This
rule was filed as NMEAF Rule No. 6.
TITLE
5 POST-SECONDARY EDUCATION
CHAPTER
7 TUITION AND FINANCIAL AID
PART
26 EDUCATIONAL LOAN PURCHASE
PROGRAM
5.7.26.1 ISSUING AGENCY:
New Mexico Educational Assistance Foundation.
[Recompiled
10/31/01]
5.7.26.2 SCOPE:
These regulations shall be of application to those activities of the
foundation undertaken by it in connection with the program.
[Recompiled
10/31/01]
5.7.26.3 STATUTORY AUTHORITY:
[RESERVED]
[Recompiled
10/31/01]
5.7.26.4 DURATION: [Permanent]
[Recompiled
10/31/01]
5.7.26.5 EFFECTIVE DATE:
[Filed November 29, 1993] The
effective date of these regulations shall be September 23, 1993.
[Recompiled
10/31/01]
5.7.26.6 OBJECTIVE:
[RESERVED]
[Recompiled
10/31/01]
5.7.26.7 DEFINITIONS:
Terms:
A. "Bond" or "bonds" means any bond or
all of the bonds issued under and at any time outstanding pursuant to the
indenture.
B. "Certificate of insurance" means a certificate
of federal loan insurance issued with respect to a student loan by the
secretary of education pursuant to the provisions of the Higher Education Act.
C. "Contract of insurance" means the contract of
federal loan insurance, dated February 12, 1982, between the foundation and the
secretary of education, and any amendment thereof which is hereafter entered
into.
D. "Educational Assistance Act" means Sections
21-21A1 to 21-21A-23 NMSA 1978, as amended from time to time.
E. "Eligible borrower" means a student, parent or
other borrower who is eligible under the Higher Education Act to be the obligor
of a loan for financing a program of post-secondary education.
F. "Eligible institution" means an "eligible
institution" as defined under the Higher Education Act which is a
"participating school" within the meaning of the Higher Education
Act.
G. "Eligible loan" means a student loan which:
(1) has been or will be made to an eligible
borrower for the post-secondary
education of:
(a) a resident of the state attending a
post-secondary school located within or without the state; or
(b) a resident of a state other than the state
attending a post-secondary school located within the state;
(2) is either guaranteed or insured;
(3) is an "eligible loan" as defined
in Section 438 of the Higher Education Act for purposes of receiving special
allowance payments;
(4) bears interest at a rate per annum not
less than or in excess of the applicable rate of interest provided by the
Higher Education Act; and
(5) has not been tendered at any time to
either the secretary of education or any guarantee agency, including the
guarantee agency, for payment unless the situation giving rise to the tender
has been cured.
H. "Eligible student" shall mean a student who is
eligible under the Higher Education Act to receive a loan, which is insured or
guaranteed, for financing a program of post-secondary education, including a
student who is eligible under the Higher Education Act to be a student for
whose benefit a PLUS/SLS loan is made.
I. "Federal reimbursement contracts" means the
agreements, dated July 1, 1981, as amended and supplemented, between the
guarantee agency and the secretary of education providing for the payment by
the secretary of education of amounts authorized to be paid pursuant to the
Higher Education Act, including (but not necessarily limited to) reimbursement
of amounts paid or payable upon defaulted financed student loans and other
student loans guaranteed or insured by the guarantee agency and interest
subsidy payments to holders of qualifying student loans guaranteed or insured
by the guarantee agency.
J. "Financed", when used with respect to student
loans, as of the date such student loans are included in the trust estate,
student loans originated, acquired or refinanced by the foundation with moneys
in the acquisition fund, eligible loans substituted for student loans which are
not eligible loans pursuant hereto, and any eligible loans received in exchange
for financed student loans upon the sale thereof in accordance with Section 402
hereof, but does not include student loans released from the lien of this
indenture and sold, as permitted in this indenture, to any purchaser, including
a trustee for the holders of the foundation's bonds, notes or other evidences
of indebtedness.
