2023 New York Laws › EDN - Education › Title 1 - General Provisions › Article 14 - New York State Higher Education Services Corporation › Part 5 - The New York Higher Education Loan Program › 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;
(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  section  two  thousand  four hundred five-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  section seventy-eight-a of the state finance law, the
New York higher education loan program fixed rate default  reserve  fund
created by section seventy-eight-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 section two  thousand
four  hundred  five-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.