NY State Senate Bill 2019-S6634

Senate Bill S6634

2019-2020 Legislative Session

Create an income driven repayment plan for private student loans held by New York state banking institutions

download bill text pdf

Archive: Last Bill Status - In Senate Committee Higher Education Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to higher education
Jul 19, 2019	referred to rules

2019-S6634 (ACTIVE) - Details

See Assembly Version of this Bill:: A5182
Current Committee:: Senate Higher Education
Law Section:: Education Law
Laws Affected:: Add §681-b, Ed L
Versions Introduced in Other Legislative Sessions:: 2015-2016: A6605
2017-2018: A7318

2019-S6634 (ACTIVE) - Summary

Creates an income driven repayment plan for private student loans held by New York state banking institutions.

2019-S6634 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S6634

SPONSOR: MARTINEZ
 
TITLE OF BILL:  An act to amend the education law, in relation to
creating an income driven repayment plan for private student loans held
by New York state banking institutions

 
PURPOSE OR GENERAL IDEA OF BILL:

Help recent college graduates who cannot find a job or are on a limited
income who are required to begin making payments on their student loans
immediately following graduation. Modeled after President Obama's Income
Driven Repayment Plans for Federal Student Loans.  Sets a monthly
student loan payment at an amount that is intended to be affordable
based on income and family size. Monthly payments are based on income
and family size which may result in no monthly payment.

 
SUMMARY OF PROVISIONS:

This legislation amends the Education Law, in relation to creating an
income driven repayment plan for private student loans held by New York

State banking institutions. This bill amends the Education Law by adding
an income based repayment plan. An eligible student loan is any
outstanding loan made by a private lender through a New York banking
institution to a student who is a resident of New York State and has
attended an institution in New York State or is a parent of such a
student. It sets a monthly payment at an amount that is income related
based on the household income and family size.  The required payment
under this plan must be lesser than what it would otherwise be paid
under the Standard Repayment Plan with a ten year repayment period.
Partial financial hardship shall mean circumstances in which at the time
the borrower files an individual state tax return, the annual amount due
on all the borrower's eligible loans or at the time the borrower elects
the income based repayment plan, exceeds fifteen percent of the differ-
ence between the borrower's AGI and one hundred fifty percent of the
poverty guidelines for the borrower's family size. The commissioner will
make the determination as to whether a borrower qualifies for partial
hardship based on disclosure of the AGI and other tax information as
well as annually certifying the borrower's family size. A borrower's
aggregate income based monthly loan payment may fluctuate, that is
increase or decrease annually based on changes to the AGI and family
size. To qualify for loan forgiveness after the ten years, a borrower
must have participated in the income based repayment plan and while
employed full time will have made one hundred twenty on-time and sepa-
rate monthly payments beginning October 1st, 2007, on the loans for
which forgiveness requalifies. Any amount that is forgiven may be
subject to the New York state income tax if there is a balance remaining
at the end of the repayment period.

 
JUSTIFICATION:

It is known that currently over seventy percent of students take out a
student loan so that they can attend college. A college graduate has an
average debt of $30,000.00. Student loan debt can be a road block
preventing a graduate from purchasing a home, purchasing a car, building
a savings for retirement forcing many students to reside with their
parents longer than they initially expected. This can also lead to
possible garnished wages and income tax returns seized by the government
or money taken from Social Security checks.  Statistics show over 40
million Americans have incurred a student loan debt. Recent studies show
that 1 out of every 7 students default on their student loan within
three years of beginning repayment.  Many recent college graduates find
themselves to be underemployed immediately following graduation. Secur-
ing a job becomes increasingly difficult for recent graduates. For some
if they do find a job they are restricted to a low wage position or
sometimes even working a part time job. Statistics show the 56% of
recent college graduates are underemployed and working only on a part
time basis.  Education majors and health majors have the lowest unem-
ployment rate at 3 to 4%. Architecture and construction majors have an
unemployment rate of 8%. Liberal arts and social sciences major face a 7
to 8% unemployment rate. Studies show that for technology majors only
38% are working in a job that required a bachelor's degree. Among commu-
nication, liberal arts, business, and social sciences majors only 40 to
45% were working in jobs that required a bachelor's degree.  A survey
conducted on workers who graduated in the past 2 years showed many
recent graduates to hold a large amount of debt from their student loans
and are in jobs that do not require a college degree. Only 53% of gradu-
ates were able to get a full time position in their field of study.
There is also a gap in regards to anticipated earning upon graduation
versus their actual salary. Fifteen percent of graduates think they will
earn less than $25,000.00 a year while one a third of recent college
graduates make that amount or less than that amount. It's estimated that
for borrowers who started repayment in 2011 650,000 have already
defaulted on their student loans by 2013.

