHDRAW
THE REMAINDER OF THE BALANCE THAT SUCH PARTICIPANT PAID INTO  THE  FUND,
OR  MAY CHOOSE TO KEEP THE REMAINDER IN THE FUND TO BE APPLIED TO A FOUR
YEAR PROGRAM IN THE EVENT THAT THE ELIGIBLE CHILD TRANSFERS  TO  A  FOUR
YEAR PROGRAM.
  (C)  IF  SUCH ELIGIBLE CHILD TRANSFERS TO A FOUR YEAR PROGRAM AT CUNY,
THE PARTICIPANT SHALL RECEIVE A REFUND FOR THE  DIFFERENCE  BETWEEN  THE
ACTUAL  COST  OF  EDUCATION  AT CUNY AND THE FOUR YEAR PROGRAM FOR WHICH
THEY PAID, INCLUDING ANY ADDITIONAL  REFUNDS  DUE  TO  THE  PARTICIPANT,
CALCULATED  AT  THE  TIME  OF  THE  SUBMISSION OF THE PARTICIPANT'S LAST
PAYMENT.
  (III) IF SUCH ELIGIBLE CHILD TRANSFERS TO A FOUR YEAR PROGRAM AT A NEW
YORK STATE PRIVATE SCHOOL,  THE  PARTICIPANT  MAY  CHOOSE  TO  HAVE  THE
REMAINDER  OF  THE  BALANCE  THAT  SUCH  PARTICIPANT PAID INTO THE FUND,
APPLIED TO THE COST OF EDUCATION AT SUCH PRIVATE SCHOOL.
  (IV) IF SUCH ELIGIBLE CHILD TRANSFERS TO AN OUT-OF-STATE COLLEGE,  THE
PARTICIPANT SHALL RECEIVE THE REMAINDER OF THE BALANCE THAT SUCH PARTIC-
IPANT PAID INTO THE FUND.
  (2)  CUNY.  (I)  IF  A  PARTICIPANT'S  ELIGIBLE CHILD APPLIES TO, GETS
ACCEPTED TO AND ENROLLS IN A FOUR YEAR DEGREE PROGRAM AT CUNY, THEN SUCH
ELIGIBLE CHILD'S FINANCIAL OBLIGATIONS HAVE BEEN MET TO ATTEND  AND  THE
COMPTROLLER  OR  HIS  OR  HER  DESIGNEE  SHALL  SUBMIT  PAYMENTS TO SUCH
COLLEGE, AND SHALL PROVIDE A REFUND TO THE PARTICIPANT FOR  THE  DIFFER-
ENCE  BETWEEN  THE  ACTUAL  COST OF EDUCATION FOR A FOUR YEAR PROGRAM AT
CUNY AND THE FOUR YEAR PROGRAM FOR WHICH THEY PAID, INCLUDING ANY  ADDI-
TIONAL  REFUNDS  DUE  TO  THE PARTICIPANT, CALCULATED AT THE TIME OF THE
SUBMISSION OF THE PARTICIPANT'S LAST PAYMENT BASED UPON RULES AND  REGU-
LATIONS ESTABLISHED PURSUANT TO SUBDIVISION FOUR OF THIS SECTION.
  (II)  (A)  IF A PARTICIPANT'S ELIGIBLE CHILD APPLIES TO, GETS ACCEPTED
TO AND ENROLLS IN A TWO YEAR PROGRAM AT CUNY, THEN SUCH ELIGIBLE CHILD'S
FINANCIAL OBLIGATIONS HAVE BEEN MET TO ATTEND AND THE COMPTROLLER OR HIS
OR HER DESIGNEE SHALL SUBMIT PAYMENTS TO SUCH COLLEGE AND SHALL  PROVIDE
A REFUND TO THE PARTICIPANT FOR THE DIFFERENCE BETWEEN THE COST OF A TWO
YEAR  PROGRAM  AND  THE FOUR YEAR PROGRAM FOR WHICH THEY PAID, INCLUDING
ANY  ADDITIONAL  REFUNDS  DUE  TO  THE  PARTICIPANT,   CALCULATED   UPON
SUBMISSION  OF  THE  PARTICIPANT'S LAST PAYMENT AND BASED UPON RULES AND
REGULATIONS ESTABLISHED PURSUANT TO SUBDIVISION FOUR OF THIS SECTION.

