N.Y. Education Law § 681-a: Guaranteed student loans; special requirements

§ 681-a. Guaranteed student loans; special requirements. 1. As used in

this section:

(a) "Federal guaranteed student loan program" shall mean the program

of the United States government making low interest loans available to

students or parents of students to pay for their cost of attending

post-secondary institutions established under Title IV, Part B of the

Higher Education Act of nineteen hundred sixty-five, as amended, or any

successor statute.

(b) "Guaranteed student loan" shall mean a loan made by a lender to a

student who is resident of and is attending an institution in this state

or a parent of such a student under and pursuant to the federal

guaranteed student loan program.

(c) "Lender" shall mean a bank, savings and loan association, credit

union, pension fund, insurance company, school or state lending agency

participating in such federal guaranteed student loan program.

(d) "Guarantee agency" shall mean any state agency or not-for-profit

corporation which has entered into an agreement with the United States

secretary of education to guarantee loans made under the federal

guaranteed student loan program and which guarantees loans made to

residents of this state attending institutions in this state.

(e) "Institution" shall mean any post-secondary institution, including

a vocational school, participating in the federal guaranteed student

loan program.

2. (a) Any individual, institution, lender or guarantee agency which

shall provide a student with an application for a guaranteed student

loan shall advise the student prior to his or her execution of such

application that it is for such a loan. Any application for such a loan

provided to a student shall contain, on its face in bold faced, sixteen

point size print, the following statement: "This is an application for a

guaranteed student loan. The money loaned to you must be repaid by you

in full, with interest, in accordance with the terms of the loan.

Failure to repay the loan can adversely affect your credit and result in

legal action against you."

3. No institution shall accept from a student an application for a

guaranteed student loan if the name of the lender is not prominently set

forth in the application.

4. An institution shall not require a student to make an application

for a guaranteed student loan to a particular lender or otherwise select

for the student such lender. An institution may recommend a lender,

however, in such case, at such time it shall deliver to the student a

statement supplied by the president as to the student's right and

ability to obtain such loan from other lenders and as to the insurance

premiums charged by guarantee agencies on such loans.

5. The corporation, pursuant to its authority to coordinate the

state's administrative effort in student financial aid and loan programs

with those of other levels of government shall develop and maintain

records of the guaranteed student loans made by lenders to students who

are residents of the state attending institutions in this state which

are guaranteed by guarantee agencies other than the corporation. It

shall obtain and collect from other guarantee agencies, at such times

and in such form as the president shall determine, information as to

such guaranteed student loans which shall include the following: (i) the

number and total dollar amount of such loans made during the period

reported, shown by lender and by institution; (ii) the number and total

dollar amount of loans made to students while attending institutions in

this state which were purchased in default during the period reported,

shown by lender and by institution; and (iii) the current default rate

for such loans by lender and by institution.

6. Where a violation of this section by a guarantor or an institution

other than a public institution of higher education is alleged to have

occurred, the attorney general may apply in the name of the people of

the state of New York to the supreme court of the state of New York

within the judicial district in which such violations are alleged to

have occurred, on notice of five days, for an order enjoining or

restraining commission or continuance of the alleged unlawful acts. In

any such proceeding, the court may impose a civil penalty in an amount

not to exceed five thousand dollars. Enforcement of any violation by a

public institution shall be as otherwise authorized by law.