Establishes scholarship programs within the New York 529 program

◆ The sponsor's argument

Why Michael Gianaris says this is needed

This bill authorizes New York's 529 College Savings Program (NY 529 Program or Program) administrators to establish, administer, and fund grant and scholarship programs within the existing framework of NY 529. Under current law, municipalities and Internal Revenue Code 501(c)(3) organizations are authorized to open scholarship accounts within the NY 529 Program; however, this authorization does not extend to the State. This bill authorizes the State to establish grant and scholarship programs modeled after these scholarship programs run by local govern- ments and 501(c)(3) organizations, whereby the identity of grant and scholarship beneficiaries would be determined upon disbursement. NY 529, which is jointly administered by the Comptroller and the New York State Higher Education Services Corporation (HESC), allows program participants to save money for their selected beneficiaries' higher education expenses. The Program enables residents of New York and other states to benefit from the tax incentive provided for qualified state tuition programs under the Internal Revenue Code of 1986. The NY 529 Program has successfully facilitated initiatives with several organizations that have opened and that administer child development accounts within the NY 529 Program. Since 2017, NYC Kids RISE has devel- oped a pioneering Program across New York City leveraging the NY529 Program. Every student in New York City public schools has an opportu- nity to receive an NYC Scholarship Account which is invested in a NY 529 Direct Plan Account. Additional programs serve children in specific neighborhoods or municipalities, but no program serves the entire state. This bill seeks to remove statutory constraints that prevent the State from opening or contributing funds to such child development initiatives through grant funding. This bill would authorize the State to develop and administer its own grant and scholarship programs within the exist- ing framework of the NY 529, modeled after the NYC Kids RISE Save for College Program, thereby providing a pathway for eligible children in New York State to save for higher education expenses. This legislation authorizes NY 529 to utilize administrative fees collected from the NY 529 Program Manager, the vendor that operates the Program on a day-to- day basis, to fund such grant and scholarship programs, and to accept donations into such grant and scholarship accounts from third parties and any State appropriations. This authority would afford New York's 529 College Savings Program a powerful tool to increase awareness of the NY529 Program and to encour- age New York residents to save for the pursuit of higher education goals. Studies show and research confirms that children with dedicated college savings accounts are more likely to attend college than those without such accounts.1 One study by the Center for Social Development of the Washington University in St. Louis showed that children with college savings accounts were six times more likely to attend college than those without an account.2 Further research has shown that low and moderate income children with savings accounts of less than $500 prior to reaching college age were over three times more likely to enroll in college, and four times more likely to graduate from college, than chil- dren with no savings account.3 This bill would authorize the Comptroller to develop and administer grant and scholarship programs within the existing NY 529. Such State- sponsored grant and scholarship programs are in the public interest as they would provide a pathway for eligible children to save for future education and apprenticeship expenses.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.