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 › 693 - Repayment of Loans.

§  693.  Repayment  of  loans.  1.  Terms  of  repayment. The terms of
repayment  of  education  loans  made  under  this  program   shall   be
established  in  rules  and  regulations  promulgated 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.
2.  Grace  period.  The  terms of any grace period for education loans
made under this program shall be established in  rules  and  regulations
promulgated  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.  Notwithstanding,  the grace period established shall be no less
than six months.
3. Forbearance and deferments. Education loans made under this program
shall be eligible for in-school  and  military  deferments  pursuant  to
rules  and  regulations  promulgated  by the corporation, or pursuant to
such additional deferments and/or forbearance as offered by an  eligible
lender,  in  each case, subject to the approval of the state of New York
mortgage  agency,  or  other  authorized  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. Upon the assignment of a defaulted education loan made
under this program for collection as described in  subdivision  five  of
this  section,  the  borrower  shall  no  longer  be  eligible  for  any
forbearance or deferments while such loan remains in default.
4. Delinquency. A  borrower  shall  be  considered  delinquent  on  an
education  loan under this program after thirty days of non-payment. The
holder shall notify the corporation promptly  after  the  first  day  of
delinquency  and  the  corporation shall undertake actions to return the
borrower to repayment pursuant to rules and regulations  established  by
the  corporation.  Such  actions  shall  include, but not be limited to,
attempts at: (i) locating and contacting the borrower and/or  co-signer,
as  applicable,  regarding  the  delinquent  status  of their loan; (ii)
explaining the account history and clarifying any  discrepancies;  (iii)
counseling  the  borrower and/or co-signer, as applicable, regarding all
available  repayment  options,  inducing  deferments,  and  any   public
assistance  available  to  them;  (iv)  providing  the  borrower  and/or
co-signer, as applicable, with documentation in  connection  with  their
loan   or  loans;  (v)  informing  the  borrower  and/or  co-signer,  as
applicable,  of  the  consequences  of  default;  and  (vi)  any   other
assistance that would prevent a default by a borrower.
5.  Default.  Any education loan under this program that is delinquent
for one hundred eighty days shall be deemed in  default.  Upon  default,
the  holder  shall file a claim with the corporation and, if applicable,
the state of New York mortgage agency, for payment  from  the  New  York
education  loan program variable rate default reserve fund, the New York
education loan program fixed rate default reserve fund, or the state  of
New York mortgage agency New York education loan program default reserve
fund,  as  described  in subdivision seven of section six hundred ninety
two of  the  education  law,  as  applicable,  pursuant  to  regulations
promulgated by the corporation. Upon receipt of a claim, the corporation
shall  notify  the  borrower  that  their  loan is being assigned to the
corporation for collection. The lender, or  holder  shall  be  paid  one
hundred percent of the outstanding principal, and of the capitalized and
unpaid  accrued  interest.  Upon  such payment, this amount shall be the
principal owed by the borrower.
All collection payments received by the corporation from  a  borrower,
or  on behalf of borrowers, in default on loans made under this program,
except collection fees shall be  deposited  into  a  designated  account
within  the New York higher education loan program variable rate default
reserve  fund, 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.  Collection  fee. The corporation shall assess a collection fee, in
an amount to be determined by the corporation at least annually, on  all
defaulted education loans under this program. This fee shall be retained
by  the corporation for the administration of the program. The aggregate
annual revenue generated by such fee shall not exceed the  actual  costs
incurred  by  the  corporation,  in  the preceding year, in collecting a
defaulted loan under this program on which the corporation  has  paid  a
claim,  except  in  the initial year for which such fee shall not exceed
the fee charged by the corporation for the collection of defaulted loans
under the federal family education loan program. Any amounts  in  excess
of actual cost shall be used to reduce the fee charged in the subsequent
year.
7.  Administrative wage garnishment. (a) Notwithstanding any provision
of law to the contrary, the corporation shall be entitled to garnish the
disposable pay of an individual  to  collect  the  amount  owed  by  the
individual, if such individual fails to make required voluntary payments
under a repayment agreement with the corporation, provided that:
(i)  The  amount  deducted  for any pay period does not exceed fifteen
percent of disposable pay. However, the amount deducted for  any  period
may exceed fifteen percent with the written consent of the individual;
(ii)  Prior to garnishment the individual shall have been given thirty
days written notice to the individual's last known address advising such
individual  of  the  nature  of  the  obligation,  amount  of  the  loan
obligation,  the  corporation's  intent to garnish and an explanation of
the individual's rights  under  this  section  including  the  right  to
inspect and copy records relating to the debt;
(iii)  The  individual shall have been given an opportunity within the
aforementioned thirty days to enter into a written  repayment  agreement
with the corporation to avoid garnishment of wages;
(iv)  The  individual  shall  have  been provided an opportunity for a
hearing  pursuant  to  the  requirements  of  paragraph  (f)   of   this
subdivision.
(b)  The individual's employer shall pay to the corporation amounts as
directed in the withholding order and shall be  liable  for  failure  to
comply  with  said order. The corporation may sue an employer in a court
of competent jurisdiction to recover from such employer the  amount  the
employer fails to withhold from the individual's wages following receipt
of  the  order of withholding with interest thereon plus attorneys' fees
and costs;
(c) The notice of withholding served upon the employer  shall  contain
only  such  information  as is necessary for the employer to comply with
the withholding order.
