N.Y. Education Law 692 – Education loans; special requirements
§ 692. Education loans; special requirements. In any year in which fixed rate education loans are to be acquired using the proceeds of bonds issued by the state of New York mortgage agency or other public benefit corporation authorized to issue bonds for the purposes of this program, preference shall be given to education loans made to eligible borrowers for the benefit of students who demonstrate financial need based on such student's family gross income, pursuant to rules and regulations promulgated by the corporation after consultation with the state of New York mortgage agency or other public benefit corporation authorized to issue bonds for the purposes of this program. 1. Terms and conditions. (a) eligible borrowers shall apply for education loans under this program on forms prescribed by the corporation;
Terms Used In N.Y. Education Law 692
- borrower: shall mean (i) a student who is a resident of New York state attending, or accepted for enrollment at, an eligible college, or (ii) the parent, legal guardian, or sponsor, as defined by the corporation in regulation, of a student attending, or accepted for enrollment at, an eligible college who is a resident of New York state, and who obtains an education loan from a lending institution to pay for or finance higher education expenses under this program. See N.Y. Education Law 690
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: shall mean the New York state higher education services corporation. See N.Y. Education Law 651
- Education loan: shall mean any loan that is made under this program to finance or refinance higher education expenses at an eligible college. See N.Y. Education Law 690
- Eligible co-signer: shall mean a parent, legal guardian or otherwise credit worthy individual over twenty-one years of age who satisfies applicable credit criteria approved by the corporation and is a resident of New York state. See N.Y. Education Law 690
- Eligible college: shall mean a post-secondary institution, located within New York state, eligible for funds under Title IV of the Higher Education Act of nineteen hundred sixty-five, as amended, or successor statute offering a two-year, four-year, graduate or professional degree granting or certificate program. See N.Y. Education Law 690
- Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
- You are late making a payment or commit some other default, triggering an increase to a penalty rate
- The bank changes the terms of your account and you do not reject the change.
- The rate expires (if the rate was fixed for only a certain period of time).
- Garnishment: Generally, garnishment is a court proceeding in which a creditor asks a court to order a third party who owes money to the debtor or otherwise holds assets belonging to the debtor to turn over to the creditor any of the debtor
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- lender: shall mean any entity that itself or through an affiliate originates education loans, other than an entity authorized to finance the purchase or making of education loans through the issuance of bonds pursuant to the public authorities law. See N.Y. Education Law 690
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Program: shall mean the New York Higher Education Loan Program established by this article. See N.Y. Education Law 690
- Student: shall mean any individual who is enrolled at least half-time, as defined by the commissioner, in a two year, four year, graduate or professional degree granting or certificate program at an eligible college. See N.Y. Education Law 690
- Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.
(b) except as may be provided by regulation, a student for whom an education loan is made shall be required to first apply for and exhaust: (i) their maximum eligibility of loans under the Federal Family Education Loan Program (FFELP) and the Federal Direct Student Loan Program (FDSLP), excluding PLUS loans; (ii) any other federal student aid, other than HEAL loans and other aid permitted by the corporation to be excluded; (iii) any state student aid; and (iv) any other student aid as prescribed by the corporation before being eligible for any education loan under this program;
(c) borrowers shall successfully complete a financial literacy course as prescribed by the corporation;
(d) student borrowers must apply for education loans under this program with an eligible co-signer;
(e) a borrower, or co-signer, who is in default on an education loan made under this program, the Federal Family Education Loan Program, the Williams D. Ford Program, or has failed to comply with the terms and conditions of any award under this article and has failed to satisfactorily cure such default or non-compliance as prescribed by applicable law or regulation shall be ineligible to receive a loan under this program, and shall further be ineligible for any other state student aid while in default on an education loan made under this program; and
(f) participating eligible colleges, lending institutions, and other participants in this program shall be required to enter into a participation agreement with the corporation and comply with all reporting and processing requirements and procedures as established by the corporation. These participation agreements shall contain such other specific terms and conditions of the program as shall be determined by the corporation.
2. Citizenship. A borrower must be (a) a citizen of the United States, or
(b) a noncitizen lawfully admitted for permanent residence in the United States, or
(c) an individual of a class of refugees paroled by the attorney general of the United States under his or her parole authority pertaining to the admission of noncitizens to the United States.
