FRB PROPOSES AMENDMENTS TO REGULATION Z REGULATING PRIVATE EDUCATION LOAN DISCLOSURES
On March 11, 2009, the Federal Reserve Board (FRB) published proposed amendments to Regulation Z to implement provisions of the Higher Education Opportunity Act (HEOA), which was enacted on August 14, 2008. See Alert dated August 5, 2008.
Title X of the HEOA (the “Private Student Loan Transparency and Improvement Act of 2008”) amends the Truth in Lending Act (TILA) to regulate creditors making “private education loans,” defined as loans made expressly for postsecondary educational expenses, but excluding open-end credit, real estate-secured loans and loans made, insured or guaranteed by the federal government under Title IV of the Higher Education Act of 1965.
The HEOA requires creditors to provide new disclosures in connection with private education loans, including: (i) general information about loan rates, fees and terms with an application or solicitation, (ii) transaction-specific loan information when the loan is approved and (iii) final loan information at consummation. Also, creditors must obtain from each consumer a signed and completed “self-certification form” with information about educational costs before consummating a private education loan. The HEOA also limits certain practices, such as “co-branding” loan products with educational institutions in the marketing of private student loans. Accordingly, the FRB proposes to add to Regulation Z a new Subpart F containing the private education loan rules. The FRB proposes to make other conforming changes to Regulation Z, including, but not limited to, the addition of new model disclosure forms.
The public comment period ends 60 days after publication of the proposed amendments in the Federal Register, which is expected shortly.
- Judy Scheiderer