(d) No amount may be deducted from the wages of an individual who  has
been   involuntarily   separated   from  employment  and  has  not  been
continuously employed for twelve months. An individual must  prove  that
separation   from   employment   was   involuntary.  Separation  due  to
incarceration shall not qualify as involuntary separation.
(e) An employer may not discharge from employment,  take  disciplinary
action  against  or refuse to employ an individual by reason of the fact
that such individual's wages are subject to  an  order  of  withholding.
Such  individual  may  take  action  against said employer in a court of

competent jurisdiction for  reinstatement,  back  pay  or  such  further
relief as may be just and necessary.
(f)  A  hearing  as described in subparagraph (iv) of paragraph (a) of
this subdivision shall be provided prior to an order of  withholding  if
the  individual submits a written request for a hearing on or before the
fifteenth day following the notice described  in  subparagraph  (ii)  of
paragraph  (a)  of  this  subdivision  in accordance with procedures set
forth by the corporation. If an individual fails  to  submit  a  written
request  in the time frame provided, the corporation shall still provide
a hearing upon receipt of a written request, but such hearing  need  not
be  provided  prior  to  an  order  of  withholding  being issued to the
employer. The hearing shall not  be  conducted  by  a  party  under  the
supervision  or  control  of  the  corporation except that nothing shall
prohibit the corporation from appointing an administrative law judge.  A
hearing  decision  shall  be  issued  no later than sixty days after the
filing of the petition requesting the hearing.
(g) For purposes of this section "disposable pay" shall mean that part
of the compensation of any individual from an employer  remaining  after
deduction of amounts required to be withheld by law.
(h)  All  funds received through administrative wage garnishment 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 applicable.
8.  New  York  state  tax offset. The corporation shall be entitled to
receive credits of New York state tax overpayments pursuant  to  section
one  hundred  seventy-one-d  and  paragraph  three of subdivision (e) of
section six  hundred  ninety-seven  of  the  tax  law  with  respect  to
defaulted  education  loans  under  this program. All funds, or credits,
received through such tax offsets 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 applicable.
9. Data share. The corporation shall be entitled to receive data  from
the  New  York  state  department  of  taxation  and finance pursuant to
section one hundred seventy-one-a and paragraph three of subdivision (e)
of section six hundred ninety-seven of  the  tax  law  with  respect  to
defaulted education loans under this program.
10. Statute of limitation. Notwithstanding any provision of law to the
contrary,  there  shall  be  no  statute of limitations to bring suit or
otherwise collect an education loan under  this  program.  Judgments  in
favor  of  the corporation under this program shall not expire and there
shall be no statute of limitations upon which to enforce or collect said
judgment.
11. Capacity  of  minors.  Any  person  otherwise  qualifying  for  an
education loan under this program shall not be disqualified by reason of
his or her being under the age of eighteen years and for the purposes of
applying  for, receiving and repaying such a loan, any such person shall
be deemed to have full  legal  capacity  to  act.  The  corporation,  in
collecting education loans under this program, shall not be subject to a
defense raised by any borrower based on a claim of infancy.
12.  Usury.  Notwithstanding  any provision of law to the contrary the
rate or amount of interest or fees payable on education loans made under
this program shall not exceed twenty-five per centum per  annum  or  its
equivalent rate for a longer or shorter period.
13.  Death  and disability discharge. Upon the death of a student, for
the funding of whose higher education expenses  an  education  loan  was
made,  the  education  loan  made  under  this  program  shall be deemed
discharged.  If such a student becomes totally and permanently disabled,
the  education  loan  under  this  program shall be deemed discharged. A
total or permanent disability shall mean a condition  of  an  individual
who  is  unable  to  work and earn money because of an injury or illness
that is expected to continue indefinitely or result in death. The holder
of such  discharged  education  loans  shall  be  paid  the  outstanding
principal, capitalized and unpaid accrued interest due from 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.
14. Bankruptcy. Education loans under this program shall be considered
non-dischargeable pursuant to section 523(a)(8) of the  U.S.  Bankruptcy
Code.
15. Notwithstanding any other provision of law, other than section one
thousand  six  hundred  eighty two and section two thousand four hundred
five-a of the public authorities law, a security interest  in  education
loans  shall be perfected only by the filing of a financing statement in
the manner provided under section 9-310 of the uniform commercial  code,
and  shall  attach and be assigned priority in the manner provided under
the uniform commercial code with respect to security interests perfected
by such  a  filing,  and  a  description  of  collateral  consisting  of
education  loans in any financing statement shall be conclusively deemed
to be legally sufficient if it refers to records identifying such  loans
retained  by  the  corporation, provided that any such security interest
shall be subject to any applicable lien under section two thousand  four
hundred five-a of the public authorities law. The owner of any education
loan shall advise the corporation of any sale or assignment of such loan
at the time and in the manner required by the corporation.
16.  Notwithstanding  any  other provision of law, any eligible public
college or public career education institution is hereby  authorized  to
enter  into  one  or more agreements with the corporation and any entity
authorized to finance education loans pursuant to the public authorities
law providing for the participation of such college or career  education
institution in the program and to perform or contract the performance of
its  obligations  under any such agreement. Such obligations may include
without limitation the payment obligations described in this title.