Bill > S00861

This bill establishes the New York College Debt Repayment Program, a tax-advantaged savings program designed to help New York residents manage higher education expenses. The program allows individuals to contribute funds to an account for a designated beneficiary (such as a family member) to pay off educational debt, with contributions growing tax-deferred and withdrawals for qualified education expenses exempt from state and federal income tax. Participants must make an initial investment of at least $25 and can contribute up to $375,000, with individual taxpayers able to deduct up to $5,000 annually (or $10,000 for married couples filing jointly). The program includes several key restrictions: contributors can only direct investments twice per calendar year, the funds cannot be used as loan collateral, and any withdrawal for non-qualified expenses will incur a 10% penalty tax plus standard income taxes. The program also offers age-based investment options similar to New York's existing 529 college savings program, and provides flexibility for changing beneficiaries within a family. Contributions are treated as completed gifts, and the program aims to provide a structured, tax-efficient method for families to save and manage educational debt.

Education

https://www.nysenate.gov/legislation/bills/2025/S861