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December 16, 2008
CONTACT: Jeffrey Gordon


For the First Time in Decades, SUNY and CUNY Tuition Increase Tied to Investment Plan

Governor David A. Paterson today announced that his Executive Budget proposal will establish a new program that will provide approximately 45,000 New Yorkers with at least $350 million in student loans annually. Additionally, for the first time in at least thirty years, the Executive Budget includes a tuition increase that would provide increased investment in the SUNY and CUNY systems of more than $62 million over the next two years.

“During difficult times, it becomes even more crucial to provide a quality, affordable higher education to all New Yorkers who seek it,” Governor Paterson said. “Despite a grim financial picture, this budget provides increased investment in our public universities and new tools for aspiring students to affordably finance their educations.”

New York Higher Education Loan Program (NY HELPs)

Based on the recommendations of the New York State Commission on Higher Education, the Executive Budget would establish the New York Higher Education Loan Program (NY HELPs). This initiative would provide, on an annual basis, a minimum of $350 million in loans to 45,000 resident students enrolled in a degree-granting program at a college or university in New York State.

“In a time of rising borrowing costs and tightening lending by private banks, this new lower-interest student loan program I have proposed will help ensure New Yorkers have access to the funds they need to finance their college educations,” said Governor Paterson. “Under this program, thousands of students will be eligible for affordable loans, helping our State retain the best and the brightest young minds as we seek to return New York to economic prosperity.”

NYHELPs is a partnership between the State, private lenders and higher education institutions. A private lender would originate the loan, which the State of New York Mortgage Agency (SONYMA) would then purchase with funds raised by issuing bonds. In 2009-10, SONYMA will issue $350 million in tax-free bonds to finance new fixed rate loans of up to $10,000 per borrower. The debt service on the bonds and administration costs would be paid by the borrowers. The program also allows for an unlimited amount of variable rate loans at similarly affordable rates, which would be originated and held by private lenders.

Maximum cumulative awards through NYHELPS would total $20,000 for undergraduates at a two-year institution, $50,000 for undergraduates at a four-year institution, and $70,000 for combined undergraduate and graduate studies.

The borrower’s interest rate is expected to be approximately 8 percent. This rate compares favorably with other State and federal programs, and is up to 10 percentage points lower than the current rates for conventional private bank loans. As the program continues, the interest rates for NYHELPs loans will vary based on market conditions, but they are always expected to be lower than conventional private student loan rates for the vast majority of borrowers.

The 2009-10 Executive Budget provides an initial $50 million investment to help capitalize a default reserve fund that is a critical element of the program’s structure. The default reserve fund will also receive borrower fees, as well as contributions from participating higher education institutions that are equal to one percent of their students’ loan dollar volume. Beginning in 2010-11, the State expects to contribute $10 million annually to the default reserve fund.

Affordable Tuition Increase Tied to Investment Plan

To help prevent further reductions in the resources available for SUNY’s and CUNY’s core instructional mission in this time of fiscal crisis, the Executive Budget recommends the first undergraduate tuition increase for these institutions since 2003-04. Both the SUNY and CUNY Boards of Trustees have already approved this proposal.

The SUNY Board increased undergraduate tuition by $620 (14 percent) from $4,350 to $4,950 per year, graduate tuition by 14 percent annually, and non-resident undergraduate and graduate tuition by 21 percent annually. These increases are effective beginning in the Spring 2009 semester. The 2009-10 Executive Budget also recommends that the SUNY Board increase resident graduate tuition by an additional 7 percent, effective with the fall 2009 semester.

The CUNY Board authorized increasing undergraduate tuition by up to $600 (15 percent), from $4,000 to up to $4,600 per year. Additionally, CUNY graduate tuition would increase by 20 percent. These increases are effective in the 2009-10 academic year.

For the first time in at least thirty years, the Executive Budget recommends that these tuition increases be tied to an investment plan. Breaking with the State’s more than 30-year practice of using 100 percent of the revenue from tuition increases to offset General Fund spending, SUNY would retain 10 percent ($7.6 million) of the fiscal benefit from the 2008-09 spring semester increase for enhanced investment. SUNY and CUNY would both retain 20 percent of the 2009-10 full annual increase ($33 million for SUNY, $22 million for CUNY). In the future, as economic and fiscal conditions improve, the State will seek to provide 50 percent of the fiscal benefit from this tuition increase to these institutions.

The new recommended resident undergraduate tuition rates will remain affordable and are below 2003-04 levels after adjusting for inflation. Additionally, SUNY and CUNY resident undergraduate tuition and fee rates would remain below those at all public colleges in the Northeast and Mid-Atlantic region, as well as the national average. Even after this increase, SUNY and CUNY resident undergraduate tuition would be below the $5,000 maximum threshold for Tuition Assistance Program (TAP) awards, ensuring that the neediest students would have their entire tuition costs covered.

“The affordable tuition increase included in this budget will mean greater support for SUNY and CUNY, while minimizing further reductions in aid to higher education at a time of unprecedented fiscal difficulty,” said Governor Paterson. “The initiative I have put forward strikes a balance between providing both increased investment for New York’s system of public colleges and universities and fiscal relief to the State during one of the greatest budget crises of our lifetime.”

Other major Executive Budget proposals in the area of higher education include:

  • Tuition Assistance Program (“TAP”) Adjustments: The Executive Budget proposes several actions to help control costs in the TAP program and provide 2009-10 savings of $47 million ($66 million on an Academic Fiscal Year basis), while still ensuring access to higher education for lower-income students. These include raising the number of credits (from 9 to 15) that non-remedial students must earn after two semesters and increasing the minimum GPA (from 1.2 to 1.8) necessary to remain eligible for TAP awards. Additionally, among other actions, public sector pension income would be used in calculating TAP award eligibility. Currently, only private sector pension income is included in TAP award eligibility determinations.
  • Assess SUNY/CUNY Research Foundations for Use of University Facilities: The Executive Budget assumes that SUNY and CUNY will require their respective private, non-profit research foundations to pay an amount equivalent to 10 percent ($10 million) of their indirect cost recoveries on federal grants as partial reimbursement for using State-funded facilities. General Fund support is reduced by a commensurate amount.
  • Reduce Subsidy for SUNY Hospitals: The Executive Budget includes $129 million for annual subsidy payments to SUNY’s hospitals at Brooklyn, Stony Brook and Syracuse. This reflects a $25 million reduction from the 2008-09 Academic Fiscal Year level.
  • Eliminate State Support for SUNY’s Neil D. Levin Institute: The Levin Institute was established in 2002, but has yet to become accredited or enroll students of its own. This proposal would eliminate State support for this program, providing savings of $3.1 million in the 2009-10 Academic Fiscal Year. The building will retain the name of Neil D. Levin and it is expected that the SUNY Board of Trustees will take appropriate action to ensure that Mr. Levin’s service and sacrifice continues to be recognized.

A full list of higher education programs impacted by the Executive Budget can be found at: