Final Rule Analysis: Regulation Z Disclosures for Private Student Loans

CUNA
November 2, 2009 | COMMENTS

The Federal Reserve Board (Fed) has issued a final rule to amend Regulation Z, the Truth in Lending Act, to incorporate provisions of the Higher Education Opportunity Act (HEOA) that were enacted last year. Provisions of the HEOA amend Regulation Z by including disclosure and other requirements for lenders offering private student loans that are made expressly for post-secondary educational expenses. This will exclude open-end credit; real estate-secured loans; and loans made, insured, or guaranteed by the federal government under the Higher Education Act of 1965.

The final rule also implements provisions of the HEOA that limit certain practices by creditors. This includes limitations on “co-branding” loan products with educational institutions in the marketing of private student loans. However, this will not impact credit unions that share their name with colleges or universities.

The final rule will also require creditors to obtain a self-certification form signed by the consumer before consummating the loan and requires creditors with preferred lender arrangements with educational institutions to provide certain information to those institutions.

The Fed has provided model forms for the required disclosures.

The rule is effective as of September 14, 2009. Compliance is optional until February 14, 2010.

If you have any questions or need a copy of the final rule, please feel free to contact Senior Vice President & Deputy General Counsel Mary Dunn at mdunn@cuna.com or Senior Assistant General Counsel Jeff Bloch at jbloch@cuna.com or by telephone at (800) 356-9655, extension 6736 or 6732. You may also access the rule here.

> View the Full Final Rule Analysis @ CUNA.org