N.Y. Public Authorities Law § 1679: Supplemental higher education loan financing program

§ 1679. Supplemental higher education loan financing program. 1. The

purpose of the supplemental loan financing program is to make available

to students attending public and independent sector institutions of

higher education financial assistance beyond the grants and loans

available from state, federal and private sources where such students

demonstrate remaining financial need.

2. In furtherance of its powers under this title with respect to the

supplemental higher education loan financing program, the authority is

authorized:

(a) to receive and accept from any source loans, contributions or

grants for or in aid of a supplemental higher education loan financing

program or any portion thereof and, when desirable, to use such funds,

property or labor only for the purposes for which it was loaned,

contributed or granted;

(b) to make education loans to participating institutions for higher

education, and require that the proceeds of such education loans be used

for making student loans, funding reserves, providing for capitalized

interest and paying other costs and fees involved in making student

loans or issuing bonds;

(c) to issue bonds not in excess of two hundred million dollars for

the purpose of making direct loans, education loans for the express

purpose of providing student loans, and the purchasing, acquiring or

taking by assignment or otherwise of student loans, provided, however,

that each such sale of bonds shall be subject to the approval of the

public authorities control board;

(d) to purchase student loans from participating institutions for

higher education under terms and conditions which require that such

loans were originated after the effective date of this section in

contemplation of participation by such institutions for higher education

in a supplemental higher education loan financing program of the

authority authorized by this section and in anticipation of the purchase

of such loans by the authority, provided, however, that, prior to the

sale of bonds any portion of the proceeds of which shall be used for the

purchase, acquisition or taking by assignment or otherwise of student

loans, the authority shall by resolution adopt specific guidelines

setting forth the terms and conditions upon which such purchases,

acquisitions and taking by assignment or otherwise shall be made. No

such resolution shall be adopted until at least forty-five days after

the delivery of a copy of such proposed guidelines to the governor, the

temporary president of the senate and the speaker of the assembly for

comment.

3. The authority shall adopt guidelines, subject to review by the

advisory committee, created pursuant to subdivision ten of this section,

and consistent with federal law and regulations to the extent applicable

which shall include but not be limited to: (a) eligibility criteria for

making education loans and direct loans; (b) limitations upon the

principal amounts and the terms of education loans and direct loans; (c)

qualifications and characteristics of borrowers; and (d) procedures for

allocating education loans among independent institutions and for

allocating direct loans among students and parents of students attending

public institutions. Such guidelines shall also include such eligibility

standards for borrowers as the authority shall determine are necessary

or desirable in order to effectuate the purposes of this section

including the following: (a) each student shall have a certificate of

enrollment or acceptance for enrollment at a specific participating

institution for higher education; (b) each student or his or her parents

shall satisfy such financial qualifications as the authority shall

establish to effectuate the purposes of this section; and (c) each

student and his or her parents shall submit such information as may be

required by the authority to his or her institution for higher

education. Such guidelines shall also establish specific criteria

governing the making of direct loans, education loans and student loans,

provisions for default, the establishment of default reserve funds, the

purchase of default insurance, the provision of debt service reserve

funds, and the furnishing by participating independent institutions for

higher education of such additional guarantees of, and security with

respect to, education loans, student loans or the bonds as the authority

shall determine, all of such criteria to be established to assure the

marketability of the bonds and the adequacy of the security for the

bonds.

4. The authority shall contract with financial institutions, the New

York state higher education services corporation established by the

provisions of section six hundred fifty-two of the education law or

other qualified loan origination and servicing organizations, which may

assist in pre-qualifying borrowers for student loans and direct loans

and which may service and administer each student loan and direct loan

and each institution's respective loan series portfolio. The fees or

interest costs of each student loan or direct loan shall include a

portion, if necessary, to cover the applicable pro rata cost of such a

servicing organization.

5. The maximum amount of a student loan or direct loan shall not

exceed:

(a) in the case of a borrower who is a student, the student's cost of

attendance for the period of time for which the loan is made, minus the

following amounts applicable to such period of time:

(1) the amount of grant which the student receives, or would receive

had the student made application, under the federal Pell Grant program

authorized under title IV, part A, of the "Higher Education Act of

1965", as now or hereafter amended;

(2) the maximum net loan proceeds which the student receives, or would

receive had the student made application, under the guaranteed student

loan program as defined under (i) title IV, part B, of the "Higher

Education Act of 1965", as now or hereafter amended, and (ii) the

regulations implementing such program promulgated at 34 Code of Federal

Regulations, part 682, as now or hereafter amended;