K. "Fiscal year" means the fiscal year of the
foundation as established from time to time.
L. "Foundation" means the New Mexico educational
assistance foundation, a nonprofit corporation duly organized and existing
under the laws of the state, and any successor to its functions relating to the
program.
M. "Guarantee", or "guaranteed" means, with
respect to a student loan, the insurance or guarantee by the guarantee agency
of at least ninety-eight percent of the principal of and accrued interest on
such student loan and the coverage of such student loan by the federal
reimbursement contracts, providing, among other things, for reimbursement to
the guarantee agency for losses incurred by it on defaulted financed student
loans insured or guaranteed by the guarantee agency to the extent provided in
the Higher Education Act.
N. "Guarantee agency" means the New Mexico student
loan guarantee corporation, a nonprofit corporation duly organized and existing
under the laws of the state, its successors and assigns.
O. "Guarantee agreement" means that certain
educational loan guarantee agreement, dated as of August 18, 1981, between the
foundation and the guarantee agency, including any supplement thereto or
amendment thereof entered into in accordance with the provisions thereof and
hereof.
P. "Guarantee fund" means the guarantee fund
established in accordance with the guarantee agreement.
Q. "Guarantee program" means the guarantee
agency’s student loan insurance program pursuant to which the guarantee agency
guarantees or insures student loans.
R. "Higher Education Act" means the Higher
Education Act of 1965, as amended or supplemented from time to time, and all
regulations promulgated thereunder.
S. "Indenture" means the trust indenture, dated
as of September 1, 1993, between the foundation and the first national bank of
Santa Fe as trustee and each supplemental indenture entered into in accordance
with the terms of the indenture.
T. "Insurance" or "insured" or
"insuring" means, with respect to a student loan, the insuring by
the secretary of education (as evidenced
by a certificate of insurance or other document or certification issued under
the provisions of the Higher Education Act) under the Higher Education Act of
one hundred percent of the principal of and accrued interest on such student
loan.
U. "Insured loan" means a student loan which is insured.
V. "Lender" means any "eligible lender"
as defined in the Higher Education Act and the loan purchase regulations,
permitted to participate as a seller of student loans to the foundation under
the program and which has received an eligible lender designation from the
secretary of education with respect to insured loans or from the guarantee
agency with respect to guaranteed loans.
W. "Loan purchase agreement" or "educational
loan purchase agreement" means an agreement between the foundation and a lender
providing for the sale by the lender to the foundation of eligible loans under
the program.
X. "Loan purchase regulations" shall mean the
rules and regulations of the foundation duly adopted by the board which pertain
to the program.
Y. "PLUS/SLS loans" means a student loan made
pursuant to Section 428A or Section 428B of the Higher Education Act as amended
prior to October 7, 1986, which is the effective date of the higher education
amendments of 1986.
Z. "Program" means the foundation’s program for
the origination of student loans and the acquisition of student loans from the
state treasurer or from other lenders to increase the supply of moneys
available for new student loans, thereby assisting students in obtaining a
post-secondary school education.
AA. "Repurchase obligation" shall mean those
obligations described in Section 8 [now 5.7.26.13 NMAC] hereof under the terms
of which the lender is required to repurchase any student loan.
BB. "Residency" shall mean the maintenance of a place of
abode within the state.
CC. "Secretary of education" means the commissioner of
education, department of health, education and welfare of the United States,
and the secretary of the United States department of education (who succeeded
to the functions of the commissioner of education pursuant to the Department of
Education Organization Act) , or any other officer, board, body, commission or
agency succeeding to the functions thereof under the Higher Education Act.
DD. "Special allowance payments" means special
allowance payments authorized to be made by the secretary of education by
Section 438 of the Higher Education Act, or similar allowances authorized from
time to time by federal law or regulation.
EE. "State" means the state of New Mexico.
