New York Codes, Rules and Regulations
Title 8 - EDUCATION DEPARTMENT
Chapter XX - Higher Education Services Corporation
Subchapter D - The New York Higher Education Loan Program (nyhelps)
Part 2213 - The New York Higher Education Loan Program (nyhelps)
Section 2213.20 - Program loan repayment

Universal Citation: 8 NY Comp Codes Rules and Regs ยง 2213.20

Current through Register Vol. 46, No. 39, September 25, 2024

(a) Repayment. For any program loan made, the repayment period shall begin 60 days after the date the last disbursement is made on the program loan or within one monthly billing cycle thereafter. Interest shall begin to accrue starting the day of disbursement by the lender to the corporation. Repayment options shall be determined by the corporation and set forth in the program's underwriting manual as well as published on the corporation's website. With respect to program loans that are otherwise eligible for purchase by a public benefit corporation, such determinations shall be subject to approval by such public benefit corporation, on at least an annual basis with respect to program loans to be made for the applicable academic year, or portion thereof, after taking into account applicable financial market conditions.

(1) In-school period.
(i) A student borrower's loan principal payment may be deferred during the in-school period. Subject to subparagraph (ii) of this paragraph, student borrowers shall be required to either pay interest or have the accrued interest capitalized at the end of the in-school deferment, set forth in paragraph (c)(1) of this section, or the end of any applicable grace period, set forth in paragraph (2) of this subdivision.

(ii) The availability of interest payment deferment during the in-school period shall be determined by the corporation, and with respect to program loans that are otherwise eligible for purchase by a public benefit corporation shall be subject to approval by such public benefit corporation on at least an annual basis with respect to program loans to be made for the applicable academic year, or portion thereof, after taking into account applicable financial market conditions. The corporation shall inform holders and colleges of, and publish on its website, the availability of the interest payment deferment for program loans to be used for the applicable academic year.

(iii) Non-student borrowers shall pay principal and interest while the student is in college.

(2) Grace period.
(i) The grace period for a student borrower whose principal, or whose principal and interest, payment was deferred during the in-school period shall extend for six months following graduation, withdrawal, less than half time enrollment, or transfer to a non-title IV eligible college. Subject to subparagraph (1)(ii) of this subdivision, a student borrower shall be required to either pay interest or have the accrued interest capitalized at the end of the grace period.

(ii) Non-student borrowers shall pay principal and interest while the student on behalf of whom a program loan was made is in a grace period.

(3) Return to college.
(i) Student borrowers who have entered repayment after their grace period and who subsequently return to college at least half time at a title IV eligible college may have, on previously disbursed program loans, their program loan principal payments suspended, as determined by the corporation and, with respect to program loans that are otherwise eligible for purchase by a public benefit corporation, such public benefit corporation. Such student borrowers may also be eligible for the deferral of interest payments for all or a portion of the period in which the student is in attendance at least half time at a title IV eligible college, subject to the approval of the corporation and the public benefit corporation. Interest shall continue to accrue during the suspension of principal and interest payments. Principal and interest payments on such previously disbursed program loans shall resume upon graduation, withdrawal, less than half time enrollment, or transfer to a non-title IV eligible college. The suspension of payments shall not extend the repayment requirements of the previously disbursed program loans.

(ii) Student borrowers who subsequently return to college at least half time at a title IV eligible college during their grace period and have suspended their program loan principal, or principal and interest, payments in accordance with subparagraph (i) of this paragraph shall be eligible for a new grace period following graduation, withdrawal, less than half time enrollment, or transfer to a non-title IV eligible college.

(4) Repayment terms. The borrower shall be subject to all program requirements regarding the repayment of any program loan received. Each program loan shall be repaid within the applicable repayment period, which shall be determined by the corporation and set forth in the program's underwriting manual, and with respect to program loans that are otherwise eligible for purchase by a public benefit corporation shall be subject to approval by such public benefit corporation, on at least an annual basis with respect to program loans to be made for the applicable academic year, or portion thereof, after taking into account applicable financial market conditions.