 
PRIOR LEGISLATIVE HISTORY:

2015-16: S.4624/A.6605 - Referred to Higher Education
2017-18: A7318-Referred to Higher Education

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall become

2019-S6634 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6634
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               July 19, 2019
                                ___________
 
 Introduced  by Sen. MARTINEZ -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the education law, in relation  to  creating  an  income
   driven repayment plan for private student loans held by New York state
   banking institutions

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The education law is amended by adding a new section  681-b
 to read as follows:
   §  681-B. INCOME-BASED REPAYMENT PLAN. 1. DEFINITIONS. AS USED IN THIS
 SECTION:
   (A) "ADJUSTED GROSS INCOME" OR "AGI" SHALL  MEAN  THE  ADJUSTED  GROSS
 INCOME  AS  REPORTED ON THE BORROWER'S LATEST AVAILABLE STATE INCOME TAX
 RETURN SUBJECT TO ANY SUBSEQUENT AMENDMENTS OR REVISIONS. FOR A  MARRIED
 BORROWER,  FILING JOINTLY, AGI INCLUDES BOTH THE BORROWER'S AND SPOUSE'S
 INCOME. FOR A MARRIED BORROWER FILING SEPARATELY, AGI INCLUDES ONLY  THE
 BORROWER'S INCOME.
   (B)  "ELIGIBLE LOAN" SHALL MEAN ANY OUTSTANDING LOAN MADE BY A PRIVATE
 LENDER THROUGH A NEW YORK BANKING INSTITUTION TO  A  STUDENT  WHO  IS  A
 RESIDENT OF AND HAS ATTENDED AN INSTITUTION IN THIS STATE OR A PARENT OF
 SUCH A STUDENT.
   (C) "FAMILY SIZE" SHALL MEAN THE NUMBER THAT IS DETERMINED BY COUNTING
 THE  BORROWER,  THE  BORROWER'S  SPOUSE,  AND  THE  BORROWER'S CHILDREN,
 INCLUDING UNBORN CHILDREN WHO WILL BE BORN DURING THE YEAR THE  BORROWER
 CERTIFIES  FAMILY  SIZE,  IF  THE  CHILDREN RECEIVE MORE THAN HALF THEIR
 SUPPORT FROM THE BORROWER. A BORROWER'S FAMILY SIZE INCLUDES OTHER INDI-
 VIDUALS IF, AT THE TIME THE BORROWER CERTIFIES FAMILY  SIZE,  THE  OTHER
 INDIVIDUALS:
   (I) LIVE WITH THE BORROWER; AND
   (II)  RECEIVE  MORE THAN HALF THEIR SUPPORT FROM THE BORROWER AND WILL
 CONTINUE TO RECEIVE THIS SUPPORT FROM THE  BORROWER  FOR  THE  YEAR  THE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD06027-02-9

