The legislation, which goes into effect April 1, 2023, prohibits state agencies from assessing additional student loan collection fees on outstanding student debts.
10/17/2022 11:00 A.M.
2 minute read
New York Gov. Kathy Hochul signed legislation, S.B. 7862B, last week waiving the 22% collection fee on student-related debt.
The legislation passed both the Assembly and Senate with wide margins in June. The legislation was then delivered to the governor and signed into law on Oct. 12.
The bill, which amends state finance law, is “part of a broader effort to re-examine the debt policies at the state’s university system,” Bloomberg reports. In January, Hochul announced an end to the State University of New York’s practice of withholding transcripts from students with outstanding balances.
“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,” according to a press release from the governor’s office. “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.”
The law takes effect April 1, 2023. You can read the text of the bill here.
While this law applies to state agencies collecting student-related debt, members who work with state agencies in New York in collecting student loan debt to which New York’s State Finance Law, Section 18 applies should take note of the change.
As of April 1, 2023, state agencies collecting debt to which New York’s State Finance Law, Section 18 applies will no longer be able to assess the up-to 22% collection fee previously permitted under that law. It’s unclear how the law applies to accounts for which the collection fee has already been assessed. Debt collectors working on behalf of New York state agencies in collecting debt to which this change applies should consult with their state-agency counterpart, such as the Office of the Attorney General’s Civil Recoveries Bureau.
If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.