S. 7449--A                         14

  (B) AT THAT TIME, SUCH PARTICIPANT SHALL HAVE THE OPTION  TO  WITHDRAW
THE  REMAINDER  OF THE BALANCE THAT SUCH PARTICIPANT PAID INTO THE FUND,
OR MAY CHOOSE TO KEEP THE REMAINDER IN THE FUND TO BE APPLIED TO A  FOUR
YEAR  PROGRAM  IN  THE EVENT THAT THE ELIGIBLE CHILD TRANSFERS TO A FOUR
YEAR PROGRAM.
  (C)  IF  SUCH ELIGIBLE CHILD TRANSFERS TO A FOUR YEAR PROGRAM AT CUNY,
THE PARTICIPANT SHALL RECEIVE A REFUND FOR THE  DIFFERENCE  BETWEEN  THE
ACTUAL  COST  OF  EDUCATION  AT CUNY AND THE FOUR YEAR PROGRAM FOR WHICH
THEY PAID, INCLUDING ANY ADDITIONAL  REFUNDS  DUE  TO  THE  PARTICIPANT,
CALCULATED  AT  THE  TIME  OF  THE  SUBMISSION OF THE PARTICIPANT'S LAST
PAYMENT.
  (D) IF SUCH ELIGIBLE CHILD TRANSFERS TO A FOUR YEAR PROGRAM  AT  SUNY,
THEN SUCH ELIGIBLE CHILD'S FINANCIAL OBLIGATIONS HAVE BEEN MET TO ATTEND
AND THE COMPTROLLER OR HIS OR HER DESIGNEE SHALL SUBMIT PAYMENTS TO SUCH
COLLEGE,  AND  PROVIDE  ANY  REFUNDS  DUE TO THE PARTICIPANT, BASED UPON
RULES AND REGULATIONS ESTABLISHED PURSUANT TO SUBDIVISION FOUR  OF  THIS
SECTION.
  (III)  IF  AN  ELIGIBLE  STUDENT TRANSFERS TO A NEW YORK STATE PRIVATE
SCHOOL, THE PARTICIPANT MAY CHOOSE TO HAVE THE REMAINDER OF THE  BALANCE
THAT  SUCH PARTICIPANT PAID INTO THE FUND, APPLIED TO THE COST OF EDUCA-
TION AT SUCH PRIVATE SCHOOL.
  (IV) IF SUCH ELIGIBLE CHILD TRANSFERS TO AN OUT-OF-STATE COLLEGE,  THE
PARTICIPANT SHALL RECEIVE THE REMAINDER OF THE BALANCE THAT SUCH PARTIC-
IPANT PAID INTO THE FUND.
  (3)  NEW  YORK STATE PRIVATE SCHOOL. IF A PARTICIPANT'S ELIGIBLE CHILD
APPLIES TO, GETS ACCEPTED TO AND ENROLLS IN A FOUR YEAR  DEGREE  PROGRAM
OR  A  TWO  YEAR  DEGREE  PROGRAM  AT A NEW YORK STATE PRIVATE SCHOOL, A
PARTICIPANT MAY CHOOSE TO HAVE THE BALANCE THAT  SUCH  PARTICIPANT  PAID
INTO THE FUND APPLIED TO THE COST OF EDUCATION AT SUCH PRIVATE SCHOOL OR
SUCH PARTICIPANT MAY CHOOSE TO WITHDRAW THE TOTAL CONTRIBUTION THAT SUCH
PARTICIPANT  PAID INTO THE FUND BASED UPON RULES AND REGULATIONS PROMUL-
GATED PURSUANT TO SUBDIVISION FOUR OF THIS SECTION.
  (4) OUT-OF-STATE SCHOOL  OR  NON-ACCEPTANCE  INTO  A  NEW  YORK  STATE
COLLEGE, OR IF AN ELIGIBLE CHILD DOES NOT APPLY TO COLLEGE. IF A PARTIC-
IPANT'S  ELIGIBLE  CHILD  APPLIES TO, GETS ACCEPTED TO AND ENROLLS IN AN
OUT-OF-STATE SCHOOL OR IF A PARTICIPANT'S ELIGIBLE CHILD  DOES  NOT  GET
ACCEPTED  INTO  A  NEW  YORK  STATE  COLLEGE,  OR  CHOOSES NOT TO ATTEND
COLLEGE, THEN SUCH PARTICIPANT SHALL  WITHDRAW  THE  TOTAL  CONTRIBUTION
THAT  SUCH  PARTICIPANT  PAID  INTO  THE FUND BASED UPON RULES AND REGU-
LATIONS PROMULGATED PURSUANT TO SUBDIVISION FOUR OF THIS SECTION.
  (5) NON-PAYMENT.  (I)  IF  A  PARTICIPANT  CANNOT  MAKE  THE  REQUIRED
PAYMENTS  AT  ANY  TIME AFTER ENROLLMENT OF AN ELIGIBLE CHILD, THEN SUCH
PARTICIPANT MAY WITHDRAW THE BALANCE THAT SUCH PARTICIPANT HAS PAID INTO
THE FUND AT SUCH TIME THAT THE ELIGIBLE CHILD GRADUATES HIGH  SCHOOL  OR
REACHES THE AGE OF SCHEDULED GRADUATION.
  (II)  IF  SUCH  PARTICIPANT CANNOT MAKE PAYMENT BUT WISHES TO CONTINUE
PAYING INTO THE PROGRAM, SUCH PARTICIPANT MAY RESUME PAYMENTS CALCULATED
UNDER A NEW SCHEDULE BASED UPON THE ELIGIBLE CHILD'S CURRENT AGE AND THE
CURRENT TOTAL COST OF EDUCATION.
  (6) DEATH OF ELIGIBLE CHILD. IN THE EVENT OF THE DEATH OF AN  ENROLLED
ELIGIBLE CHILD, THE PARTICIPANT MAY WITHDRAW THE TOTAL BALANCE THAT SUCH
PARTICIPANT PAID INTO THE FUND OR MAY ELECT TO HAVE A SCHOLARSHIP IN THE
AMOUNT  OF  SUCH TOTAL BALANCE AWARDED TO ANOTHER STUDENT IN THE NAME OF
SUCH DECEASED ELIGIBLE CHILD, UPON SUBMISSION OF A DEATH CERTIFICATE AND
BASED UPON RULES AND REGULATIONS  PROMULGATED  PURSUANT  TO  SUBDIVISION
FOUR OF THIS SECTION.

