§ 692 — Education loans; special requirements

§ 692. Education loans; special requirements. In any year in which\nfixed rate education loans are to be acquired using the proceeds of\nbonds issued by the state of New York mortgage agency or other public\nbenefit corporation authorized to issue bonds for the purposes of this\nprogram, preference shall be given to education loans made to eligible\nborrowers for the benefit of students who demonstrate financial need\nbased on such student's family gross income, pursuant to rules and\nregulations promulgated by the corporation after consultation with the\nstate of New York mortgage agency or other public benefit corporation\nauthorized to issue bonds for the purposes of this program. 1. Terms and\nconditions. (a) eligible borrowers shall apply for education loans under\nthis program on forms prescribed by the corporation;\n (b) except as may be provided by regulation, a student for whom an\neducation loan is made shall be required to first apply for and exhaust:\n(i) their maximum eligibility of loans under the Federal Family\nEducation Loan Program (FFELP) and the Federal Direct Student Loan\nProgram (FDSLP), excluding PLUS loans; (ii) any other federal student\naid, other than HEAL loans and other aid permitted by the corporation to\nbe excluded; (iii) any state student aid; and (iv) any other student aid\nas prescribed by the corporation before being eligible for any education\nloan under this program;\n (c) borrowers shall successfully complete a financial literacy course\nas prescribed by the corporation;\n (d) student borrowers must apply for education loans under this\nprogram with an eligible co-signer;\n (e) a borrower, or co-signer, who is in default on an education loan\nmade under this program, the Federal Family Education Loan Program, the\nWilliams D. Ford Program, or has failed to comply with the terms and\nconditions of any award under this article and has failed to\nsatisfactorily cure such default or non-compliance as prescribed by\napplicable law or regulation shall be ineligible to receive a loan under\nthis program, and shall further be ineligible for any other state\nstudent aid while in default on an education loan made under this\nprogram; and\n (f) participating eligible colleges, lending institutions, and other\nparticipants in this program shall be required to enter into a\nparticipation agreement with the corporation and comply with all\nreporting and processing requirements and procedures as established by\nthe corporation. These participation agreements shall contain such other\nspecific terms and conditions of the program as shall be determined by\nthe corporation.\n 2. Citizenship. A borrower must be (a) a citizen of the United States,\nor\n (b) a noncitizen lawfully admitted for permanent residence in the\nUnited States, or\n (c) an individual of a class of refugees paroled by the attorney\ngeneral of the United States under his or her parole authority\npertaining to the admission of noncitizens to the United States.\n 3. Loan limits. Education loans made under this program shall have\nannual and cumulative loan limits as approved from time to time by the\ncorporation, subject to the approval of the state of New York mortgage\nagency, or other public benefit corporation authorized to issue bonds\nunder the public authorities law for purposes of this program, with\nrespect to loans that are expected to be financed by such entity.\n 4. Interest rates. The interest rate of loans made under this program\nshall be established in a manner that shall be approved at least\nannually by the corporation, subject to the approval of the state of New\nYork mortgage agency, or other subject to public benefit corporation\nauthorized to issue bonds under the public authorities law for purposes\nof this program, with respect to loans that are expected to be financed\nby such entity.\n 5. Default fee. A percentage of the education loan shall be paid as a\ndefault fee, by or on behalf of the borrower or the lender, in an amount\nto be established at least annually by the corporation subject to the\napproval of the state of New York mortgage agency, or other public\nbenefit corporation authorized to issue bonds under the public\nauthorities law for purposes of this program, with respect to loans that\nare expected to be financed by such entity. The default fee established\nby the corporation, subject to the approval of the state of New York\nmortgage agency, or other public benefit corporation authorized to issue\nbonds under the public authorities law for purposes of this program,\nwith respect to education loans that are expected to be financed by such\nentity, shall be a percentage of the principal amount of such loans, as\ndetermined by the corporation, that, together with other