senate Bill S4575A

Amends the student loan linked deposit act

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 11 / Apr / 2013
    • REFERRED TO HIGHER EDUCATION
  • 08 / Jan / 2014
    • REFERRED TO HIGHER EDUCATION
  • 24 / Mar / 2014
    • AMEND AND RECOMMIT TO HIGHER EDUCATION
  • 24 / Mar / 2014
    • PRINT NUMBER 4575A

Summary

Enacts the student loan linked deposit act.

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Bill Details

Versions:
S4575
S4575A
Legislative Cycle:
2013-2014
Current Committee:
Senate Higher Education
Law Section:
Education Law
Laws Affected:
Amd §680, Ed L; amd §98-a, add Art 15-A §§225 - 234-c, St Fin L

Sponsor Memo

BILL NUMBER:S4575A

TITLE OF BILL: An act to amend the education law and the state
finance law, in relation to the student loan linked deposit act

PURPOSE: This bill would create the student loan linked deposit
program to provide low-cost student loans by means of authorizing the
comptroller to place state deposits with participating lenders at a
decreased interest rate, in order to offer students reduced rate
student loans at up to 3 points below market rates.

SUMMARY OF PROVISIONS:

Section 1: Provides the Legislative findings and intent

Section 2: Amends paragraph c of subdivision 1 of section 680 of the
education law to add a new paragraph d to authorize the Higher
Education Services Corporation to administer the student loan linked
deposit program pursuant to article fifteen-A of the state finance
law.

Section 3. Amends subdivision 2 of section 98-a of the state finance
law to allow the comptroller to invest funds in the student loan
linked deposit program pursuant to article fifteen-A of the state
finance law.

Section 4: Amends the state finance law by adding a new article
fifteen-A to establish the student loan linked deposit act which
further establishes the student loan linked deposit program.

Section 5. Sets forth the effective date.

JUSTIFICATION: This bill creates a new article fifteen-A in the state
finance law to establish the student loan linked deposit program. Such
program is modeled after a highly successful economic development
linked deposit program and it would provide low-cost student loans by
means of authorizing the comptroller to place state deposits with
participating lenders at a decreased interest rate in order to offer
students reduced rate student loans at up to 3 points below market
rates.

Additionally, this bill would designate $100 million for the purposes
of the program, with repaid loan amounts revolving back into available
deposits and loans. Students who attend in state college could be
eligible to receive such loans to cover qualified tuition expenses.
These expenses include tuition, fees, books, supplies and room and
board. A student could qualify for a maximum of $7,500 per academic
year and a maximum total amount up to $30,000

With the cost of higher education increasing and the amount of student
loan debt accumulated during the course of a college education growing
at an alarming rate, this bill would lessen the amount of debt a
student will have upon graduation by authorizing lenders to lend money
to qualified students at a reduced interest rate thereby greatly
reducing the student loan debt burden.

LEGISLATIVE HISTORY: New bill.


FISCAL IMPLICATIONS: This bill will require $100 million in state
investments.

EFFECTIVE DATE: This act shall take effect on the 180th day after it
shall have become law, provided, however, that effective immediately,
the addition, amendment and/or repeal of any rules or regulations
necessary for implementation of the foregoing sections of this act on
its effective date is authorized and directed to be made and completed
on or before such effective date.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4575--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 11, 2013
                               ___________

Introduced  by  Sen. LAVALLE -- read twice and ordered printed, and when
  printed to be committed to the Committee on Higher Education -- recom-
  mitted to the Committee on Higher Education in accordance with  Senate
  Rule  6,  sec.  8  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

AN ACT to amend the education law and the state finance law, in relation
  to the student loan linked deposit act

