The governor of New York yesterday signed a bill into law that will eliminate a 22% collection fee on student loans owed to the state.
The fee was added when unpaid student loan debts were referred to the Office of the Attorney General’s Civil Recoveries Bureau. Debts were referred there by various state agencies charged with collecting on student loans owed to the state that were deemed to be uncollectible. The 22% fee allowed the AG’s office to recover its costs when pursuing collection efforts from students who did not pay their loans. The fee was added to the total debt due and “substantially increased” the amount that was owed.
A copy of the bill can be accessed by clicking here.
“When students across New York spoke up about the difficulties of digging out of debt, my administration listened,” Gov. Kathy Hochul said in a statement. “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.”
Last year, Letitia James, the Attorney General of New York, vowed to overhaul student loan collection practices in the state, including ending a practice that allowed the AG’s office to file collection lawsuits on unpaid student loans in Albany, regardless of where the student resided. Many of the 16,000 students who were sued were unable to make it to Albany and had default judgments entered against them.