 S. 6634                             2
 
 BORROWER  CERTIFIES  FAMILY  SIZE. SUPPORT INCLUDES MONEY, GIFTS, LOANS,
 HOUSING, FOOD, CLOTHES, CARE, MEDICAL AND DENTAL CARE,  AND  PAYMENT  OF
 COLLEGE COSTS.
   (D) "PARTIAL FINANCIAL HARDSHIP" SHALL MEAN A CIRCUMSTANCE IN WHICH:
   (I) FOR AN UNMARRIED BORROWER OR A MARRIED BORROWER WHO FILES AN INDI-
 VIDUAL  STATE  TAX  RETURN,  THE ANNUAL AMOUNT DUE ON ALL THE BORROWER'S
 ELIGIBLE LOANS, AS CALCULATED UNDER A TEN-YEAR STANDARD  REPAYMENT  PLAN
 USING  THE  GREATER OF THE AMOUNT DUE AT THE TIME THE BORROWER INITIALLY
 ENTERED REPAYMENT OR AT THE TIME THE BORROWER  ELECTS  THE  INCOME-BASED
 REPAYMENT  PLAN,  EXCEEDS  FIFTEEN PERCENT OF THE DIFFERENCE BETWEEN THE
 BORROWER'S AGI AND ONE HUNDRED FIFTY PERCENT OF  THE  POVERTY  GUIDELINE
 FOR THE BORROWER'S FAMILY SIZE; OR
   (II)  FOR  A MARRIED BORROWER WHO FILES A STATE TAX RETURN WITH HIS OR
 HER SPOUSE, THE ANNUAL AMOUNT DUE ON  ALL  OF  THE  BORROWER'S  ELIGIBLE
 LOANS  AND,  IF  APPLICABLE,  THE SPOUSE'S ELIGIBLE LOANS, AS CALCULATED
 UNDER A TEN-YEAR STANDARD REPAYMENT  PLAN,  USING  THE  GREATER  OF  THE
 AMOUNT  DUE  AT THE TIME THE LOANS INITIALLY ENTERED REPAYMENT OR AT THE
 TIME THE BORROWER OR SPOUSE  ELECTS  THE  INCOME-BASED  REPAYMENT  PLAN,
 EXCEEDS  FIFTEEN  PERCENT  OF  THE DIFFERENCE BETWEEN THE BORROWER'S AND
 SPOUSE'S AGI, AND ONE HUNDRED FIFTY PERCENT OF THE POVERTY GUIDELINE FOR
 THE BORROWER'S FAMILY SIZE.
   (E) "POVERTY GUIDELINE" SHALL MEAN THE INCOME CATEGORIZED BY THE STATE
 AND FAMILY SIZE IN THE POVERTY  GUIDELINES  PUBLISHED  ANNUALLY  BY  THE
 UNITED  STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES AND POSTED ON THE
 NEW YORK STATE DEPARTMENT OF HEALTH'S WEBSITE.
   2. QUALIFICATIONS. (A) THE  COMMISSIONER  SHALL  DETERMINE  WHETHER  A
 BORROWER  HAS  A  PARTIAL  FINANCIAL HARDSHIP TO QUALIFY FOR THE INCOME-
 BASED REPAYMENT PLAN FOR THE YEAR THE BORROWER SELECTS THE PLAN AND  FOR
 EACH SUBSEQUENT YEAR THAT THE BORROWER REMAINS ON THE PLAN. TO MAKE THIS
 DETERMINATION, THE COMMISSIONER SHALL REQUIRE THE BORROWER TO:
   (I)(A) PROVIDE WRITTEN CONSENT FOR THE DISCLOSURE OF THE AGI AND OTHER
 TAX  RETURN INFORMATION BY THE DEPARTMENT OF TAXATION AND FINANCE TO THE
 COMMISSIONER. THE BORROWER SHALL PROVIDE CONSENT BY  SIGNING  A  CONSENT
 FORM AND RETURNING IT TO THE COMMISSIONER;
   (B)  IF A BORROWER'S AGI IS NOT AVAILABLE OR THE COMMISSIONER BELIEVES
 THAT THE BORROWER'S REPORTED AGI DOES NOT REASONABLY REFLECT THE BORROW-
 ER'S CURRENT  INCOME,  THE  COMMISSIONER  MAY  USE  OTHER  DOCUMENTATION
 PROVIDED BY THE BORROWER TO VERIFY INCOME; AND
   (II)  ANNUALLY  CERTIFY  THE  BORROWER'S  FAMILY SIZE. IF THE BORROWER
 FAILS TO CERTIFY FAMILY SIZE, THE COMMISSIONER ASSUMES A FAMILY SIZE  OF
 ONE FOR THAT YEAR.
   (B)  A  BORROWER'S AGGREGATE MONTHLY LOAN PAYMENT BASED ON THE BORROW-
 ER'S INCOME-BASED REPAYMENT PLAN MAY INCREASE OR DECREASE  ANNUALLY  DUE
 TO CHANGES IN THE BORROWER'S AGI AND FAMILY SIZE.
   3. TERMS OF REPAYMENT PLAN. (A) A BORROWER MAY SELECT THE INCOME-BASED
 REPAYMENT  PLAN  ONLY  IF THE BORROWER HAS A PARTIAL FINANCIAL HARDSHIP.
 THE BORROWER'S AGGREGATE MONTHLY LOAN PAYMENTS ARE LIMITED  TO  NO  MORE
 THAN  THE ANNUAL AMOUNT DUE BASED ON A TEN-YEAR STANDARD REPAYMENT PERI-
 OD.
   (B) IF A BORROWER'S AGGREGATE MONTHLY LOAN PAYMENTS BECOME LARGER THAN
 THOSE CALCULATED ON A TEN-YEAR STANDARD  REPAYMENT  PLAN,  A  BORROWER'S
 AGGREGATE  MONTHLY  LOAN PAYMENT SHALL NO LONGER BE CALCULATED ACCORDING
 TO THE BORROWER'S AGI AND FAMILY SIZE. THE BORROWER'S AGGREGATE  MONTHLY
 LOAN  PAYMENT  WILL  BE CALCULATED UNDER THE TEN-YEAR STANDARD REPAYMENT
 PLAN, THE AMOUNT OF WHICH SHALL BE EQUAL  TO  THE  BORROWER'S  AGGREGATE