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Legislative findings and declaration of purpose. The legis-
lature  hereby  finds  that the costs of completing higher education for
residents of the state of New York are increasing at a rate significant-
ly faster than the rate of inflation. Paying out of  pocket  has  become
increasingly  difficult  for  families  and  students seeking to improve
their educational and economic prospects. An affordable  college  educa-
tion  has  become  increasingly  inaccessible to large numbers of middle
class families in the state, for  whom  financial  resources,  including
state  grants  and scholarships, are either limited or unavailable. Many
families and students have no choice but to turn to the private  lending
market in order to finance their higher education.
  Compounding  the  problem  is the fact that typical interest rates for
student loans offered through the private lending market are  relatively
high when compared to interest rates for other purposes, such as a mort-
gage  or  automobile.  Additionally,  the average student loan debt upon
graduation is more than $26,000 per student in the state.  Reducing  the
debt  burden  that  students endure upon graduating college has become a
critical public policy goal.
  As increasing the share of the state's population that undertakes  and
completes  higher  education is also a desirable public policy goal, and
an individual's decision to complete a program of  postsecondary  educa-
tion  typically reaps economic and social rewards to the individual, the

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09566-02-4

S. 4575--A                          2

legislature hereby declares that it is in the best interest of the state
to create a student loan linked deposit program whereby the  state  will
subsidize private lenders to provide reduced-rate loans to students.
  S 2. Paragraph c of subdivision 1 of section 680 of the education law,
as  added by chapter 622 of the laws of 2008, is amended and a new para-
graph d is added to read as follows:
  c. To enter into cooperative agreements, subject to  the  approval  of
the  board  of trustees and the director of the budget, with other enti-
ties, including, but not limited to, other states, the  federal  govern-
ment,  and  post-secondary  institutions,  to establish, administer, and
operate federal student aid programs. Notwithstanding the provisions  of
paragraphs  a  and b of this subdivision, the corporation is authorized,
pursuant to such cooperative agreements, to provide federal student  aid
services  to  students  and  families  who are not residents of New York
state[.]; AND
  D. TO ADMINISTER AND OPERATE A STUDENT  LOAN  LINKED  DEPOSIT  PROGRAM
PURSUANT TO ARTICLE FIFTEEN-A OF THE STATE FINANCE LAW.
  S  3. Subdivision 2 of section 98-a of the state finance law, as added
by chapter 705 of the laws of 1993, is amended to read as follows:
  2. Notwithstanding any provision of law to the contrary, investment of
bond proceeds and other funds not immediately required may  be  invested
by  the  comptroller  in  linked deposits pursuant to article fifteen OR
ARTICLE FIFTEEN-A of this chapter. If any moneys  are  invested  by  the
comptroller  in  linked  deposits pursuant to article fifteen OR ARTICLE
FIFTEEN-A of this chapter, the comptroller  shall  compute  the  monthly
earnings  for  all  funds,  other  than  the general fund, as if no such
moneys had been invested in such linked deposits.
  S 4. The state finance law is amended by adding a new article 15-A  to
read as follows:
                              ARTICLE 15-A
                     STUDENT LOAN LINKED DEPOSIT ACT
SECTION 225.   SHORT TITLE.
        226.   DEFINITIONS.
        227.   ESTABLISHMENT  AND  PURPOSE;  STUDENT LOAN LINKED DEPOSIT
                 PROGRAM AUTHORIZATION.
        228.   RESPONSIBILITIES OF THE PRESIDENT, COMPTROLLER AND SUPER-
                 INTENDENT.
        229.   RELEASE FROM LINKED DEPOSITS.
        230.   LINKED STUDENT LOANS.
        231.   INTEREST RATE FOR LINKED LOANS; NO LENDER'S FEES.
        232.   APPLICATION PROCEDURE.
        233.   REPAYMENT PERIODS FOR LINKED STUDENT LOANS.
        234.   LIABILITY; EARLY REPAYMENT AND WITHDRAWAL.
        234-A. MONITORING AND REPORT.
        234-B. PROMOTION OF PROGRAM.
        234-C. RULES AND REGULATIONS.
  S 225. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY  BE  CITED  AS
THE "STUDENT LOAN LINKED DEPOSIT ACT".
  S  226.  DEFINITIONS.  WHEN  USED  IN THIS ARTICLE, UNLESS A DIFFERENT
MEANING CLEARLY APPEARS FROM THE CONTEXT, THE FOLLOWING TERMS SHALL HAVE
THE FOLLOWING MEANINGS:
  1. "AUTHORIZED DEPOSITOR" MEANS THE COMPTROLLER WITH RESPECT TO LINKED
DEPOSITS MADE BY THE COMPTROLLER.
  2. "COMPTROLLER" MEANS THE COMPTROLLER OF THE STATE OF NEW YORK.
  3. "DEPARTMENT" MEANS THE DEPARTMENT OF FINANCIAL SERVICES.

