§ 2405-A — Education loans

§ 2405-a. Education loans. (1) For purposes of this section, the\nfollowing words and terms shall have the following meaning unless the\ncontext shall indicate another or different meaning or intent:\n (a) "Corporation" shall mean the New York state higher education\nservices corporation.\n (b) "Education Loan" shall mean: (i) a New York higher education loan\nprogram loan made pursuant to part v of article fourteen of the\neducation law; or (ii) a loan under Part B of Title IV of the Higher\nEducation Act of nineteen hundred sixty-five, as amended, including but\nnot limited to a loan described in subdivision ten of section\ntwenty-four hundred two of this part; provided, that the borrower shall\nbe required to apply the net proceeds of such loans to pay the student's\ncosts of post-secondary education or to repay one or more such loans\nincurred for such purpose.\n (2) In addition to the powers of the agency pursuant to the other\nsections of this title, the agency shall have power:\n (a) To enter into one or more agreements with the corporation and to\nperform or contract for the performance of its obligations under any\nsuch agreement;\n (b) To make and contract to make and to acquire and contract to\nacquire education loans and to enter into advance commitments for the\npurchase of said education loans;\n (c) Subject to any agreement with bondholders or noteholders, to\ninvest moneys of the agency not required for immediate use, including\nproceeds from the sale of any bonds or notes, in education loans;\n (d) To make and execute contracts for the marketing, origination,\nservicing, collection, administration, guarantee, securing, and\nfinancing of education loans originated or acquired by the agency\npursuant to this title, and to pay the reasonable value of services\nrendered to the agency pursuant to those contracts;\n (e) Subject to any agreement with bondholders or noteholders, to\nrenegotiate or refinance any education loan that has been acquired by\nthe agency or which the agency has committed to purchase that is in\ndefault; to waive any default or consent to the modification of the\nterms or any such education loan; to forgive all or part of any\nindebtedness; and to commence any action or proceeding to protect or\nenforce any right conferred upon it with respect to any such education\nloan by law, loan agreement, contract or other agreement;\n (f) To prescribe standards and criteria for the origination of\neducation loans to be eligible for acquisition by the agency and for\neducation loans purchased by the agency;\n (g) Subject to any agreement with bondholders or noteholders, to sell\nany education loans made or acquired by the agency at public or private\nsale and at such price or prices and on such terms as the agency shall\ndetermine;\n (h) To establish, revise from time to time, charge and collect such\npremiums or fees in connection with education loans and its\nparticipation in the New York higher education loan program as the\nagency shall determine; and\n (i) Subject to any agreement with bondholders or noteholders, to\ninvest moneys pledged to secure bonds issued for the corporate purposes\nauthorized by this section not required for immediate use in investments\nauthorized for investment of state funds under section ninety-eight or\nninety-eight-a of the state finance law.\n (3) The agency shall have the power and is hereby authorized from time\nto time to issue its bonds and notes pursuant to section two thousand\nfour hundred six of this title for the corporate purposes authorized by\nthis section, including without limitation for the purposes of financing\nand refinancing education loans and of refunding any bonds or notes\nissued for such purpose.\n (4) Each lender or service provider who makes a representation or\nwarranty to the agency with respect to an education loan shall be liable\nto the agency for any damages suffered by the agency by reason of the\nuntruth of such representation or the breach of such warranty and, in\nthe event that any representation shall prove to be untrue when made or\nin the event of any breach of warranty, such person shall, at the option\nof the agency, repurchase the education loan for the price provided in\nthe applicable financing agreement, as the agency may determine.\n (5) It is the intent of the legislature that any pledge by the agency\nof education loans or of earnings, revenues or other moneys receivable\nfrom any source, including without limitation default payments by the\nNew York higher education loan program variable rate default reserve\nfund, the 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, with respect\nto education loans financed by the agency, shall be valid and binding\nfrom the time when the pledge is made. The education loans, earnings,\nrevenues or other moneys so pledged and thereafter received by the\nagency or its agent, including without limitation the higher education\nservices corporation or any education loan servicer, shall immediately\nbe subject to the lien of such pledge without any physical delivery\nthereof or further act, and the lien of any such pledge shall be valid\nand binding as against all parties having claims of any kind in tort,\ncontract or otherwise against the agency or its agent, including without\nlimitation the higher education services corporation or any education\nloan servicer, irrespective of whether such parties have notice thereof.\nNeither the resolution nor any other instrument by which a pledge is\ncreated need be recorded.\n (6) The state of New York mortgage agency New York higher education\nloan program default reserve fund. (a) There is hereby created and\nestablished in the sole custody of the state of New York mortgage agency\na special fund to be known as the state of New York mortgage agency New\nYork higher education loan program default reserve fund which shall be\nfor the exclusive benefit of the holders of education loans that the\nagency has acquired, or agreed to acquire, under the New York higher\neducation loan program, codified in part V of article fourteen of the\neducation law.\n (b) Amounts held in this fund shall not be, or be deemed, funds of the\nstate or funds under the management of the state, the agency, or the\ncorporation. The obligations of such fund shall not be, or be deemed,\nthe debts or obligations of the state and the state shall not be, or be\ndeemed, in any way obligated to: any holder of any such education loan;\nany holder of bonds issued pursuant to section two thousand four hundred\nsix of this part for the corporate purposes authorized in section two\nthousand five-a of this article; any fiduciary or provider of any credit\nfacility, liquidity facility or interest rate exchange agreement with\nrespect to such bonds; or any other creditor of this fund.\n (c) Such fund shall consist of: (i) all moneys received by the higher\neducation services corporation pursuant to paragraph (b) of subdivision\nseven of section six hundred ninety-two of the education law, in\nconnection with education loans that the agency has acquired or agreed\nto acquire under the New York higher education loan program education\nloans; (ii) any transfers from the New York higher education loan\nprogram variable rate default reserve fund created by section\nseventy-eight-a of the state finance law or from the New York higher\neducation loan program fixed rate default reserve fund created by\nsection seventy-eight-b of the state finance law; and (iii) any\nappropriation payment or transfer to the agency for such purpose.\n (d) The agency shall establish accounts within the fund and priorities\nof payment from such accounts and shall invest the fund in investments\nauthorized for investment of state funds under section ninety-eight or\nninety-eight-a of the state finance law.\n (e) This fund, including all sub-accounts thereof, shall be segregated\nfrom all other funds kept by the agency and shall not be used for any\nother purpose beyond those set forth in part V of article fourteen of\nthe education law or in this section. The agency shall utilize monies in\nthe fund solely to pay the outstanding principal, capitalized and unpaid\naccrued interest on defaulted education loans described in paragraph a\nof this subdivision.\n (f) Nothing contained in this section shall prevent the agency, or the\ncorporation, from receiving grants, gifts or bequests for the purposes\nof this fund and depositing them into the fund according to law, rules,\nor regulations.\n (g) The agency shall make payments from the monies in this fund in\namounts and at times required pursuant to part V of article fourteen of\nthe education law.\n