 S. 6634                             3
 
 MONTHLY  LOAN  PAYMENT  AT  THE TIME THE BORROWER INITIALLY SELECTED THE
 INCOME-BASED REPAYMENT PLAN.
   4.  LOAN  FORGIVENESS.  (A)  TO QUALIFY FOR LOAN FORGIVENESS AFTER TEN
 YEARS, A BORROWER MUST HAVE PARTICIPATED IN THE  INCOME-BASED  REPAYMENT
 PLAN AND SATISFIED THE FOLLOWING CONDITIONS DURING THAT PERIOD:
   (I)  WHILE  EMPLOYED  FULL  TIME, THE BORROWER MADE ONE HUNDRED TWENTY
 ON-TIME AND SEPARATE MONTHLY PAYMENTS AFTER OCTOBER FIRST, TWO  THOUSAND
 SEVEN ON THE LOANS WHICH THE BORROWER IS REQUESTING TO BE FORGIVEN.
   (II) ALL PAYMENTS MUST HAVE BEEN MADE NO LATER THAN FIFTEEN DAYS AFTER
 THE  REQUIRED  DUE  DATE  AND MUST HAVE BEEN PAID FOR THE FULL SCHEDULED
 AMOUNT.
   (B) ANY AMOUNT THAT IS FORGIVEN MAY  BE  SUBJECT  TO  NEW  YORK  STATE
 INCOME  TAX  IF THERE IS A BALANCE REMAINING AT THE END OF THE REPAYMENT
 PERIOD.
   § 2. This act shall take effect on the ninetieth day  after  it  shall
 have become a law.

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