S. 4575--A                          3

  4. "ELIGIBLE RECIPIENT" MEANS  AN  INDIVIDUAL  THAT  HAS  SUCCESSFULLY
APPLIED FOR A LINKED STUDENT LOAN AND MET ALL REQUIREMENTS PRESCRIBED BY
THE PRESIDENT AND A LENDING INSTITUTION FOR RECEIPT OF A LOAN.
  5. "LENDER" MEANS:
  (A) ANY COMMERCIAL BANK WHICH IS OR SHALL BECOME AN APPROVED DEPOSITO-
RY  OF  STATE  FUNDS UNDER THE PROVISIONS OF SECTION ONE HUNDRED FIVE OF
THIS CHAPTER AND WHICH AGREES TO PARTICIPATE IN THE PROGRAM; OR
  (B) ANY THRIFT WHICH AN AUTHORIZED DEPOSITOR DETERMINES IS ELIGIBLE TO
ACCEPT LINKED DEPOSITS BASED UPON CRITERIA  APPLIED  BY  THE  AUTHORIZED
DEPOSITOR  IN  MAKING  DETERMINATIONS  UNDER SECTION ONE HUNDRED FIVE OF
THIS CHAPTER, AND WHICH AGREES TO PARTICIPATE IN THE  PROGRAM,  PROVIDED
THAT  ANY  LINKED  DEPOSIT  IN  SUCH THRIFT SHALL BE SECURED IN THE SAME
MANNER AS MONEYS DEPOSITED PURSUANT TO SECTION ONE HUNDRED FIVE OF  THIS
CHAPTER  AND  SUCH THRIFTS SHALL PLEDGE ASSETS OR FURNISH OTHER SECURITY
SATISFACTORY IN FORM AND AMOUNT TO  THE  AUTHORIZED  DEPOSITOR  FOR  THE
REPAYMENT OF MONEYS.
  6.  "LINKED DEPOSIT" MEANS A DEPOSIT PLACED WITH A LENDER BY THE COMP-
TROLLER FOR A PERIOD OF FOUR YEARS AT THE LINKED DEPOSIT INTEREST  RATE,
PROVIDED THE LENDER AGREES TO:
  (A) LEND THE EQUIVALENT VALUE OF SUCH DEPOSIT TO AN ELIGIBLE RECIPIENT
AT  THE INTEREST RATE PROVIDED IN SECTION TWO HUNDRED THIRTY-ONE OF THIS
ARTICLE; AND
  (B) PERMIT THE DEPOSIT TO BE COMPRISED  OF  A  SERIES  OF  NINETY  DAY
DEPOSITS  EACH  BEARING  AN  INTEREST  RATE  EQUAL TO THE LINKED DEPOSIT
INTEREST RATE FIXED AT THE TIME THE ORIGINAL DEPOSIT IS PLACED.
  THIS ARTICLE AND THE RELATED STATUTES THAT REFER TO  THIS  ARTICLE  DO
NOT  GRANT  THRIFTS  ELIGIBILITY TO ACCEPT PUBLIC FUNDS OR PUBLIC MONEYS
FROM PUBLIC ENTITIES  FOR  INVESTMENT  PURPOSES.  A  LINKED  DEPOSIT  IS
INTENDED TO ENABLE A LENDER TO MAKE A LINKED LOAN TO AN ELIGIBLE RECIPI-
ENT  AND  SUCH DEPOSIT EARNS A YIELD LOWER THAN POSTED RATES IN ORDER TO
ACCOMPLISH THE GOALS OF THIS ARTICLE.
  7. "LINKED DEPOSIT INTEREST RATE" MEANS FOR A LINKED DEPOSIT  MADE  IN
CONNECTION  WITH  A LINKED LOAN TO AN ELIGIBLE RECIPIENT A FIXED RATE OF
INTEREST WHICH IS THREE HUNDRED BASIS POINTS BELOW THE  LENDER'S  POSTED
FOUR YEAR CERTIFICATE OF DEPOSIT RATE OR, IF THE LENDER DOES NOT OFFER A
FOUR  YEAR  CERTIFICATE  OF DEPOSIT, IS THREE HUNDRED BASIS POINTS BELOW
THE AVERAGE STATEWIDE RATE FOR FOUR  YEAR  CERTIFICATES  OF  DEPOSIT  AS
DETERMINED  BY  THE  SUPERINTENDENT OF FINANCIAL SERVICES.  IN THE EVENT
THAT THE LENDER'S POSTED FOUR YEAR CERTIFICATE OF DEPOSIT RATE,  OR  THE
AVERAGE  STATEWIDE  RATE FOR FOUR YEAR CERTIFICATES OF DEPOSIT ARE BELOW
THREE HUNDRED BASIS POINTS, THE LINKED DEPOSIT INTEREST RATE  SHALL  NOT
BE LESS THAN ZERO.
  8.  "LINKED  LOAN"  MEANS  A LOAN MADE TO AN ELIGIBLE RECIPIENT, IN AN
AMOUNT EQUAL TO A LINKED DEPOSIT AND BEARING INTEREST FOR THE FIRST FOUR
YEARS AT THE INTEREST RATE PROVIDED IN SECTION TWO HUNDRED THIRTY-ONE OF
THIS ARTICLE.
  9. "PRESIDENT" MEANS THE PRESIDENT OF THE  HIGHER  EDUCATION  SERVICES
CORPORATION.
  10. "PROGRAM" MEANS THE STUDENT LOAN LINKED DEPOSIT PROGRAM.
  11. "QUALIFIED EDUCATIONAL EXPENSES" MEANS THE ACTUAL OR EXPECTED COST
OF A STUDENT'S HIGHER EDUCATION, WHICH SHALL INCLUDE THE FULL QUARTERLY,
SEMESTERLY  OR  ANNUAL  COST OF TUITION, FEES, BOOKS, SUPPLIES, ROOM AND
BOARD.
  12. "THRIFT" MEANS ANY SAVINGS BANK OR SAVINGS AND  LOAN  ASSOCIATION,
FEDERAL SAVINGS BANK OR FEDERAL SAVINGS AND LOAN ASSOCIATION.

