§ 630 — Penalties

§ 630. Penalties. 1. If after providing notice and an opportunity for\na hearing the department determines that a covered institution or\nlending institution has violated any terms or provisions of this\narticle, then the covered institution or lending institution may be\nliable for a civil penalty. Regardless of the department's determination\nthat a covered institution or lending institution is liable for a single\nviolation or a series of violations under this article, the maximum\npenalty shall not exceed fifty thousand dollars. In taking action\nagainst a covered institution or lending institution, consideration\nshall be given to the nature and severity of violations of this article.\n 2. If after providing notice and an opportunity for a hearing the\ndepartment determines that a covered institution employee has violated\nany terms or provisions of this article, then the covered institution\nemployee may be liable for a civil penalty. Regardless of the\ndepartment's determination that a covered institution employee is liable\nfor a single violation or a series of violations under this article, the\nmaximum penalty shall not exceed seven thousand five hundred dollars. In\ntaking action against a covered institution employee, consideration\nshall be given to the nature and severity of violations of this article.\n 3. If after providing notice and an opportunity for a hearing the\ndepartment determines that a lending institution has violated a term or\nprovision of this article, such lending institution shall not be placed\nor remain on any covered institution's preferred lender list unless\nnotice of such violation is provided to all potential borrowers of the\ncovered institution.\n 4. Nothing in this section shall prohibit the department from reaching\na settlement agreement with a covered institution, covered institution\nemployee or lending institution in order to effectuate the purposes of\nthis section. Provided, however, if such settlement agreement is reached\nwith a covered institution or lending institution, the department shall\nprovide notice of such action to all potential borrowers in a form and\nmanner prescribed by the department.\n 5. The department shall deposit the funds generated from this section\ninto the student lending education account, created by section\nninety-seven-hhhh of the state finance law. Such funds shall be given to\ncovered institutions upon application to the department for the purposes\nof:\n a. Educating borrowers and potential borrowers on the educational loan\nprocess, including, but not limited to, available educational loan\noptions, understanding rates and terms of student loans, managing costs\nand credit responsibilities, student loan repayment and loan\nconsolidation; and\n b. Reimbursing borrowers from inflated educational loan prices caused\nby revenue sharing agreements between such covered institution and a\nlending institution.\n