Right and wrong.
Yes, you must maintain a minimum GPA and complete the program in a timely manner. "Professional students" and "partiers" need not apply.
No, you do not have to stay in NY for 5 years; however, you do have to stay one year for every year of assistance that you receive. This was a last minute add to the law made by the Assembly, not the Governor, and amounts to little more than workforce development. Failure to comply will result in the aid being converted to a loan.
Roughly 85% of all graduates stay upon graduation so it a moot point for most.
The plan does provide inverse assistance, benefiting those who really don't need it, and does not pay for room, board, books or other supplies. 529's can be used to offset these costs or, ideally, the students would continue to live at home, thereby truly making their college experience as debt free as possible.
The plan does not extend to private schools nor can it be used for post graduate studies.