S. 4575--A                          4

  S  227. ESTABLISHMENT AND PURPOSE; STUDENT LOAN LINKED DEPOSIT PROGRAM
AUTHORIZATION.  THE  STUDENT  LOAN  LINKED  DEPOSIT  PROGRAM  IS  HEREBY
CREATED.    THE PURPOSE OF THE PROGRAM IS TO MAKE AVAILABLE TO RESIDENTS
OF NEW YORK STATE REDUCED RATE LOANS THAT WILL ASSIST IN  THE  FINANCING
OF  AN  IN-STATE COLLEGE EDUCATION. THE COMPTROLLER IS HEREBY AUTHORIZED
TO USE ANY MONEYS OF THE STATE THE COMPTROLLER IS AUTHORIZED  TO  INVEST
PURSUANT  TO  SECTION  NINETY-EIGHT-A OF THIS CHAPTER AS LINKED DEPOSITS
FOR THE PROGRAM.   NOT MORE THAN ONE HUNDRED  MILLION  DOLLARS  OF  SUCH
MONEYS SHALL BE ON DEPOSIT PURSUANT TO THE PROGRAM AT ANY GIVEN TIME.
  S  228. RESPONSIBILITIES OF THE PRESIDENT, COMPTROLLER AND SUPERINTEN-
DENT. 1. THE PRESIDENT SHALL ADMINISTER THE PROGRAM PURSUANT TO  SECTION
TWO  HUNDRED  THIRTY-TWO  OF  THIS ARTICLE, INCLUDING ALL DECISIONS WITH
RESPECT TO THE APPLICATION AND USE OF THE PROGRAM FOR  ELIGIBLE  RECIPI-
ENTS;  MARKET  AND  PROMOTE  THE PROGRAM PURSUANT TO SECTION TWO HUNDRED
THIRTY-FOUR-B OF THIS ARTICLE; AFTER CONSULTING WITH THE COMPTROLLER AND
THE SUPERINTENDENT OF FINANCIAL SERVICES, ISSUE  RULES  AND  REGULATIONS
FOR  THE  OPERATION OF THE PROGRAM PURSUANT TO SECTION TWO HUNDRED THIR-
TY-FOUR-C OF THIS ARTICLE.
  2. THE COMPTROLLER'S RESPONSIBILITIES FOR THE PROGRAM SHALL BE LIMITED
TO:  PURSUANT TO SECTIONS TWO HUNDRED TWENTY-SEVEN AND TWO HUNDRED THIR-
TY-TWO OF THIS ARTICLE, PLACING MONEYS ON DEPOSIT AT THE REQUEST OF  THE
PRESIDENT  FOR THE PURPOSES OF THE PROGRAM AND ADMINISTERING SUCH DEPOS-
ITS IN ACCORDANCE WITH SECTIONS NINETY-EIGHT-A AND ONE HUNDRED  FIVE  OF
THIS  CHAPTER  AND  WITH  THE  COMPTROLLER'S ESTABLISHED PROCEDURES; AND
ENTERING INTO DEPOSIT AGREEMENTS WITH LENDERS PURSUANT  TO  SECTION  TWO
HUNDRED THIRTY-TWO OF THIS ARTICLE.
  3.  THE  SUPERINTENDENT'S  RESPONSIBILITIES  FOR  THE PROGRAM SHALL BE
LIMITED TO MARKETING AND PROMOTING THE PROGRAM PURSUANT TO  SECTION  TWO
