Section 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.