(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.