Private Education Debt New York

December 20, 2023
By Cornerstone Staff

SB 5056

The private education debt landscape is undergoing transformations, particularly in New York with the introduction of the SB 5056 bill. The proposed legislation has far-reaching implications for private education creditors, especially those involved in the debt collection industry.

The SB 5056 bill aims to establish a Private Education Debt Registry. This registry would require private education creditors to annually register with the Superintendent of Financial Services. The bill outlines various reporting requirements for these creditors, aiming to provide a more transparent and regulated private education debt market.

Reporting Requirements for Creditors

Creditors making, extending, or securing private education debts have specific reporting obligations. They must annually provide detailed information on the private education debts, including:

• The schools associated with the debts
• Total outstanding debt amount and number of consumers
• Total dollar amount and number of debts per school
• Range of starting interest rates and percentage of consumers with those rates
• Overall default rate and default rate per school
• Total dollar amount of debts defaulted for non-payment reasons
• Debts with a cosigner
• Debts used to refinance other debts or federal student loans
• Debts for which the creditor has initiated a lawsuit
• Any additional information deemed necessary by the superintendent
• A copy of any model promissory note or contract used to substantiate a new debt

Private education creditors that acquire or assume private education debts have additional reporting obligations. They must provide similar information as the creditors extending the debts, with additional focus on the total dollar amount and number of debts acquired or assumed in the prior fiscal year.

Higher education providers holding private education debts resulting from unpaid debts not considered credit extensions must also report specific data. This includes the total outstanding dollar amount and number of private debts, number of student accounts with academic holds due to private education debt, and information about federal financial aid returned upon student withdrawal.

Strict Penalties for Non-compliance

The superintendent has the power to levy a civil penalty of up to $10,000 for non-compliance. The superintendent can also prevent a person from operating in the state for up to 10 years.


Certain entities are exempt from being defined as private education creditors under this measure. This includes federally chartered banks, savings banks, savings and loan associations, credit unions, and their wholly-owned subsidiaries.

Status and Outlook

The bill was sent to Governor Kathy Hochul on December 12, 2023. The governor has 10 days, excluding Sundays, to sign or veto the measure. If the governor does not sign the measure, it will be enacted without a signature.

Cornerstone can Help

Understanding the complexities of SB 5056 can feel daunting. However, with Cornerstone’s expertise, we are here to help keep clients in compliance. We simplify and streamline the process, enabling our clients to focus on their core business objectives.

Connect with us for more information on how Cornerstone can assist with your licensing and business needs.


Cornerstone Staff

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