(5) Minimum payment. The minimum monthly payment a borrower may be assessed is $50, except for a borrower making:
(i) interest only payments that are less; or

(ii) payments in accordance with an approved modified payment plan.

(6) Modified payment plan. During any period in which the corporation and, with respect to program loans that are otherwise eligible for purchase by a public benefit corporation, such public benefit corporation determine that modified payment plans may be offered, after taking into account applicable financial market conditions, a borrower who is not in default on the repayment of a program loan(s) may be eligible for a modified payment plan in accordance with criteria set forth in the program's default avoidance and claim manual. This repayment option shall not extend the original repayment terms of the previously disbursed program loans.

(b) Forbearance.

(1) Administrative forbearance. Subject to paragraph (5) of this subdivision, an administrative forbearance may be granted for the period of prior delinquency, if any, and up to an additional 60 days due to extenuating circumstances of the borrower and/or cosigner(s), or in connection with the processing of a program loan, a deferment, a re-establishment of a repayment due date for the borrower, a discharge, a modified payment plan, or an economic hardship forbearance, as determined by the corporation. An administrative forbearance shall only be granted once for each incident resulting in a request for a discharge, modified payment plan, or economic hardship forbearance. If subsequent applications are based on the continuation of the same incident, an administrative forbearance shall not be granted. An administrator forbearance shall not extend the length of the original repayment terms of the previously disbursed program loans.

(2) Economic hardship forbearance. Subject to paragraph (5) of this subdivision, a borrower who is not in default on the repayment of a program loan(s) and who is unable to make payments because of a temporary change in financial circumstances may apply to the corporation for a forbearance due to economic hardship in accordance with criteria set forth in the program's default avoidance and claim manual. Economic hardship forbearance shall not extend the original repayment terms of the previously disbursed program loans.

(3) Forbearances shall be agreed upon by the holder and borrower either verbally or in writing, as directed by the corporation.

(4) A borrower shall be required to either pay interest or to have the accrued interest capitalized at the end of any forbearance period.

(5) The terms and availability of administrative and economic hardship forbearance shall be determined by the corporation, and with respect to program loans that are otherwise eligible for purchase by a public benefit corporation shall be subject to approval by such public benefit corporation, on at least an annual basis with respect to all or a portion of the program loans to be made for the applicable academic year after taking into account applicable financial market conditions.

(6) Disaster relief. In a federally declared major disaster, as defined in 42 U.S.C. section 5122(2), the corporation may grant certain relief for borrowers and cosigners within a federally declared disaster area, including the cessation of due diligence and collection activities for up to three months and suspension of required payments under certain repayment plans. Prior to granting any relief under this paragraph, the corporation shall perform an impact assessment and with respect to program loans that are otherwise eligible for purchase by a public benefit corporation shall be subject to approval by such public benefit corporation.

(c) Deferment.

(1) In-school deferment. In accordance with paragraphs (a)(1) and (2) of this section, a student borrower in attendance at least half time at a title IV eligible college may be granted a deferral of principal or principal and interest payments as follows: up to a total of 12 semesters or 18 trimesters for undergraduate study, including, for purposes of determining remaining available periods of deferment, any previously completed periods of study which shall count toward the total; up to a total of 16 semesters or 24 trimesters for both undergraduate and graduate study, including, for purposes of determining remaining available periods of deferment, any previously completed periods of study which shall count toward the total; and one year for an approved professional residency or internship program as approved by the commissioner. In no instance shall the total deferral period exceed nine academic years.

(2) Military service deferment.
(i) A deferment for military service shall be unlimited for borrowers who are members of the military and in active duty status, and shall be limited to the period of a student borrower's in-school and grace period for cosigners who are members of the military and in active duty status. Such deferment for borrowers who are members of the military and in active duty status may extend the term of the loan, however, such deferment for cosigners who are members of the military and in active duty status shall not extend the term of the loan. The corporation shall request and receive documentation to verify active duty status in order to qualify the borrower, or cosigner, for this deferment. The borrower's or cosigner's continued eligibility for the military service deferment shall be reviewed by the holder, servicer or corporation as applicable, prior to the expiration date specified in the borrower's, or cosigner's military orders or other government documentation.

