N.Y. Public Authorities Law § 2405-a: Education loans

§ 2405-a. Education loans. (1) For purposes of this section, the

following words and terms shall have the following meaning unless the

context shall indicate another or different meaning or intent:

(a) "Corporation" shall mean the New York state higher education

services corporation.

(b) "Education Loan" shall mean: (i) a New York higher education loan

program loan made pursuant to part v of article fourteen of the

education law; or (ii) a loan under Part B of Title IV of the Higher

Education Act of nineteen hundred sixty-five, as amended, including but

not limited to a loan described in subdivision ten of section

twenty-four hundred two of this part; provided, that the borrower shall

be required to apply the net proceeds of such loans to pay the student's

costs of post-secondary education or to repay one or more such loans

incurred for such purpose.

(2) In addition to the powers of the agency pursuant to the other

sections of this title, the agency shall have power:

(a) To enter into one or more agreements with the corporation and to

perform or contract for the performance of its obligations under any

such agreement;

(b) To make and contract to make and to acquire and contract to

acquire education loans and to enter into advance commitments for the

purchase of said education loans;

(c) Subject to any agreement with bondholders or noteholders, to

invest moneys of the agency not required for immediate use, including

proceeds from the sale of any bonds or notes, in education loans;

(d) To make and execute contracts for the marketing, origination,

servicing, collection, administration, guarantee, securing, and

financing of education loans originated or acquired by the agency

pursuant to this title, and to pay the reasonable value of services

rendered to the agency pursuant to those contracts;

(e) Subject to any agreement with bondholders or noteholders, to

renegotiate or refinance any education loan that has been acquired by

the agency or which the agency has committed to purchase that is in

default; to waive any default or consent to the modification of the

terms or any such education loan; to forgive all or part of any

indebtedness; and to commence any action or proceeding to protect or

enforce any right conferred upon it with respect to any such education

loan by law, loan agreement, contract or other agreement;

(f) To prescribe standards and criteria for the origination of

education loans to be eligible for acquisition by the agency and for

education loans purchased by the agency;

(g) Subject to any agreement with bondholders or noteholders, to sell

any education loans made or acquired by the agency at public or private

sale and at such price or prices and on such terms as the agency shall

determine;

(h) To establish, revise from time to time, charge and collect such

premiums or fees in connection with education loans and its

participation in the New York higher education loan program as the

agency shall determine; and

(i) Subject to any agreement with bondholders or noteholders, to

invest moneys pledged to secure bonds issued for the corporate purposes

authorized by this section not required for immediate use in investments

authorized for investment of state funds under section ninety-eight or

ninety-eight-a of the state finance law.

(3) The agency shall have the power and is hereby authorized from time

to time to issue its bonds and notes pursuant to section two thousand

four hundred six of this title for the corporate purposes authorized by

this section, including without limitation for the purposes of financing

and refinancing education loans and of refunding any bonds or notes

issued for such purpose.

(4) Each lender or service provider who makes a representation or

warranty to the agency with respect to an education loan shall be liable

to the agency for any damages suffered by the agency by reason of the

untruth of such representation or the breach of such warranty and, in

the event that any representation shall prove to be untrue when made or

in the event of any breach of warranty, such person shall, at the option

of the agency, repurchase the education loan for the price provided in

the applicable financing agreement, as the agency may determine.

(5) It is the intent of the legislature that any pledge by the agency

of education loans or of earnings, revenues or other moneys receivable

from any source, including without limitation default payments by 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, with respect

to education loans financed by the agency, shall be valid and binding

from the time when the pledge is made. The education loans, earnings,

revenues or other moneys so pledged and thereafter received by the

agency or its agent, including without limitation the higher education

services corporation or any education loan servicer, shall immediately

be subject to the lien of such pledge without any physical delivery

thereof or further act, and the lien of any such pledge shall be valid

and binding as against all parties having claims of any kind in tort,

contract or otherwise against the agency or its agent, including without

limitation the higher education services corporation or any education

loan servicer, irrespective of whether such parties have notice thereof.

Neither the resolution nor any other instrument by which a pledge is

created need be recorded.

(6) The state of New York mortgage agency New York higher education

loan program default reserve fund. (a) There is hereby created and

established in the sole custody of the state of New York mortgage agency

a special fund to be known as the state of New York mortgage agency New

York higher education loan program default reserve fund which shall be

for the exclusive benefit of the holders of education loans that the

agency has acquired, or agreed to acquire, under the New York higher

education loan program, codified in part V of article fourteen of the

education law.

(b) Amounts held in this fund shall not be, or be deemed, funds of the

state or funds under the management of the state, the agency, or the

corporation. The obligations of such fund shall not be, or be deemed,

the debts or obligations of the state and the state shall not be, or be

deemed, in any way obligated to: any holder of any such education loan;

any holder of bonds issued pursuant to section two thousand four hundred

six of this part for the corporate purposes authorized in section two

thousand five-a of this article; any fiduciary or provider of any credit

facility, liquidity facility or interest rate exchange agreement with

respect to such bonds; or any other creditor of this fund.

(c) Such fund shall consist of: (i) all moneys received by the higher

education services corporation pursuant to paragraph (b) of subdivision

seven of section six hundred ninety-two of the education law, in

connection with education loans that the agency has acquired or agreed

to acquire under the New York higher education loan program education

loans; (ii) any transfers from the New York higher education loan

program variable rate default reserve fund created by section

seventy-eight-a of the state finance law or from the New York higher

education loan program fixed rate default reserve fund created by

section seventy-eight-b of the state finance law; and (iii) any

appropriation payment or transfer to the agency for such purpose.

(d) The agency shall establish accounts within the fund and priorities

of payment from such accounts and shall invest the fund in investments

authorized for investment of state funds under section ninety-eight or

ninety-eight-a of the state finance law.

(e) This fund, including all sub-accounts thereof, shall be segregated

from all other funds kept by the agency and shall not be used for any

other purpose beyond those set forth in part V of article fourteen of

the education law or in this section. The agency shall utilize monies in

the fund solely to pay the outstanding principal, capitalized and unpaid

accrued interest on defaulted education loans described in paragraph a

of this subdivision.

(f) Nothing contained in this section shall prevent the agency, or the

corporation, from receiving grants, gifts or bequests for the purposes

of this fund and depositing them into the fund according to law, rules,

or regulations.

(g) The agency shall make payments from the monies in this fund in

amounts and at times required pursuant to part V of article fourteen of

the education law.