HUNDRED THIRTY-FOUR-B OF THIS ARTICLE.
  S  229.  RELEASE  FROM  LINKED  DEPOSITS. THE AUTHORIZED DEPOSITOR MAY
PERMIT FUNDS RELEASED FROM A LINKED DEPOSIT RELATING TO A LINKED LOAN TO
BE MADE AVAILABLE FOR ADDITIONAL LINKED DEPOSITS UNDER THIS PROGRAM.
  S 230. LINKED STUDENT LOANS. LINKED STUDENT LOANS  SHALL  BE  MADE  BY
LENDERS  PURSUANT  TO THE PROGRAM ONLY TO ELIGIBLE RECIPIENTS FOR QUALI-
FIED EDUCATIONAL EXPENSES. A LINKED LOAN SHALL BE LIMITED TO  A  MAXIMUM
AMOUNT  OF  SEVEN  THOUSAND  FIVE  HUNDRED DOLLARS PER ACADEMIC YEAR. AN
ELIGIBLE RECIPIENT MAY RECEIVE NO MORE THAN ONE LINKED LOAN PER ACADEMIC
YEAR. DURING THE LIFE OF THE LINKED LOAN PROGRAM, THE  TOTAL  AMOUNT  OF
MONEY THAT AN ELIGIBLE RECIPIENT CAN BORROW FROM THE LINKED STUDENT LOAN
PROGRAM SHALL BE THIRTY THOUSAND DOLLARS. THE CREDIT DECISION FOR MAKING
A  LINKED LOAN SHALL BE MADE SOLELY BY THE LENDER, PROVIDED HOWEVER THAT
SUCH LENDER SHALL ENSURE THAT AN ELIGIBLE RECIPIENT  COMPLIES  WITH  THE
PROVISIONS OF THIS ARTICLE, INCLUDING ANY RULES OR REGULATIONS ISSUED BY
THE  PRESIDENT. NOTWITHSTANDING THE LENGTH OF THE TERM OF A LINKED LOAN,
THE LINKED DEPOSIT RELATING TO THE LINKED LOAN SHALL BE FOR A PERIOD  OF
NOT MORE THAN FOUR YEARS.
  S  231.  INTEREST  RATE  FOR LINKED LOANS; NO LENDER'S FEES. 1. LINKED
LOANS MADE TO ELIGIBLE RECIPIENTS SHALL BEAR INTEREST AT  A  FIXED  RATE
EQUAL TO THREE PERCENTAGE POINTS BELOW THE FIXED INTEREST RATE THE LEND-
ER  WOULD  HAVE  CHARGED FOR THE LOAN IN THE ABSENCE OF A LINKED DEPOSIT
BASED ON ITS USUAL CREDIT CONSIDERATIONS. LENDERS SHALL CERTIFY  TO  THE
PRESIDENT THAT THE RATE TO BE CHARGED ON A LINKED LOAN IS THREE PERCENT-
AGE POINTS BELOW THE INTEREST RATE THE LENDER WOULD HAVE CHARGED FOR THE
LOAN IN THE ABSENCE OF A LINKED DEPOSIT.
  2.  LENDERS  WHO MAKE LOANS PURSUANT TO THE PROGRAM SHALL NOT BE ENTI-
TLED TO CHARGE ANY DISCOUNT, POINTS, ORIGINATION  FEES,  HANDLING  FEES,

