N.Y. Comp. Codes R. & Regs. tit. 21, § 5004.4 – Repayment of loans.

(a) Loans may be repaid by one of two methods:
1. (1) Direct repayment—the member sends payment directly to the system. This method shall be used in the case of members who are not in service or are on an unpaid leave of absence or for whom the employer is unable to deduct the full amount of the loan payment from the member's compensation.
2. (2) Payroll deduction repayment—the member's full loan payment is automatically deducted from the member's compensation by the employer.
(b) The amount borrowed, together with interest and insurance premiums on any unpaid balance thereof, shall be repaid in equal payments.
(c) Payment shall be due and remitted monthly, on a 10-month basis, September to June of each regular school year.
(d) Payments may be in such amount as the member elects; however, payments shall be at an annual rate of at least two percent of the member's contract salary and sufficient to repay the amount borrowed, together with interest and insurance premiums on unpaid balances thereof, within a period not in excess of five years.
(e) Notwithstanding subdivision (d) of this section, the loan repayment period for Tier 1 and Tier 2 members may exceed five years if the member makes a written request for a longer repayment period. Tier 1 and Tier 2 members must also make payments in an amount sufficient to repay the amount borrowed, together with interest and insurance premiums on the unpaid balance thereof, within a period not in excess of 30 years.
(f) In the event a member is on leave of absence without pay or not in service and wishes to secure a loan, the last working year's contract salary shall be used to determine the amount of repayment. In the event the member was employed on other than a per annum basis, the member's annualized contract salary as defined in section 5001.1(c) of this Title shall be deemed to be the member's contract salary.
(g) The system, at any time, may in its discretion accept additional payments on a loan from a member who is otherwise current and such payments will be considered a pre-payment. Pre-payments may be made in one of two methods:
1. (1) An additional payment in an exact multiple installment amount will be applied to succeeding installments of the loan to advance the loan due date, unless the member provides express instructions that such additional payments be applied to the principal of the loan.
2. (2) An additional payment in less than the exact multiple installment amount will be applied to the principal of the loan.
(h) If the last payment on a loan is $10 or more in excess of that required to fully repay the loan, the amount in excess shall be refunded to the member.
(i) In the event that the member has failed to pay a loan payment in full when due, any payment thereafter received from the member shall be applied first to the loan payment which has not been paid in full before being applied to any subsequent loan payments. If a payment is insufficient to pay an outstanding installment in full, the payment shall be applied in the following order: first to the interest portion, then the insurance portion, and finally the principal portion of the outstanding installment. In the event that more than one loan payment has not been paid in full, any payment thereafter received from the member shall first be applied to the earliest outstanding installment until it is paid in full.