(3) the maximum net loan proceeds which the student's parents receive,

or would receive had the student's parents made application, under the

parent loan to undergraduate students program as defined under (i) title

IV, part B, of the "Higher Education Act of 1965", as now or hereafter

amended, and (ii) the regulations implementing such program promulgated

at 34 Code of Federal Regulations, part 683, as now or hereafter

amended;

(4) the maximum net loan proceeds which the student receives, or would

receive had the student made application, under the auxiliary loan to

assist students program as defined under title IV, part B, of the

"Higher Education Act of 1965", as now or hereafter amended;

(5) the maximum net loan proceeds which the student receives, or would

receive had the student made application, under the health education

assistance loan program as defined under (i) title IV, part C, of the

"Health Professions Educational Assistance Act of 1976", as now or

hereafter amended, and (ii) the regulations implementing such program

promulgated at 42 Code of Federal Regulations, part 60-C, as now or

hereafter amended;

(6) the amount of scholarships, grants or other nonrepayable

assistance received from government agencies, educational institutions

or private institutions or organizations;

(7) except in the case of a student who is eligible for a loan under

the auxiliary loan to assist students program as defined under Title IV,

part B, of the "Higher Education Act of 1965", as now or hereafter

amended, the expected family contribution computed pursuant to section

428 of the "Higher Education Act of 1965", as now or hereafter amended

with respect to families in which the total adjusted gross income of all

members of the family exceeds thirty thousand dollars; and

(b) (1) in the case of a borrower who is a parent of an eligible

student, the student's cost of attendance minus (i) the amounts

determined pursuant to subparagraphs one, two and six of paragraph (a)

of this subdivision; and (ii) the amount of loan which the student

receives pursuant to paragraph (a) of this subdivision;

(2) the combined maximum loan amount of both parents shall not exceed

the maximum amount as determined under this paragraph.

6. Notwithstanding any other provisions contained in this title, but

pursuant to guidelines, the authority may commingle and pledge as

security for a series or issue of bonds, with the consent of all of the

institutions for higher education which are participating in such series

or issue, the student loan series portfolios and some or all future

student loan series portfolios of such institutions for higher education

provided that student loan series portfolios and other security and

moneys set aside in any fund or funds pledged for any series of bonds or

issue of bonds shall be held for the sole benefit of such series or

issue separate and apart from student loan series portfolios and other

security and moneys pledged for any other series or issue of bonds of

the authority. Bonds may be issued in series under one or more

resolutions in the discretion of the authority.

7. The authority shall require that education loans be used solely to

make student loans and that direct loans be used solely for the purpose

of financing the cost of attendance at public institutions for higher

education. The authority shall require that independent institutions for

higher education shall require that each borrower under a student loan

shall use the proceeds solely for such cost of attendance and that each

such borrower shall so certify.

8. Any student otherwise eligible for a student loan or for a direct

loan 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 student shall be deemed to have full

legal capacity to act; provided, however, that the signatures of both

parents of an unemancipated applicant shall be required for the purpose

of receiving such a loan unless the authority determines in accordance

with guidelines established by the board of the authority that unusual

family circumstances preclude the availability of such signatures.

9. The authority may charge to and apportion among participating

institutions of higher education and students or their parents or both

its administrative and operating costs and expenses incurred in the

exercise of the powers and duties conferred by this section.

10. There is hereby created an advisory committee on the supplemental

higher education loan financing program to the dormitory authority which

shall consist of the chairman of the authority, who shall serve as the

chairman of such committee, the commissioner of education, the

chancellor of the state university of New York, the chancellor of the

city university of New York, the president of the higher education

services corporation, the chairman of the board of trustees of the

commission on independent colleges and universities, the president of

the New York state financial aid administrators association and an

undergraduate student appointed by the governor who is in attendance at

a public or independent institution of higher education located in this

state. Such committee shall participate in the development of and review

the program guidelines to be established by the authority as required by

this section and may make recommendations on, comment upon and advise

the members of the board of the authority with respect to such

guidelines. Each of the members of such committee may designate in

writing to the chairman of the committee a representative to serve on

such committee in the place of such member. The members of the committee

shall receive no compensation for their services, but shall be entitled

to reimbursement by the dormitory authority for their actual and

necessary expenses incurred in the performance of their duties.

11. The authority shall report annually to the governor and the

legislature on or before February first concerning its findings,

conclusions and recommendations with respect to the operation of the

program provided for in this section.