S. 4575--A                          5

SERVICE  CHARGES, REFINANCING FEES OR PENALTIES OR ANY CHARGE OTHER THAN
THOSE NORMALLY CHARGED AND IN SUCH AMOUNTS NORMALLY CHARGED BY THE LEND-
ER FOR LOANS OF THE TYPE BEING MADE WITHOUT REGARD TO THE PROGRAM.
  S 232. APPLICATION PROCEDURE. 1. THE PRESIDENT, WITH THE ASSISTANCE OF
THE  SUPERINTENDENT  OF  THE  DEPARTMENT, SHALL ESTABLISH PROCEDURES AND
OTHER REQUIREMENTS FOR PARTICIPATION IN THE PROGRAM, AND SHALL PROVIDE A
SIMPLIFIED APPLICATION FORM TO  THE  PARTICIPATING  LENDERS  FOR  LINKED
DEPOSITS.    SUCH FORM SHALL REFLECT THE QUALIFYING INFORMATION REQUIRED
BY THIS ARTICLE FOR ELIGIBLE LOAN RECIPIENTS.   UPON COMPLETION  OF  ANY
APPLICATION FOR A LINKED DEPOSIT, THE LENDER SHALL SEND THE APPLICATION,
TOGETHER  WITH  THE  INTEREST  RATE  CERTIFICATION  REQUIRED PURSUANT TO
SECTION TWO HUNDRED THIRTY-ONE OF THIS ARTICLE,  TO  THE  PRESIDENT  WHO
SHALL EITHER APPROVE OR REJECT THE APPLICATION WITHIN TWENTY-EIGHT DAYS.
THE  PRESIDENT  SHALL EVALUATE EACH APPLICATION BASED UPON THE FOLLOWING
CRITERIA:
  (A) THE EXTENT TO WHICH SUCH LOAN WOULD REDUCE THE LONG-TERM  COST  OF
FINANCING A STUDENT'S HIGHER EDUCATION;
  (B)  THE  LIKELIHOOD OF THE STUDENT SUCCESSFULLY COMPLETING HIS OR HER
HIGHER EDUCATION AND REPAYING THE LOAN WITHIN A TIMELY MANNER; AND
  (C) SUCH OTHER CRITERIA AS THE PRESIDENT DEEMS RELEVANT.
  2. IF THE DEPOSIT APPLICATION IS APPROVED BY THE PRESIDENT, HE OR  SHE
SHALL  NOTIFY AN AUTHORIZED DEPOSITOR THAT A DETERMINATION HAS BEEN MADE
THAT THE APPLICATION SATISFIES THE REQUIREMENTS OF THIS ARTICLE, AND THE
PRESIDENT SHALL REQUEST THE AUTHORIZED DEPOSITOR TO DEPOSIT  FUNDS  WITH
THE LENDER IN ACCORDANCE WITH SECTION NINETY-EIGHT-A OF THIS CHAPTER AND
WITH  THE  AUTHORIZED  DEPOSITOR'S ESTABLISHED PROCEDURES. SUCH DEPOSITS
SHALL BE SECURED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  ONE
HUNDRED  FIVE OF THIS CHAPTER, AND LENDERS RECEIVING SUCH DEPOSITS SHALL