(ii) A program loan may be eligible for a deferment if the borrower dies while on active military duty. The terms and availability of this type of deferment shall be determined by the corporation, and with respect to program loans that are otherwise eligible for purchase by a public benefit corporation shall be subject to approval by such public benefit corporation, on at least an annual basis with respect to all or a portion of the program loans to be made for the applicable academic year after taking into account applicable financial market conditions.

(3) Additional deferments. A holder shall not be precluded from offering additional deferments to a borrower, as determined by the holder, and approved by the corporation; however any increase in the program loan balance as a result of the deferment shall not be eligible for claim payment by the corporation in the event of default. Holders offering any approved additional deferments shall notify the borrower of the continued availability of the benefit upon the sale of the program loan to the new holder. The new holder of a program loan who fails to provide all additional benefits offered to a borrower by a prior holder shall not be eligible to receive reimbursement from the corporation in the event of default.

(d) Fees. Fees for forbearance or deferment are prohibited.

(e) Loan discharge.

(1) Student death and disability discharge. A borrower's and cosigner's obligation to repay a program loan may be discharged based on the death of the student or the total and permanent disability of the student for whom the program loan was taken, while the student was enrolled or accepted for enrollment at least half time at the time of either occurrence. The terms and availability of such discharge shall be determined by the corporation, and with respect to program loans that are otherwise eligible for purchase by a public benefit corporation shall be subject to approval by such public benefit corporation, on at least an annual basis with respect to all or a portion of the program loans to be made for the applicable academic year after taking into account applicable financial market conditions.

(2) Military service discharge. A borrower's, and his or her cosigner's, obligation to repay a program loan may be discharged based on the death of the borrower while on active military duty. The terms and availability of such discharge shall be determined by the corporation, and with respect to program loans that are otherwise eligible for purchase by a public benefit corporation shall be subject to approval by such public benefit corporation, on at least an annual basis with respect to all or a portion of the program loans to be made for the applicable academic year after taking into account applicable financial market conditions.

(3) A certified death certificate, or other documentation acceptable to the corporation, shall be sufficient proof of death.

(4) An application for a loan shall be submitted by a borrower or cosigner and approved by the corporation.

(5) Program loans that are discharged shall be eligible for payment from the applicable default reserve fund.

(f) Loan interest rate reduction. In any period in which loan interest reductions are offered, a borrower making pre-authorized (auto-debit) payments may receive an interest rate reduction in an amount determined by the corporation in consultation with the agency.

(g) Cosigner release.

(1) The terms and availability of cosigner release shall be determined by the corporation, and with respect to program loans that are otherwise eligible for purchase by a public benefit corporation shall be subject to approval by such public benefit corporation on at least an annual basis with respect to program loans to be made for the applicable academic year, or portion thereof, after taking into account applicable financial market conditions.

(2) If available, a cosigner may be released from his/her responsibility if a borrower:
(i) makes 48, or with respect to loans made for loan periods beginning on or after July 1, 2012, no less than 24 consecutive, monthly, on-time payments of principal and interest upon entering into repayment after the end of any applicable grace period following graduation, withdrawal, less than half time enrollment, or transfer to a non-title IV eligible college, or such other longer period of time to be determined by the corporation on an annual basis, and with respect to program loans that are otherwise eligible for purchase by a public benefit corporation subject to approval by such public benefit corporation, and such period of time shall be published on the corporation's website; and

(ii) is determined to individually satisfy credit criteria that would be applicable to a borrower without a cosigner in connection with a similar program loan at the time of the cosigner release, as set forth in the program underwriting manual.

(3) On-time payments shall mean payments received within 15 days of the due date.

(4) Payments must be made by the borrower directly, not a third party on the borrower's behalf, in order to be eligible for cosigner release.

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