Gov. Andrew M. Cuomo has announced a series of reforms aimed at helping students navigate loans for college.
Cuomo also vowed to put new protections in place to ensure that those who take out student loans are treated fairly by banking institutions.
If successful, the reforms could have a significant impact in Western New York, where a 2015 Buffalo News analysis found that two-thirds of all freshmen enrolled in the area’s four-year colleges and universities took out student loans in their first year. The review of federal data showed that those loans amounted to an average of $7,900 per student in 2012-13 – double what area freshmen had borrowed a decade earlier.
The average freshman loan amounts of area students grew even faster at community colleges, climbing to $4,512 from $2,001, during the same span. The increases in borrowing amounts outpaced the average rise in costs of attending the schools, The News' analysis found.
The proposal to deal with student loans is the 16th of Cuomo's 2018 State of the State agenda aimed at addressing the crushing burden of student loan debt. At a time where a college education is more important than ever, the governor said the new reforms are vital. His proposal builds off of the Governor's Excelsior Scholarship, a program that is unique to New York State, which makes public universities tuition-free for middle class families.
"Today, a college education is a necessity for a middle class life, yet the crushing weight of student loan debt often keeps New Yorkers from buying homes, cars and ultimately limits their ability to save money and invest in their futures," Cuomo said in a prepared statement.
Nationally, student loan debt is the second highest debt category in the United States after mortgage debt, accounting for 10 percent of debt balance and amounting to $1.48 trillion nationwide. In New York, the average student loan burden is more than $30,000, according to the governor's office.
Cuomo is proposing to create a Student Loan Ombudsman at the state Department of Financial Services to help resolve student complaints, mediate disputes and educate borrowers about student loans. The ombudsman will also offer free financial counseling and assistance for students in default.
The governor is also proposing to require that all colleges annually provide students with the estimated amounts incurred for student loans. The proposal expands on the Governor's Financial Aid Award Information Sheet that helps inform students of their college costs prior to going to college.
Cuomo also is proposing that no student loan servicers or debt consultants can mislead a borrower or engage in any predatory practices, and a prohibition on suspending professional licenses of individuals behind or in default on their student loans.