S. 7449--A                         15

  4.  THE  COMPTROLLER  OR HIS OR HER DESIGNEE, IN CONSULTATION WITH THE
SUNY CHANCELLOR OR HIS OR HER DESIGNEE AND THE CUNY CHANCELLOR OR HIS OR
HER DESIGNEE, SHALL PROMULGATE ALL NECESSARY RULES AND  REGULATIONS  FOR
THE  SUCCESSFUL  IMPLEMENTATION  OF THIS SECTION.   SUCH RULES AND REGU-
LATIONS  SHALL  INCLUDE PROVISIONS TO ADDRESS AN ELIGIBLE CHILD'S ELIGI-
BILITY FOR TUITION ASSISTANCE PROGRAM AWARDS OR ANY OTHER  SCHOLARSHIPS,
GRANTS  OR  AWARDS, TO ENSURE THAT THE VALUE OF SUCH AWARDS ARE REFUNDED
TO THAT PARTICIPANT OR ELIGIBLE CHILD.
  S 2. The state finance law is amended by adding a new section 99-u  to
read as follows:
  S  99-U.  NEW  YORK  STATE  PRE-PAY TUITION FUND.   1. THERE IS HEREBY
ESTABLISHED WITHIN THE CUSTODY OF THE STATE COMPTROLLER, OR HIS  OR  HER
DESIGNEE,  IN CONSULTATION WITH THE SUNY CHANCELLOR OR HIS OR HER DESIG-
NEE AND THE CUNY CHANCELLOR OR HIS OR HER DESIGNEE, A  NEW  FUND  TO  BE
KNOWN A THE NEW YORK STATE PRE-PAY TUITION FUND.
  2.  ALL MONIES RECEIVED PURSUANT TO THE NEW YORK STATE PRE-PAY TUITION
PROGRAM SHALL BE DEPOSITED INTO THIS FUND AND SHALL BE MANAGED  PURSUANT
TO SECTION THREE HUNDRED FIFTY-FIVE-D OF THE EDUCATION LAW.
  3.  ALL  NECESSARY  RULES  AND REGULATIONS FOR THE SUCCESSFUL ADMINIS-
TRATION, INVESTMENT AND MANAGEMENT OF SUCH FUND SHALL BE PROMULGATED  BY
THE  STATE  COMPTROLLER  OR HIS OR HER DESIGNEE IN CONSULTATION WITH THE
SUNY CHANCELLOR OR HIS OR HER DESIGNEE OR THE CUNY CHANCELLOR OR HIS  OR
HER DESIGNEE.
  S 3.  Paragraph 33 of subsection (c) of section 612 of the tax law, as
added by chapter 546 of the laws of 1997, is amended to read as follows:
  (33) Distributions from a family tuition account established under the
New York state college choice tuition savings program provided for under
article  fourteen-A  of  the education law OR DISTRIBUTIONS FROM THE NEW
YORK STATE PRE-PAY TUITION SAVINGS PROGRAM PROVIDED  FOR  UNDER  SECTION
THREE  HUNDRED FIFTY-FIVE-D OF THE EDUCATION LAW, to the extent includi-
ble in gross income for federal income tax purposes.
  S 4. Nothing in this act shall be construed  to  guarantee  acceptance
into any New York state college.
  S  5. This act shall take effect one year after it shall have become a
law; provided however that effective  immediately  the  New  York  state
comptroller  or his or her designee, in consultation with the chancellor
of the state university of New York or his or her designee and the chan-
cellor of the city university of New York or his or her designee,  shall
promulgate  all necessary rules and regulations for the timely implemen-
tation of this act on or before such effective date.
  S 2. Severability. If any clause, sentence, paragraph, section or part
of this act shall be adjudged by any court of competent jurisdiction  to
be  invalid  and  after  exhaustion  of all further judicial review, the
judgment shall not affect, impair, or invalidate the remainder  thereof,
but  shall  be  confined in its operation to the clause, sentence, para-
graph, section or part of this act directly involved in the  controversy
in which the judgment shall have been rendered.
  S  3.  This  act shall take effect immediately provided, however, that
the applicable effective date of Parts A through D of this act shall  be
as specifically set forth in the last section of such Parts.

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