When it comes to student-loan debt, state governments don’t usually help a lot. That’s not surprising because most of the loans come from the federal government, which offers a variety of repayment options. However, New York State’s Higher Education Services Corporation (HECS) initiated a new program at the beginning of the year to help out. It’s called the Get on Your Feet Loan Forgiveness Program (GOYF Program), and it offers to pay for up to 24 months of student debtors’ bills.
The program is carefully designed to benefit long-term New Yorkers. Debtors are eligible if they:
(1) Are U.S. citizens or eligible non-citizens,
(2) Graduated from a high school in New York or received their high-school-equivalent degree in New York,
(3) Received an undergraduate degree from a college or university in New York during or after the 2014-15 academic year,
(4) Apply within two years of receiving their undergraduate degrees,
(5) Obtained nothing more than a bachelor’s degree anywhere,
(6) Have resided in New York for 12 months,
(7) Work primarily in New York State,
(8) Be current on their student loans or New York State awards (and still be within their terms and conditions),
(9) Be enrolled in a federal income-based repayment plan, and
(10) Have an adjusted gross income below $50,000.
More information can be found on the HECS Web site.
There are less obvious catches to the GOYF Program. First of all, like the loan-cancellation benefits of most income-based repayment plans, GOYF Program payments are not tax free. That means debtors will receive Form 1099-C from the state notifying them that the payments are considered income and will be taxed accordingly.
Second, student loans from private lenders and federal Parent PLUS loans are not covered. Neither type of loan is eligible for an income-based repayment plan, meaning those debtors will not be able to take advantage of the GOYF Program. This is unfortunate because these loans offer few other options for debtors if they run into financial difficulties, including bankruptcy.
According to Syracuse.com, the Cuomo administration expects the program to cost $5 million in its first year and up to $42 million annually once it’s fully implemented. 24,000 graduates are expected to join the 2,500 who have already signed on.
It’s debatable whether this program is really the best kind of aid for student-loan debtors, given that income-based repayment plans are already quite generous. A debtor with an annual adjusted gross income of $50,000 would probably pay at most $3,300 ($275 per month) for student loans while on the Pay-As-You-Earn repayment plan, and many recent college graduates don’t have substantial earnings to begin with. Perhaps the point of the program is to keep New Yorkers in the state.
Nevertheless, the GOYF Program might benefit this particular class of student-loan debtors, so New Yorkers should take advantage of it.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
