New Alternative Loan Regulations
Changes to Alternative Loan Regulations
(Effective February 14, 2010)
The Federal Truth-In-Lending Act has changed the regulations necessary for borrowers to receive private educational loans. Specific adjustments include providing three detailed disclosures to the borrower throughout the loan application and approval process, obtaining a borrower self-certification form and providing a three-day right of rescission period in which the student may cancel the loan.
The borrower must submit a signed self-certification form to the lender. This form, which is completed and signed by the student, must show the student’s cost of attendance, expected family contribution, estimated financial assistance, total aid and the maximum private loan amount allowed. The self-certification form is available here or can be obtained at the Office of Student Financial Aid. For assistance completing the self-certification, please contact the Office of Student Financial Aid.If you cannot access the PDF document, please contact our office for a hard copy.
Students who borrow alternative loans after February 14, 2010 will receive the following disclosures during the course of the loan application process:
1. At the Time the Student Applies for the Loan
This initial disclosure provides general loan rates, fees and terms including the maximum rate and maximum payment amount possible. It also contains information on the availability of federal student loans (Stafford and PLUS Loans) that may be available at lower interest rates.
2. Upon Approval of the Loan
This disclosure provides specific loan information for the applicant and estimates the total repayment amount based on both the current rate (at the time of approval) and the maximum interest rate that may be charged under the loan program.
3. After the Student Accepts the Loan
This final disclosure explains that the student has a ten day rescission period in which to cancel the loan. The loan funds will not be sent to the school until ten business days have passed.
Regulations for Lenders Upon Acceptance of the Loan
When an alternative loan has been approved, the applicant must be given 30 days to accept the loan. During this time the lender cannot change the rates or terms of the loan offer unless:
- changes are made based on the index to which the loan is tied;
- the change is to the benefit of the borrower; or
- the change is made upon request of the borrower.