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The lender, if it has the appropriate ACH transfer permission paperwork, can utilize same for that automatic payment. In fact, some lenders even provide a discount on the interest rate for the loan
, if a student includes this paperwork permission in his lending paperwork. I have not noted an prohibition by NY state on this type of agreement, if I am understanding you correctly.
Now, if one doesn't agree to such auto payments, then the only way the lender can force that payment to itself is generally by securing a judgment due to default, and then garnishing/levying bank account.
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