SATISFY, IN THE SOLE JUDGMENT OF THE AUTHORIZED DEPOSITOR,  ALL  COLLAT-
ERAL  AND  OTHER REQUIREMENTS GENERALLY APPLIED BY THE AUTHORIZED DEPOS-
ITOR TO FUNDS INVESTED BY IT.  THE NOTIFIED AUTHORIZED DEPOSITOR AND THE
LENDER SHALL ENTER INTO A WRITTEN DEPOSIT AGREEMENT. IN NO  EVENT  SHALL
ANY  DEFECT IN ANY SUCH AGREEMENT BE ASSERTED AS A DEFENSE BY A BORROWER
ON A LINKED LOAN MADE PURSUANT TO THE PROGRAM.
  S 233. REPAYMENT PERIODS FOR LINKED STUDENT LOANS. THE PRESIDENT SHALL
REQUIRE THAT LINKED STUDENT LOANS ISSUED THROUGH THE PROGRAM OFFER FLEX-
IBLE REPAYMENT OPTIONS, INCLUDING THE OPTION OF AN  INCOME-BASED  REPAY-
MENT PLAN.  SUCH REPAYMENT OPTIONS MAY, IF THE PRESIDENT DEEMS IT ADVIS-
ABLE,  BE  CONSISTENT WITH THE REPAYMENT TERMS STIPULATED BY THE WILLIAM
D. FORD FEDERAL DIRECT LOAN PROGRAM AUTHORIZED PURSUANT TO 20 USC  CHAP-
TER 28, SUBCHAPTER IV, PART C.
  S 234. LIABILITY; EARLY REPAYMENT AND WITHDRAWAL. NOTHING CONTAINED IN
THIS  ARTICLE  SHALL IMPOSE LIABILITY ON THE STATE OR ANY OF ITS DEPART-
MENTS OR EMPLOYEES FOR PAYMENT OR DELAYS IN PAYMENT OF THE PRINCIPAL  OR
INTEREST  OF  A  LINKED  LOAN. ANY DELAY IN PAYMENTS OR ANY DEFAULT ON A
LINKED LOAN SHALL IN NO WAY AFFECT THE LINKED DEPOSIT AGREEMENT  BETWEEN
THE  LENDER  AND  THE  AUTHORIZED  DEPOSITOR.  HOWEVER, IN THE EVENT THE
INTEREST RATE OF THE LINKED LOAN SHALL BE INCREASED AS A CONSEQUENCE  OF
DEFAULT  OR  RENEGOTIATION, OR THE LOAN SHALL BE CHARGED OFF, THE LENDER
SHALL GIVE THE AUTHORIZED DEPOSITOR PROMPT NOTICE OF SUCH EVENT, AND THE
AUTHORIZED DEPOSITOR SHALL THEREAFTER WITHDRAW THE LINKED  DEPOSIT  UPON
NOT LESS THAN SEVEN DAYS' PRIOR WRITTEN NOTICE TO THE LENDER. UPON EARLY
REPAYMENT OF A LINKED LOAN, THE LENDER SHALL WITHIN THIRTY DAYS GIVE THE
AUTHORIZED  DEPOSITOR NOTICE OF SUCH EARLY REPAYMENT, AND THE AUTHORIZED
DEPOSITOR SHALL THEREAFTER WITHDRAW THE LINKED  DEPOSIT  UPON  NOT  LESS
THAN  SEVEN  DAYS'  PRIOR WRITTEN NOTICE TO THE LENDER, AND THE INTEREST