FF. "Student loan" means a loan made to an eligible
borrower for post-secondary education authorized to be made or acquired by the
foundation pursuant to its articles of incorporation and the Educational
Assistance Act.
GG. "Trustee" means the first national bank of Santa
Fe and any successor under the indenture.
[Recompiled
10/31/01]
5.7.26.8 LENDERS CERTIFICATION OF
INTENT:
A. For eligible loans originated prior to the date of a loan
purchase agreement, and which are to be sold to the foundation pursuant to such
loan purchase agreement, the lender must certify that the eligible loans were
originated by lender with the reasonable expectation that such eligible loans
would be acquired by the foundation and not with the intent that lender retain
ownership of such eligible loans.
B. In fulfilling its obligations under paragraph 2.01 [now
Subsection A of 5.7.26.8 NMAC] a lender shall:
(1) make available loan applications and other
documentation, together with qualified loan personnel, at locations reasonably
accessible to eligible borrowers, and
(2) undertake promotional activities to
publicize the availability of student loans.
[Recompiled
10/31/01]
5.7.26.9 PURCHASE OF NOTES OR BONDS:
No eligible borrower or any related person thereto within the meaning of
Section 144 (a) (3) of the Internal Revenue Code of 1986, as amended, shall
purchase, pursuant to any arrangement, formal or informal, any notes, bonds or
any other obligations of the foundation in an amount related to such eligible
borrower's financed student loans.
[Recompiled
10/31/01]
5.7.26.10 SERVICING OF LOANS:
Student loans purchased by the foundation shall be serviced by the
foundation or on behalf of the foundation by a servicer in accordance with such
procedures as may be approved by the foundation from time to time.
[Recompiled
10/31/01]
5.7.26.11 MAXIMUM STUDENT LOAN AMOUNTS:
The maximum amount of student loans permitted for an eligible borrower
shall be determined in accordance with the Higher Education Act.
[Recompiled
10/31/01]
5.7.26.12 INFORMATION TO BE PROVIDED BY
LENDERS TO ELIGIBLE BORROWERS:
A. At the time a lender makes an eligible loan to an
eligible borrower the lender shall provide thorough and accurate loan
information to the eligible borrower as required by the Higher Education Act
and the guarantee corporation, which shall include:
(1) the yearly and cumulative maximum amounts
that may be borrowed by an eligible borrower;
(2) the terms on which repayment will begin;
(3) the maximum number of years in which the
eligible loan must be repaid;
(4) the interest rate that will be repaid, and
the maximum amount of required monthly payments;
(5) any special options that an eligible
borrower may have for deferral, cancellation, prepayment, consolidation, or
other refinancing of the eligible loan;
(6) a definition of default and the
consequences to the eligible borrower if the eligible borrower should default,
including a description of any arrangement made with credit bureau
organizations; and
(7) to the extent practicable, the effect of
accepting the eligible loan on the eligibility of the eligible borrower for
other forms of student assistance.
B. The foundation may refuse to purchase eligible loans not
made in accordance with this requirement.
[Recompiled
10/31/01]
5.7.26.13 REVISIONS IN REGULATIONS:
These regulations shall be subject to amendment, modification and
revision from time to time to conform the same to the provision of the Higher
Education Act or for any other purpose.
If any such amendment, modification or revision will materially
adversely affect the rights of a lender pursuant to a loan purchase agreement
which is then in effect or the rights of the holders of then outstanding bonds,
such amendment, modification or revision will not be effective with regard to
such loan purchase agreements or the holders of such bonds.
[Recompiled
10/31/01]
HISTORY
OF 5.7.26 NMAC:
Pre-NMAC
History: The material in this Part was
derived from that previously filed with the State Records Center and Archives:
NMEAF
Rule No. 6, Educational Loan Purchase Program Regulations, 9/24/93.
NMEAF
Rule No. 6, Educational Loan Purchase Program Regulations, 11/29/93.
History
of Repealed Material: [RESERVED]