Governor Hochul Signs Legislation Ending the Practice of Charging Additional Fee on Outstanding Student Debt
Governor Kathy Hochul signed legislation ending the practice of charging an additional fee to debtors when collecting outstanding debts owed to the State resulting from educational expenses. Prior to this law, a fee of 22 percent was added by state law on top of the total debt due.
“When students across New York spoke up about the difficulties of digging out of debt, my administration listened,” Governor Hochul said. “By signing this legislation, we are removing a barrier to higher education and ensuring that students can graduate without debilitating debt that has disproportionately hurt students least able to afford it. Every New Yorker deserves access to a quality education without fear of getting trapped in a cycle of debt.”
Legislation (S.7862B/A.10261) adds a provision to the state finance law prohibiting state agencies from collecting a 22 percent fee when enforcing debt collection on educational debt. Various state agencies collect educational debts owed to the State, and when unable to collect through traditional means, these debts may be referred to the Office of the Attorney General’s Civil Recoveries Bureau. Prior to the signing of this legislation, state law provided that the Attorney General recover its costs in pursuing collection of this educational debt through an additional fee of up to 22 percent of the outstanding debt; That fee was then added on top of the total debt due, which substantially increased the amount owed by student debtors.
State Senator Jamaal T. Bailey said, “Every New Yorker deserves a high-quality, affordable education. Student debt should not be a barrier preventing students from meeting their full potential, yet, far too often, students are forced to take on crushing debt to pursue opportunities in higher education. I am proud to sponsor S7862, which will make an affordable education more accessible to New Yorkers by removing the twenty-two percent collection fee on outstanding student debt. This legislation will remove the additional fees and costs that pile onto a student’s total debt, decrease the amount of money borrowers pay overtime, and eliminate the additional burden to students who are already struggling to pay massive amounts of debt. Thank you Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins, Assembly Speaker Carl Heastie, Assemblyman Kenneth Zebrowski for championing this critical legislation in the Assembly, and my colleagues in both houses for their support to bring urgently needed relief to students and curb the growing student loan debt crisis.”
Assemblymember Kenneth Zebrowski said, “The current 22 percent fee on student loan debt imposed on SUNY students who have fallen behind on payments is crushing. As the federal government works to lessen the burden on student loan borrowers, it is important that New York do the same. This law will help accomplish that goal and provide real relief to borrowers. I thank Governor Hochul for signing this bill into law to ensure individuals are able to pay off their student loan debt without exorbitant penalties.”