3. Loan limits. Education loans made under this program shall have annual and cumulative loan limits as approved from time to time by the corporation, subject to the approval of the state of New York mortgage agency, or other public benefit corporation authorized to issue bonds under the public authorities law for purposes of this program, with respect to loans that are expected to be financed by such entity.
4. Interest rates. The interest rate of loans made under this program shall be established in a manner that shall be approved at least annually by the corporation, subject to the approval of the state of New York mortgage agency, or other subject to public benefit corporation authorized to issue bonds under the public authorities law for purposes of this program, with respect to loans that are expected to be financed by such entity.
5. Default fee. A percentage of the education loan shall be paid as a default fee, by or on behalf of the borrower or the lender, in an amount to be established at least annually by the corporation subject to the approval of the state of New York mortgage agency, or other public benefit corporation authorized to issue bonds under the public authorities law for purposes of this program, with respect to loans that are expected to be financed by such entity. The default fee established by the corporation, subject to the approval of the state of New York mortgage agency, or other public benefit corporation authorized to issue bonds under the public authorities law for purposes of this program, with respect to education loans that are expected to be financed by such entity, shall be a percentage of the principal amount of such loans, as determined by the corporation, that, together with other amounts on deposit in the applicable default reserve fund, shall not exceed an amount sufficient to ensure that the balance of such funds satisfies the obligations of such default reserve fund and permits such loans to be financed. This fee may be considered part of the cost of attendance for the purposes of calculating the loan amount for this program and shall be transmitted to the corporation in accordance with rules or regulations promulgated by the corporation. The corporation shall deposit these funds into a designated account within the New York higher education loan program variable rate default reserve fund, the New York higher education loan program fixed rate default reserve fund, or the state of New York mortgage agency New York higher education loan program default reserve fund, as applicable.
6. Consolidation. Education loans made pursuant to this program may be eligible for consolidation upon the terms and conditions established by the corporation. Any person consolidating education loans under this program shall be considered a borrower for purposes of this part.
7. Default reserve funds. (a) General provisions. One or more default reserve funds shall be established in the custody of the comptroller pursuant to sections seventy-eight-a and seventy-eight-b of the state finance law. One or more default reserve funds shall be established in the custody of the state of New York mortgage agency pursuant to subdivision six of § 2405-a of the public authorities law. These funds shall be used by the corporation to pay default claims to participating lenders and holders of education loans made pursuant to this program.
(b) Deposits. The corporation shall promptly deposit or transfer into the New York higher education loan program variable rate default reserve fund created by § 78-a of the state finance law, the New York higher education loan program fixed rate default reserve fund created by § 78-b of the state finance law or the state of New York mortgage agency New York higher education loan program default reserve fund created by subdivision six of § 2405-a of the public authorities law, with respect to education loans, described in such provisions, any moneys received in connection with this program other than payments of principal and interest of education loans that are not in default status, including, but not limited to: (i) default fees; (ii) fees received from eligible colleges; (iii) funds received for the repayment of defaulted education loans, the unpaid principal, capitalized and unpaid accrued interest of which have been paid from the funds, including without limitation all such amounts received through the operation of voluntary collection activities, administrative wage garnishment or credit of tax overpayments less any amounts received for collection fees assessed by the corporation; (iv) contractual penalties and subsidy fees; (v) any amount that may be appropriated to the corporation; (vi) any amount received by the corporation or any agent from any other source for deposit therein; and (vii) interest and investment income earned by the funds.
8. Lender due diligence. Participating lenders shall be required to perform all due diligence requirements as prescribed by the corporation and incorporated into the participation agreement and into regulations promulgated by the corporation.
9. Eligible college requirements. (a) Participating eligible colleges shall be required to certify loan eligibility upon forms prescribed by the corporation and incorporated into the participation agreement and pursuant to regulations promulgated by the corporation.
(b) Participating eligible colleges shall be required to contribute a one percent fee prescribed by the corporation, subject to the approval of the state of New York mortgage agency, or other public benefit corporation authorized to issue bonds under the public authorities law for purposes of this program, with respect to loans that are expected to be financed by such entity, based upon the loan dollar volume or have the contribution made on its behalf, pursuant to the terms of the participation agreement. This fee shall be deposited into a designated account within the New York higher education loan program variable rate default reserve fund the New York higher education loan program fixed rate default reserve fund, or the state of New York mortgage agency New York higher education loan program default reserve fund, as described in subdivision seven of this section as applicable. This fee, or any other college fee, shall not be assessed to the student or eligible borrower in connection with this program.