The New York Public Interest Research Group and the Schuyler Center for Analysis and Advocacy are criticizing a new program that the 2009-10 state budget—which lawmakers are in the process of voting on—would set up. The New York Higher Education Loan program (HELPs), which would cost $50 million to set up and $10 million annually after that, is a “poorly structured program with few safeguards for student borrowers,” the Schuyler Center said in a statement.

“New York should not launch the nation’s most expensive state student loan program in the middle of the worst labor market for college graduates in a half century,” said Karen Schimke, Schuyler’s president and CEO. The group is a non-profit policy and advocacy group. “We are going to bury those students in debt that will follow them for years to come.”

Gov. David Paterson proposed NYHELPs in his budget. In a news release this week, the governor’s administration said the initiative would provide a minimum of $350 million in loans to 45,000 resident students in degree-granting programs.

Fran Clark, NYPIRG program coordinator, said setting up NYHELPs “without writing basic borrower protections into the law is a big mistake. With decisions about interest rates, fees, payment plans, etc. being made in regulation, it will be hard for legislators to ensure that the terms of NYHELPs loans protect students rather than banks or bond issuers.”

There is no safeguard in NYHELPs to ensure that students don’t forego “cheaper, safer” federal Parent PLUS loans in favor of borrowing from NYHELPs, Clark said.

According to the Schuyler Center, NYHELPs would drive New York into competition with Parent PLUS and result in the state’s taking on costs and risks that the federal government would bear under Parent PLUS. Interest rates, which are at historic rates now, are likely to rise sharply over time, the group said.

The State University of New York Student Assembly said in a statement that is was pleased with the NYHELPs program and some other aspects of the negotiated budget, such as restoration of 10 percent in proposed cuts to community colleges and the restoration of a proposed cut in the Tuition Assistance Program for needy students.

NYHELPs “will act as an additional, reliable and affordable mechanism for students to help pay for college,” the Student Assembly said.

The Student Assembly criticized the budget because it reduces state funding for SUNY by 80 percent of the amount of money a tuition increase brought in. In other words, SUNY is receiving 20 percent of the tuition hike. Students said they are unhappy with the decision to sweep $40 million from campus accounts that include student fees paid directly to SUNY schools for services like technology, parking and student activities.

Melody Mercedes, president of the Student Assembly and a SUNY trustee, thanked state leaders for addressing many of the students’ concerns.

“However, our largest concerns were not addressed, and we will continue to pursue those avenues in the future. Tuition was granted a path of ‘systematic theft,’ and that is simply unacceptable,” said Mercedes, a University of Buffalo senior who originally is from Yonkers.