On December 22, 2021, New York State Senate Bill 2767A was signed into law. The Bill establishes the Private Student Loan Refinancing Task Force (the “Task Force”), which was charged with “study[ing] and analyz[ing] ways lending institutions that offer non-federal student loans to students of New York institutions of higher education can be incentivized and encouraged to create student loan refinance programs.” As part of that directive, on November 8, 2022, the Task Force requested information from “interested stakeholders” concerning private-sector refinancing of student loans. Responses are requested by December 8, 2022. That won’t give the Task Force much time to “study and analyze” the responses, as its report to the Governor and Legislature must be submitted no later than December 31, 2022.
Contained in the Task Force’s information request is a lengthy list of questions, which include:
- What options are available for student loan borrowers to refinance private student loans both in New York State and outside the state? Who is offering these loans? What are the terms? Are they limited to certain types of student loans?
- What is the volume of private student loans refinanced, the terms of the borrowers’ prior loans, the terms of the borrowers’ refinancing loans, the unmet need for student loan refinancing, and the impact of these refinancing loans in New York and nationwide?
- How does the prospect of government loan forgiveness or cancellation affect student loan refinancing?
- How and to whom is student loan refinancing currently marketed in New York State?
- What disclosures are made to borrowers who refinance into private loans, including disclosures concerning the effects of refinancing and the potential loss of any benefits on borrowers who refinance their federal loans? What disclosures should be required?
- What can the public or private sectors do to make safe and affordable private student loan refinancing more accessible to borrowers?
- Are there any statutory or regulatory actions that could make private student loan refinancing safer, more affordable, and more accessible? Are there other programs or public incentives that could make private student loan refinancing safer, more affordable, and more accessible? What are the estimated costs, benefits, outcomes, and other effects of these programs?
While the final result of the Task Force’s review is yet to be determined, other states have recently looked at issues surrounding the private refinancing of student loans. In 2021, Maine passed disclosure requirements addressing the refinancing of education loans into private education loans. Specifically, the law requires the lender to provide the borrower with a disclosure that the benefits and protections applicable to the existing loan may be lost due to the refinancing. See Me. Rev. Stat. tit. 9-A, § 16-103(b) and applicable FAQs. It would not be surprising to see New York reach a similar conclusion.