S. 4575--A                          6

RATE PAYABLE ON THE LINKED DEPOSIT FROM THE DATE OF EARLY  REPAYMENT  OF
THE LINKED LOAN TO THE DATE OF WITHDRAWAL OF THE LINKED DEPOSIT SHALL BE
THE INTEREST RATE UPON WHICH THE LINKED DEPOSIT INTEREST RATE WAS CALCU-
LATED WITHOUT REGARD TO THE APPLICABLE BASIS POINT REDUCTION.
  S  234-A.  MONITORING  AND  REPORT. 1. THE PRESIDENT SHALL MONITOR THE
ACTIVITIES OF PARTICIPATING LENDERS AND LOAN RECIPIENTS AND MAY  REQUIRE
PERIODIC REPORTS OR OTHER INFORMATION THE PRESIDENT DEEMS NECESSARY FROM
PARTICIPATING  LENDERS  AND  LOAN RECIPIENTS ON THE STATUS OF THE LINKED
LOANS TO ENSURE COMPLIANCE WITH THE PROVISIONS AND THE  INTENT  OF  THIS
ARTICLE.
  2.  ON  OR  BEFORE  DECEMBER FIRST, TWO THOUSAND SIXTEEN, AND ANNUALLY
THEREAFTER THE PRESIDENT SHALL SUBMIT TO  THE  GOVERNOR,  THE  TEMPORARY
PRESIDENT OF THE SENATE AND THE SPEAKER OF THE ASSEMBLY A REPORT REGARD-
ING THE ACTIVITIES OF THE PROGRAM. SUCH REPORT SHALL CONTAIN A STATEMENT
OF  THE COST OF THE PROGRAM TO THE STATE, CONSIDERED AS A WHOLE, BECAUSE
OF REDUCED RATES ON FUNDS INVESTED IN LINKED DEPOSITS. SUCH REPORT SHALL
ALSO INCLUDE, BUT SHALL NOT BE LIMITED TO, THE NUMBER AND TYPE OF LINKED
LOANS UNDER THE PROGRAM AND THE AMOUNT THEREOF; THE NUMBER AND TYPES  OF
LENDERS  MAKING  LINKED LOANS AND OF INDIVIDUALS RECEIVING LINKED LOANS;
THE GEOGRAPHIC DISTRIBUTION OF SUCH LENDERS  AND  RECIPIENTS,  INCLUDING
THE STEPS TAKEN TO ENSURE GEOGRAPHIC DIVERSITY AMONG PARTICIPATING LEND-
ERS, AS WELL AS ANY INFORMATION THE PRESIDENT DETERMINES USEFUL IN EVAL-
UATING THE BENEFITS OF THE PROGRAM.
  S  234-B. PROMOTION OF PROGRAM. THE DEPARTMENT, WITH THE ASSISTANCE OF
OTHER APPROPRIATE STATE AGENCIES,  SHALL  ACTIVELY  MARKET  AND  PROMOTE
AWARENESS  OF  THE  PROGRAM IN ALL GEOGRAPHICAL AREAS OF THE STATE AMONG
COMMERCIAL BANKS, THRIFTS AND OTHER APPROPRIATE BANKING ORGANIZATIONS.
  S 234-C. RULES AND REGULATIONS. THE PRESIDENT SHALL,  IN  CONSULTATION
WITH  THE  COMPTROLLER  AND  THE  SUPERINTENDENT  OF FINANCIAL SERVICES,
PROMULGATE RULES AND REGULATIONS NECESSARY AND REASONABLE FOR THE OPERA-
TION OF THE PROGRAM.
  S 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law, provided however that effective immediately,
the addition, amendment and/or repeal of any rules or regulations neces-
sary for implementation of the foregoing sections of  this  act  on  its
effective date is authorized and directed to be made and completed on or
before such effective date.

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