In an effort to address mounting concerns surrounding student loan debt, New York Governor Andrew Cuomo recently proposed a plan to provide two years of loan payments for graduates of New York colleges who remain in the state earning their degree and make less than $50,000 per year. The New York Get On Your Feet Forgiveness program has been approved by the state budget and will not only benefit the state of New York, but will also serve as an example for other states searching for ways to help reduce the national student debt burden.
Student Debt in New York is a Major Issue
According to the Institute for College Access and Success, about 60 percent of graduates of public or private colleges in New York State leave school with student debt. Further, the amount of debt they carry with them is not insignificant; the average loan balance per graduate was $26,381. At Credible, we have seen hundreds of graduates from New York come to our site looking for ways to save on their monthly payments and reduce interest rates, demonstrating the clear need for Governor Cuomo's program.
Governor Cuomo's Plan Will Help Low Income Graduates
Under Governor Cuomo's proposal, New York State will cover a graduate's student loan payments for the first two years after graduation -- adding up to about $3,500 in total savings per graduate.
In order to qualify for the program, students must:
- Have graduated from a 2-year or 4-year degree program in 2015 or later.
- Have earned their degree in New York State.
- Live and work in New York after graduation.
- Make no more than $50,000 per year.
Governor Cuomo's office believes that the plan will assist approximately 24,000 recent graduates each year.
How Governor Cuomo's Plan Will Benefit the State
Of course, helping graduates repay their student debt will be costly. It is estimated that by 2020, the plan will cost New York State $41.7 million a year. However, the plan does have a number of benefits:
- Reduces debt for graduates: Those who qualify for the program will have higher disposable incomes to fuel New York's economy, and will start their careers on the right foot.
- Increases mortgage qualification: Graduates with lower student debt levels may have the opportunity to prepare for homeownership sooner than they would otherwise. A 2014 study showed that recent graduates with student loans needed to earn 34% more than those without in order to afford a median-priced home.
- Improves the quality of the workforce: Since students are required to remain in the state to participate, the quality of the state's workforce will improve as the portion of labor force participants with higher degrees increases.
Which Other States Should Adopt a Similar Plan?
We have helped thousands of graduates across the country in their search for student loan relief options. Governor Cuomo has created a compelling plan for recent graduates in New York, and it is clear that a similar strategy for tackling student debt would benefit other states across the country.
States with relatively low unemployment rates for recent graduates and high average student debt balances would be most likely to benefit from a similar student debt assistance plan. For comparison, the average student debt in New York is $26,381 with an unemployment rate of 15.7% for those under 25.
Based on these metrics, here are our top five states that should adopt a similar plan:
1) New Hampshire:
Unemployment rate (under 25): 12.20%
Average student loan balance (ranked highest to lowest): $32,795 (1)
2) Minnesota:
Unemployment rate: 9.80%
Average student loan balance: $30,894 (5)
3) Iowa:
Unemployment rate: 9.50%
Average student loan balance: $29,370 (9)
4) Pennsylvania:
Unemployment rate: 15.50%
Average student loan balance: $32,528 (3)
5) Delaware:
Unemployment rate: 15.40%
Average student loan balance: $32,571 (2)
See the full rankings here