The New York Senate passed a bill on Tuesday that would allow a debt-issuing authority to sell up to $750 million of bonds to make student loans for higher education. The bill was delivered to the Assembly, but there is no sponsor in that chamber for the bill, making its future uncertain as the 2008 legislative session nears its end on June 23.
Sen. Kenneth LaValle, R-Port Jefferson, sponsored the bill, which would enact the "I Live New York" program that would provide low interest loans to residents who are full-time students at a college or university in the state. LaValle is the chairman of the Senate Higher Education Committee.
Although the bill itself did not specify an issuer, a press release identified the Dormitory Authority of the State of New York as the proposed issuer. The loans would be serviced and administered by the New York State Higher Education Services Corp., a state agency that guarantees federal student loans and administers the state's federally funded Tuition Assistance Program.
"The I Live New York program would provide students and families with access to low-cost loans to help close the gap between financial aid and the cost of attendance and allow college graduates to be able to afford to contribute to the local economies in New York State," LaValle said in the release.
The proposal comes at a time when the credit crunch threatens to curtail the availability of student loans. A Moody's Investors Service report last week stated that lower lender discounts and higher cost of capital for lenders would likely increase the cost of borrowing for students.
About 75% of states in the country offer college students a low-cost student loan program, but New York currently does not, according to the release.
"The Dormitory Authority is prepared to serve if the Legislature and the governor establish a low-cost college loan fund for New York to be funded with tax-exempt bonds," DASNY spokesman Marc Violette said in an e-mail.