ALBANY -- Gov. David Paterson is supporting a plan to create low-interest student loans for public and private universities in New York.

The state Commission on Higher Education proposed the subsidized loan program, which would be financed through tax-exempt bonds, in a 105-page report released Monday.

The governor also supports a recommendation to deregulate some areas of the State University of New York system, Paterson spokeswoman Marissa Shorenstein said. The plan would give the SUNY Board of Trustees authority to lease university property without prior legislative approval -- as long as it supports the system's mission.

"Students and their families are facing the prospects of higher and higher interest rates ... it's time to change that," Shorenstein said.

If the Legislature backs the commission's recommendations, hundreds of thousands of students could benefit, she said.

The Senate Republican majority passed a bill in June that would allow the Dormitory Authority to go to the marketplace for $750 million in bonding to support low interest student loans, said Sen. Kenneth LaValle, the Republican chairman of the Senate's Higher Education Committee. The Assembly has not passed a comparable version of the bill.

The state of Texas provides loans to students with interest rates at about 6 percent, while New Yorkers who borrow in the private market must pay between 9 and 12 percent, LaValle said.

Among the commission's other recommendations are:

Expanding the research capacity of schools across the state with a $3 billion Empire State Innovation Fund. The money would be disbursed in equal amounts over 10 years to create grants for research in physical sciences, biology, engineering and medicine.

Adding 2,000 more full-time faculty at the State University of New York and City University of New York and the recruitment of 250 top scholars over five years.

Creating "educational partnership zones" in low-income neighborhoods involving colleges in helping high schools prepare students for higher education.

Allowing SUNY schools and CUNY to set their own tuition levels based on the demand for entrance and their needs. The commission also supports regular, predictable increases in tuition that supporters say help families and colleges plan better.

Giving SUNY more autonomy in construction projects and procurement.