(May 2009). The Federal Reserve Board has published new regulations about disclosures, certifications, and practices relating to private education loans under the Truth-in-Lending Act (TILA).

According to the Federal Reserve Board, lenders will be required to disclose certain information about their loans, and federal loans that may be available on three specific occasions, with applications, at the time of the loan approval and at consummation of the loan. The HEOA changes to TILA require the student borrower to obtain a self-certification form from the educational institution, along with certain information about their costs of attendance and financial aid, and submit a signed copy to the lender. The proposed rules allow this form to be paper or electronic, including signatures, and would further allow the institution to transmit the form to the lender (rather than the student).

COHEAO created a working group to discuss ways to respond and after several meetings via conference call the group in conjunction with NASFAA, ACE, and NACUBO and several other higher education associations agreed to send a joint letter to the Federal Reserve with comments.

The associations are asking for an exemption for institutional loans in certain situations, additional guidance clarifying that short-term loans and budget tuition plans are not considered “private education loans,” and limiting the self-certification forms required by HEOA to direct-to-consumer loans that have not been previously certified by schools, among other things.

Final rules are required to be published by August 14, 2009.

To view the letter click HERE.

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