NY State to Pay up to Two Years of Student Loan Debt
January 18, 2015
The NYS Get on Your Feet Loan Forgiveness Program provides up to 24 months of federal student loan debt relief to recent NYS college graduates who are participating in a federal income-driven repayment plan whose payments are generally capped at 10 percent of their discretionary income.
Governor Andrew M. Cuomo today announced the fifth component of his “2015 Opportunity Agenda” – a student loan forgiveness program that will make it easier for recent college graduates to live and work in New York State.
Although SUNY and CUNY offer among the lowest tuition in the nation, currently, the average New York student graduates college with a four-year degree saddled with more than $25,000 in student loans. In fact, 60 percent of students in New York graduate with student debt, with an average debt amount of $25,537. Mounting student debt makes it difficult for recent graduates to deal with the everyday costs of living, which often increases the amount of credit card and other debt they must take on in order to survive.
Graduating from college with unmanageable student loan debt forces graduates, especially low wage graduates, to be faced with difficult choices that can have lasting consequences for them, their families and the New York economy. Because of high student loan debt these graduates are forced to take on other high interest debt to make ends meet creating a vicious cycle where the student can never get out of debt. That, in turn, makes it more difficult to purchase a home, car or have other economic opportunity.
Studies show that students who graduate with debt are less likely to start small business or to purchase a home, and the consequences of defaulting on student loans can prevent a person from ever realizing their goals. Managing the burden in the first years out of college is crucial to starting out strong. In 2008, slightly more than 30% of 27-30 year olds had purchased a house, in 2014 that had fallen to 22%. Similarly, since 2008 the percentage of 27-30 olds who purchased a car has fallen by more than 6%. Helping students at the start can have lasting effects.
The Get on Your Feet Loan Forgiveness Program is designed to help eligible New York State residents who graduate from college and continue to live in the state to pay nothing on their student loans for the first two years out of school. This will supplement the federal Pay As You Earn (PAYE) income-based loan repayment program.
“Student loans are one of the greatest challenges that today’s recent college graduates face when starting their careers – and we must do more to give them a full opportunity to succeed” Governor Cuomo said. “By alleviating the weight of student loan debt, we can give our recent graduates a better shot at establishing themselves right here in the Empire State. I’m proud to include this item in my 2015 Opportunity Agenda as it represents another step forward in our goal of growing economic opportunity for New Yorkers.”
To be eligible for the Governor’s proposal, a student must:
- Attend college in New York and continue to live in the state following graduation;
- Participate in the federal PAYE program; and
- Earn less than $50,000 annually.
When an individual meets these qualifications, New York State will pay the difference between what the federal government covers and the individual’s total loan payment. This means the State will ensure that 100 percent of a graduate’s loan payments for two years are covered so they are not overwhelmed with debt repayments while working to get situated in today’s job market.
An estimated 7,100 graduates will be enrolled in the program in its first year. This estimation is based on the total number of undergraduates per year in New York State, the percentage of those who meet the program eligibility criteria for residency (82%) and the percentage of those with qualifying loan debt and with salaries under $50,000 based on nation data, extrapolated for New York. We expect more than 24,000 participants annually by 2019-20. When fully phased in, the program is expected to cost approximately $41.7 million.
Helping students pay for college is critical to ensuring their success after graduation. When combined with the State’s outstanding Tuition Assistance Program (TAP) – which more than covers the tuition at community colleges in New York – this program will go a long way to help even more students hit the ground running when they graduate.
Governor Cuomo has been fighting for students and graduates struggling with college loans for years. As Attorney General, he led an inquiry into the relationship between colleges and universities and the lending institutions that offered student loans – an investigation that ultimately resulted in nationwide reform.
- be a legal resident of NYS and have resided in NYS for 12 continuous months;
- be a U.S. citizen or eligible non-citizen;
- have graduated from a NYS high school or received a NYS high school equivalency diploma;
- have earned an undergraduate degree from a college or university located in NYS in or after the 2014-15 academic year;
- have earned no higher than a bachelor’s degree at the time of application; and
- apply for this program within two years of receiving an undergraduate degree.
- be enrolled in the federal Income Based Repayment plan or Pay as You Earn plan;
- have a primary work location in NYS, if employed;
- have an adjusted gross income of less than $50,000;