§ 693 — Repayment of loans

§ 693. Repayment of loans. 1. Terms of repayment. The terms of\nrepayment of education loans made under this program shall be\nestablished in rules and regulations promulgated by the corporation\nsubject to the approval of the state of New York mortgage agency or\nother public benefit corporation authorized to issue bonds under the\npublic authorities law for purposes of this program with respect to\nloans that are expected to be financed by such entity.\n 2. Grace period. The terms of any grace period for education loans\nmade under this program shall be established in rules and regulations\npromulgated by the corporation subject to the approval of the state of\nNew York mortgage agency or other public benefit corporation authorized\nto issue bonds under the public authorities law for purposes of this\nprogram with respect to loans that are expected to be financed by such\nentity. Notwithstanding, the grace period established shall be no less\nthan six months.\n 3. Forbearance and deferments. Education loans made under this program\nshall be eligible for in-school and military deferments pursuant to\nrules and regulations promulgated by the corporation, or pursuant to\nsuch additional deferments and/or forbearance as offered by an eligible\nlender, in each case, subject to the approval of the state of New York\nmortgage agency, or other authorized 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. Upon the assignment of a defaulted education loan made\nunder this program for collection as described in subdivision five of\nthis section, the borrower shall no longer be eligible for any\nforbearance or deferments while such loan remains in default.\n 4. Delinquency. A borrower shall be considered delinquent on an\neducation loan under this program after thirty days of non-payment. The\nholder shall notify the corporation promptly after the first day of\ndelinquency and the corporation shall undertake actions to return the\nborrower to repayment pursuant to rules and regulations established by\nthe corporation. Such actions shall include, but not be limited to,\nattempts at: (i) locating and contacting the borrower and/or co-signer,\nas applicable, regarding the delinquent status of their loan; (ii)\nexplaining the account history and clarifying any discrepancies; (iii)\ncounseling the borrower and/or co-signer, as applicable, regarding all\navailable repayment options, inducing deferments, and any public\nassistance available to them; (iv) providing the borrower and/or\nco-signer, as applicable, with documentation in connection with their\nloan or loans; (v) informing the borrower and/or co-signer, as\napplicable, of the consequences of default; and (vi) any other\nassistance that would prevent a default by a borrower.\n 5. Default. Any education loan under this program that is delinquent\nfor one hundred eighty days shall be deemed in default. Upon default,\nthe holder shall file a claim with the corporation and, if applicable,\nthe state of New York mortgage agency, for payment from the New York\neducation loan program variable rate default reserve fund, the New York\neducation loan program fixed rate default reserve fund, or the state of\nNew York mortgage agency New York education loan program default reserve\nfund, as described in subdivision seven of section six hundred ninety\ntwo of the education law, as applicable, pursuant to regulations\npromulgated by the corporation. Upon receipt of a claim, the corporation\nshall notify the borrower that their loan is being assigned to the\ncorporation for collection. The lender, or holder shall be paid one\nhundred percent of the outstanding principal, and of the capitalized and\nunpaid accrued interest. Upon such payment, this amount shall be the\nprincipal owed by the borrower.\n All collection payments received by the corporation from a borrower,\nor on behalf of borrowers, in default on loans made under this program,\nexcept collection fees shall be deposited into a designated account\nwithin the New York higher education loan program variable rate default\nreserve fund, New York higher education loan program fixed rate default\nreserve fund, or the state of New York mortgage agency New York higher\neducation loan program default reserve fund, as applicable.\n 6. Collection fee. The corporation shall assess a collection fee, in\nan amount to be determined by the corporation at least annually, on all\ndefaulted education loans under this program. This fee shall be retained\nby the corporation for the administration of the program. The aggregate\nannual revenue generated by such fee shall not exceed the actual costs\nincurred by the corporation, in the preceding year, in collecting a\ndefaulted loan under this program on which the corporation has paid a\nclaim, except in the initial year for which such fee shall not exceed\nthe fee charged by the corporation for the collection of defaulted loans\nunder the federal family education loan program. Any amounts in excess\nof actual cost shall be used to reduce the fee charged in the subsequent\nyear.\n 7. Administrative wage garnishment. (a) Notwithstanding any provision\nof law to the contrary, the corporation shall be entitled to garnish the\ndisposable pay of an individual to collect the amount owed by the\nindividual, if such individual fails to make required voluntary payments\nunder a repayment agreement with the corporation, provided that:\n (i) The amount deducted for any pay period does not exceed fifteen\npercent of disposable pay. However, the amount deducted for any period\nmay exceed fifteen percent with the written consent of the individual;\n (ii) Prior to garnishment the individual shall have been given thirty\ndays written notice to the individual's last known address advising such\nindividual of the nature of the obligation, amount of the loan\nobligation, the corporation's intent to garnish and an explanation of\nthe individual's rights under this section including the right to\ninspect and copy records relating to the debt;\n (iii) The individual shall have been given an opportunity within the\naforementioned thirty days to enter into a written repayment agreement\nwith the corporation to avoid garnishment of wages;\n (iv) The individual shall have been provided an opportunity for a\nhearing pursuant to the requirements of paragraph (f) of this\nsubdivision.\n (b) The individual's employer shall pay to the corporation amounts as\ndirected in the withholding order and shall be liable for failure to\ncomply with said order. The corporation may sue an employer in a court\nof competent jurisdiction to recover from such employer the amount the\nemployer fails to withhold from the individual's wages following receipt\nof the order of withholding with interest thereon plus attorneys' fees\nand costs;\n (c) The notice of withholding served upon the employer shall contain\nonly such information as is necessary for the employer to comply with\nthe withholding order.