ESC-25-10-00007-A New York Higher Education Loan Program (NYHELPs)
8/25/10 N.Y. St. Reg. ESC-25-10-00007-A
NEW YORK STATE REGISTER
VOLUME XXXII, ISSUE 34
August 25, 2010
RULE MAKING ACTIVITIES
HIGHER EDUCATION SERVICES CORPORATION
NOTICE OF ADOPTION
I.D No. ESC-25-10-00007-A
Filing No. 838
Filing Date. Aug. 10, 2010
Effective Date. Aug. 25, 2010
New York Higher Education Loan Program (NYHELPs)
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of Part 2213 of Title 8 NYCRR.
Statutory authority:
Education Law, section 691(10)
Subject:
The New York Higher Education Loan Program (NYHELPs).
Purpose:
Amend several provisions of the regulation.
Substance of final rule:
1. Section 2213.2. Borrower eligibility requirements. The amendment corrects erroneous references to subdivisions within the section and clarifies the reference to title IV loans.
2. Section 2213.5. Due diligence in originating, disbursing, and servicing program loans. The amendment (a) clarifies that a discharge may only be granted based upon the death or total and permanent disability of a student while that student is enrolled in college; (b) provides that a request for discharge may also be based on the death of the borrower while on active military duty to correspond with section 2213.20(e)(2); and (c) provides for disbursements in unequal installments to accommodate differences in college payment deadlines.
3. Section 2213.6. Application content. The amendment conforms the requirements contained in the regulation to federal regulation by reference.
4. Section 2213.10. Default fees. The amendment (a) provides that the corporation will determine a process for transfer of funds when payment of the college default fee is made by an entity other than the college; and (b) clarifies processing of the borrower default fee; no substantive change was made except to permit deposits into a separate account at SONYMA rather than the Corporation.
5. Section 2213.13. College certification requirements. The amendment (a) clarifies that when a college certifies student eligibility, such certification includes that the student is making satisfactory academic progress; and, (b) adds two additional certifications, which are: (i) the program loan doesn't exceed the student's unmet need and is within the annual loan limit; and, (ii) a program loan for a prior academic term doesn't exceed the student's unmet need, is within the annual loan limit and doesn't supplant or reimburse institutional aid.
6. Section 2213.14. Processing program loan proceeds. The amendment: (a) permits program loans to be disbursed in unequal disbursements; (b) clarifies when the college must credit the loan to the student's account; and (c) clarifies the process and requirements for a program loan for a prior academic term.
7. Section 2213.15. Processing program loan refunds. The amendment clarifies that any refund of fees will be determined for each disbursement rather than the entire program loan.
8. Section 2213.17. Disclosure requirements for participating lenders. The amendment conforms the requirements contained in the regulation to federal regulation by reference and clarifies the process for disseminating and collecting the required disclosure forms.
9. Section 2213.20. Program loan repayment. The amendment will make deferments available to all borrowers in active duty status rather than limit this benefit to student borrower is active duty status. The amendment will also make deferments available based on the death of a borrower on active military duty in the event the borrower does not qualify for discharge. The rule also clarifies the requirement for a modified payment plan.
10. Section 2213.28. Incorporation by reference. The amendment updates the regulation to include version 2 of both the program's underwriting manual and the program's default avoidance and claim manual.
Final rule as compared with last published rule:
Nonsubstantive changes were made in sections 2213.2, 2213.5, 2213.6, 2213.10, 2213.13, 2213.14, 2213.15, 2213.17, 2213.20 and 2213.28.
Text of rule and any required statements and analyses may be obtained from:
Cheryl B. Fisher, Supervising Attorney, New York State Higher Education Services Corporation, 99 Washington Avenue, Room #1315, Albany, New York 12255, (518) 474-5592, email: regcomments@hesc.org
Revised Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement
A revised regulatory impact statement, regulatory flexibility analysis, Rural Area Flexibility Analysis and Job Impact Statement are not required as there were no substantial revisions to the proposed rule. The revisions to the proposed rule provided clarification and did not materially alter the purpose of the proposed rule. The previously submitted RIS, RFA, RAFA and JIS are accurate and the revisions to the proposed rule do not necessitate modification of the above mentioned.
Assessment of Public Comment
The New York State Higher Education Services Corporation (HESC) is authorized, pursuant to New York State Education Law § 691(10), to adopt rules and regulations implementing NYHELPs.
HESC received comments following the June 23, 2010 publication of the ‘Notice of Proposed Rulemaking' in the State Register. All substantive comments received are considered and discussed below.
1. Credit Criteria Requirement
Comment: The regulation contains a requirement that non-student borrowers and primary cosigners have at least two years of credit history and at least three trade lines; otherwise the application is denied for insufficient credit. The requirement of three trade lines fails to consider older borrowers with little debt and high FICO scores, which are all excellent applicants that should qualify for a NYHELPs loan. [Underwriting Manual, § III(A)(2)(iv), page 4]
Response: HESC has amended this provision to eliminate the trade line requirement.
2. Income Verification Requirement
Comment: The regulation contains a requirement that both the current year's and the prior year's income history of each applicant (except a student borrower) must be verified. This requirement has caused an inordinate delay in processing the loan resulting in loan cancellation. The current year's income history is sufficient to evaluate an applicant's income. [Underwriting Manual, § III(D)(2), page 5]
Response: HESC has amended this provision to require that only the current year's income history of each applicant (except a student borrower) be verified.
3. Employment Verification Requirement
Comment: The regulations require that the holder/servicer confirm an applicant's employment by telephone and that the pay stub matches the information provided in the application. The requirement that the holder/servicer call every employer delays loan processing and is unnecessary to verify employment status given the documentation provided. [Underwriting Manual, § III(E), page 5]
Response: HESC has amended this provision to require that the holder/servicer verify employment as directed by the Corporation or if the holder/servicer suspects fraud.