amounts on\ndeposit in the applicable default reserve fund, shall not exceed an\namount sufficient to ensure that the balance of such funds satisfies the\nobligations of such default reserve fund and permits such loans to be\nfinanced. This fee may be considered part of the cost of attendance for\nthe purposes of calculating the loan amount for this program and shall\nbe transmitted to the corporation in accordance with rules or\nregulations promulgated by the corporation. The corporation shall\ndeposit these funds into a designated account within the New York higher\neducation loan program variable rate default reserve fund, the New York\nhigher education loan program fixed rate default reserve fund, or the\nstate of New York mortgage agency New York higher education loan program\ndefault reserve fund, as applicable.\n 6. Consolidation. Education loans made pursuant to this program may be\neligible for consolidation upon the terms and conditions established by\nthe corporation. Any person consolidating education loans under this\nprogram shall be considered a borrower for purposes of this part.\n 7. Default reserve funds. (a) General provisions. One or more default\nreserve funds shall be established in the custody of the comptroller\npursuant to sections seventy-eight-a and seventy-eight-b of the state\nfinance law. One or more default reserve funds shall be established in\nthe custody of the state of New York mortgage agency pursuant to\nsubdivision six of section two thousand four hundred five-a of the\npublic authorities law. These funds shall be used by the corporation to\npay default claims to participating lenders and holders of education\nloans made pursuant to this program.\n (b) Deposits. The corporation shall promptly deposit or transfer into\nthe New York higher education loan program variable rate default reserve\nfund created by section seventy-eight-a of the state finance law, the\nNew York higher education loan program fixed rate default reserve fund\ncreated by section seventy-eight-b of the state finance law or the state\nof New York mortgage agency New York higher education loan program\ndefault reserve fund created by subdivision six of section two thousand\nfour hundred five-a of the public authorities law, with respect to\neducation loans, described in such provisions, any moneys received in\nconnection with this program other than payments of principal and\ninterest of education loans that are not in default status, including,\nbut not limited to: (i) default fees; (ii) fees received from eligible\ncolleges; (iii) funds received for the repayment of defaulted education\nloans, the unpaid principal, capitalized and unpaid accrued interest of\nwhich have been paid from the funds, including without limitation all\nsuch amounts received through the operation of voluntary collection\nactivities, administrative wage garnishment or credit of tax\noverpayments less any amounts received for collection fees assessed by\nthe corporation; (iv) contractual penalties and subsidy fees; (v) any\namount that may be appropriated to the corporation; (vi) any amount\nreceived by the corporation or any agent from any other source for\ndeposit therein; and (vii) interest and investment income earned by the\nfunds.\n 8. Lender due diligence. Participating lenders shall be required to\nperform all due diligence requirements as prescribed by the corporation\nand incorporated into the participation agreement and into regulations\npromulgated by the corporation.\n 9. Eligible college requirements. (a) Participating eligible colleges\nshall be required to certify loan eligibility upon forms prescribed by\nthe corporation and incorporated into the participation agreement and\npursuant to regulations promulgated by the corporation.\n (b) Participating eligible colleges shall be required to contribute a\none percent fee prescribed by the corporation, subject to the approval\nof the state of New York mortgage agency, or other public benefit\ncorporation authorized to issue bonds under the public authorities law\nfor purposes of this program, with respect to loans that are expected to\nbe financed by such entity, based upon the loan dollar volume or have\nthe contribution made on its behalf, pursuant to the terms of the\nparticipation agreement. This fee shall be deposited into a designated\naccount within the New York higher education loan program variable rate\ndefault reserve fund the New York higher education loan program fixed\nrate default reserve fund, or the state of New York mortgage agency New\nYork higher education loan program default reserve fund, as described in\nsubdivision seven of this section as applicable. This fee, or any other\ncollege fee, shall not be assessed to the student or eligible borrower\nin connection with this program.\n