\n (d) No amount may be deducted from the wages of an individual who has\nbeen involuntarily separated from employment and has not been\ncontinuously employed for twelve months. An individual must prove that\nseparation from employment was involuntary. Separation due to\nincarceration shall not qualify as involuntary separation.\n (e) An employer may not discharge from employment, take disciplinary\naction against or refuse to employ an individual by reason of the fact\nthat such individual's wages are subject to an order of withholding.\nSuch individual may take action against said employer in a court of\ncompetent jurisdiction for reinstatement, back pay or such further\nrelief as may be just and necessary.\n (f) A hearing as described in subparagraph (iv) of paragraph (a) of\nthis subdivision shall be provided prior to an order of withholding if\nthe individual submits a written request for a hearing on or before the\nfifteenth day following the notice described in subparagraph (ii) of\nparagraph (a) of this subdivision in accordance with procedures set\nforth by the corporation. If an individual fails to submit a written\nrequest in the time frame provided, the corporation shall still provide\na hearing upon receipt of a written request, but such hearing need not\nbe provided prior to an order of withholding being issued to the\nemployer. The hearing shall not be conducted by a party under the\nsupervision or control of the corporation except that nothing shall\nprohibit the corporation from appointing an administrative law judge. A\nhearing decision shall be issued no later than sixty days after the\nfiling of the petition requesting the hearing.\n (g) For purposes of this section "disposable pay" shall mean that part\nof the compensation of any individual from an employer remaining after\ndeduction of amounts required to be withheld by law.\n (h) All funds received through administrative wage garnishment shall\nbe deposited 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 8. New York state tax offset. The corporation shall be entitled to\nreceive credits of New York state tax overpayments pursuant to section\none hundred seventy-one-d and paragraph three of subdivision (e) of\nsection six hundred ninety-seven of the tax law with respect to\ndefaulted education loans under this program. All funds, or credits,\nreceived through such tax offsets 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 applicable.\n 9. Data share. The corporation shall be entitled to receive data from\nthe New York state department of taxation and finance pursuant to\nsection one hundred seventy-one-a and paragraph three of subdivision (e)\nof section six hundred ninety-seven of the tax law with respect to\ndefaulted education loans under this program.\n 10. Statute of limitation. Notwithstanding any provision of law to the\ncontrary, there shall be no statute of limitations to bring suit or\notherwise collect an education loan under this program. Judgments in\nfavor of the corporation under this program shall not expire and there\nshall be no statute of limitations upon which to enforce or collect said\njudgment.\n 11. Capacity of minors. Any person otherwise qualifying for an\neducation loan under this program shall not be disqualified by reason of\nhis or her being under the age of eighteen years and for the purposes of\napplying for, receiving and repaying such a loan, any such person shall\nbe deemed to have full legal capacity to act. The corporation, in\ncollecting education loans under this program, shall not be subject to a\ndefense raised by any borrower based on a claim of infancy.\n 12. Usury. Notwithstanding any provision of law to the contrary the\nrate or amount of interest or fees payable on education loans made under\nthis program shall not exceed twenty-five per centum per annum or its\nequivalent rate for a longer or shorter period.\n 13. Death and disability discharge. Upon the death of a student, for\nthe funding of whose higher education expenses an education loan was\nmade, the education loan made under this program shall be deemed\ndischarged. If such a student becomes totally and permanently disabled,\nthe education loan under this program shall be deemed discharged. A\ntotal or permanent disability shall mean a condition of an individual\nwho is unable to work and earn money because of an injury or illness\nthat is expected to continue indefinitely or result in death. The holder\nof such discharged education loans shall be paid the outstanding\nprincipal, capitalized and unpaid accrued interest due from the New York\nhigher education loan program variable rate default reserve fund, the\nNew York higher education loan program fixed rate default reserve fund,\nor the state of New York mortgage agency New York higher education loan\nprogram default reserve fund, as applicable.\n 14. Bankruptcy. Education loans under this program shall be considered\nnon-dischargeable pursuant to section 523(a)(8) of the U.S. Bankruptcy\nCode.\n 15. Notwithstanding any other provision of law, other than section one\nthousand six hundred eighty two and section two thousand four hundred\nfive-a of the public authorities law, a security interest in education\nloans shall be perfected only by the filing of a financing statement in\nthe manner provided under section 9-310 of the uniform commercial code,\nand shall attach and be assigned priority in the manner provided under\nthe uniform commercial code with respect to security interests perfected\nby such a filing, and a description of collateral consisting of\neducation loans in any financing statement shall be conclusively deemed\nto be legally sufficient if it refers to records identifying such loans\nretained by the corporation, provided that any such security interest\nshall be subject to any applicable lien under section two thousand four\nhundred five-a of the public authorities law. The owner of any education\nloan shall advise the corporation of any sale or assignment of such loan\nat the time and in the manner required by the corporation.\n 16. Notwithstanding any other provision of law, any eligible public\ncollege or public career education institution is hereby authorized to\nenter into one or more agreements with the corporation and any entity\nauthorized to finance education loans pursuant to the public authorities\nlaw providing for the participation of such college or career education\ninstitution in the program and to perform or contract the performance of\nits obligations under any such agreement. Such obligations may include\nwithout limitation the payment obligations described in this title.\n