Hochul signs legislation ending practice of charging additional fee on outstanding student debt

Legislation ends 22% fee on outstanding debt owed to state resulting from educational expenses, and ‘punitive’ law that prohibits students from clearing debts

Gov. Kathy Hochul has signed legislation (S.7862B/A.10261) 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% 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," 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."

Hochul’s team said, “Legislation (S.7862B/A.10261) adds a provision to the state finance law prohibiting state agencies from collecting a 22% 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% 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.”