The Board of Governors of the Federal Reserve System released a notice of proposed rules on Regulation Z, which implements the Truth in Lending Act (TILA) following the passage of the Higher Education Opportunity Act of 2008 (HEOA). Title X of the HEOA amends TILA by adding disclosure and timing requirements that apply to creditors making private education loans, which are 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 also amends TILA by adding limitations on certain practices by creditors, including limitations on "co-branding" their products with educational institutions in the marketing of private student loans. The proposal requires that creditors obtain a self-certification form signed by the consumer before consummating the loan. It also requires creditors with preferred lender arrangements with educational institutions to provide certain information to those institutions.

Comments on the NPRM are due Tuesday, May 26.

NASFAA has drafted its comments and is currently reviewing them for submission. NASFAA's comments will focus on:

• Including payment plans and certain institutional loans as exempted transactions under TILA
• Ensuring that institutions are not prohibited from marketing or promoting their own loans (co-branding)
• Exempting schools from using a self-certification form for institutional loans as well as loans they are already certifying directly to a lender
• Requiring lenders to disclose the interest rates the majority of their borrowers are receiving on their loan products
• Requiring lenders to provide specific, clear language about alternatives to private education loans
• Requiring lenders to include all fees in their disclosures
• Including both the APR and finance charges applicable to loans
• Requiring disclosures relating to bankruptcy during the application and solicitation phases of the loan process
• Additional disclosures for lenders to schools with whom they have a preferred lender arrangement

Schools that are interested in submitting comments are strongly encouraged to do so. Schools that would like to send comments to NASFAA on these issues may do so by emailing GovtAffairs@nasfaa.org.

Posted 05/21/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.