1 Presented by: Lori Seuch, MEFA & Betsy Mayotte, American Student Assistance Title X November 5, 2009

2 Confidential and Proprietary Information Agenda Definitions Title X Self Certification Form

3 Confidential and Proprietary Information Preferred Lender Arrangements New requirements for existing and prospective students *Most Effective February 14 th, 2010

4 Confidential and Proprietary Information Definitions Covered institution (CI):  Any higher education institution that receives any type of (US) Federal funding or assistance Institution Affiliated Organization:  Any org directly or indirectly related to a covered institution Includes alumni and social organizations that recommend, promote or endorse education loans for students attending said CI

5 Confidential and Proprietary Information Definitions Education Loan:  FFEL, Direct or private education loan Private Education Loan:  Non-title IV loan provided by a private educational lender to a borrower expressly for postsecondary educational expenses Includes payment plans and other institutional loans Excludes short term emergency loans of less than 90 days Excludes billing payment plans if no interest is charged and term is 1 year or less.  Excludes credit cards and home equity lines of credit

6 Confidential and Proprietary Information Definitions Preferred Lender Arrangement:  Lender issues loans to CI’s students and families AND:  CI recommends, promotes or endorses lenders education loan products  Does include both federal and private loans  If school has PLA – they must also have a PLL  Does not include Direct Loan or PLUS Auction Loans  Does not include loans a CI makes to it’s own students as long as funded by a CI’s own funds Cannot be pass through from a lender Lender:  Any other person in business of securing, making or extending educational loans (under TILA)  This includes CI’s

7 Confidential and Proprietary Information Preferred Lender Lists – Private Loans Minimum of two unaffiliated lenders Prominent information about federal aid Prominent statement about why each lender was chosen  Including method, criteria School must report annually to ED: Examples of disclosures to students in above bullet Detailed explanation as to why each PL, including terms etc.. Report must be made available to public

8 Confidential and Proprietary Information Preferred Lender Lists - FFEL Minimum of 3 unaffiliated  Must disclose affiliated and details of affiliation  ED will maintain list School must also disclose why they chose each lender including term and condition descriptions Ensure lenders chosen are in the borrowers best interest including  Origination fee discounts  Competitive interest rates  High quality servicing  Additional benefits beyond the standard terms Must clearly state the borrower may choose any lender whether on list or not

9 Confidential and Proprietary Information Preferred Lender Lists - FFEL It’s not a preferred lender list IF:  School provides comprehensive, neutral list of lenders who have made loans to students within a set period of time  School must still provide statement of borrower choice

10 Confidential and Proprietary Information Private Loans – Co-Branding No co-branding allowed  Nothing that would lead a consumer to believe loan marketing by school Cannot use logo, mascot or name of school Not listed under federal loans Not applicable to preferred lender lists Safe harbor

11 Confidential and Proprietary Information Private Loans – Term Requirements Lender must allow 30 days from loan approval for consumer to decide  Cannot change rates or terms unless it will benefit borrower Must allow cancellation within 3 days of consummation

12 Confidential and Proprietary Information Private Loans Lenders may not:  Offer incentives to schools in exchange for loan volume consideration  Charge borrowers a fee for early repayment  Pay school advisory board members other than reasonable travel reimbursement

13 Confidential and Proprietary Information Private Loans – Self Certification Form Lender must collect self-certification form from borrower Form supplied by school or lender Must be signed and received by lender prior to loan consummation Contains info about federal loans, students COA and EFC ED developing form – must be complete within 2 years Must also do for CI private loans

14 Confidential and Proprietary Information Private Loans – Self Certification Form Three ways form can be supplied:  The lender may receive the form directly from the consumer;  The lender may receive the form from the consumer through the institution;  The lender may provide the form, and the information the consumer will require to complete the form, directly to the consumer. Note in all three cases the institution is required to supply the information to complete the form

15 Confidential and Proprietary Information Private Loans – Self Certification Form Current Fields:  Cost of attendance (COA)  Expected family contribution (EFC)  Portion of EFC replaced by other aid, as defined by Title IV regulation  Estimated financial assistance (EFA), as defined by Title IV regulation  Total aid (EFA + portion of EFC replaced by other aid)  Maximum private loan amount (COA - Total aid)

16 Confidential and Proprietary Information Disclosures

17 Confidential and Proprietary Information Disclosures – Private Loans All private loans, including institutional loans unless:  Term is less than 90 days  Payment plans of less than 1 year with no interest or fees or  Institution provided credit less than 25 times in the previous calendar year  Exceptions revoked if creditor is school affiliated organization

18 Confidential and Proprietary Information Disclosures – Private Loans Three categories:  Disclosures with applications  Disclosures when the loan is approved  Disclosures at consummation

19 Confidential and Proprietary Information Disclosures – With Applications Provide general information about: loan rates, fees, and terms, an example of the total cost of a loan based on the maximum interest rate the potential availability of federal student loans including interest rates and that additional information about federal loans may be obtained from the school or the U.S. Department of Education website.

20 Confidential and Proprietary Information Disclosures – When Loan is Approved Creditor must give the consumer a set of transaction-specific disclosures, including: information about the rate, fees and other terms of the loan. estimates of the total repayment amount based on both the current interest rate and the maximum interest rate that may be charged. monthly payment at the maximum rate of interest.

21 Confidential and Proprietary Information Disclosures – When Loan is Disbursed Must provide:  updated cost disclosures - similar to those provided at approval.  three-day right to cancel info

22 Confidential and Proprietary Information Disclosures – if you have a PLA As part of all Preferred Lender Arrangements (school)  Max amount of grant and loan aid available  A statement showing a school is required to process any FFEL loan from any eligible lender (to be determined by ED)  Federal disclosure to be developed by ED

23 Confidential and Proprietary Information Resources Bill text  _xml.pdf _xml.pdf DCL - new/GEN0812FP0810.pdf new/GEN0812FP0810.pdf Negotiated Rulemaking - tml tml