I may be interpreting the final rule incorrectly. Does a bank need to develop such loans and are the loans fully the bank's risk or are there still some government guaranteed educ. loans that would fall under the new rule?

I haven't read it cover to cover, however the Executive Summary indicates:

The final rule on education loans indicates the agencies will consider low-cost education loans to low-income borrowers as a positive factor when assessing a financial institution's record of meeting community credit needs under the CRA. The rule:

Provides a definition of "low-income borrower" consistent with current CRA definitions (50 percent of area median income), including borrowers' and co-borrowers' income;
Defines "low-cost" based on the rates and fees charged under U. S. Department of Education lending programs;
Includes loans for higher education by accredited institutions listed by the U. S. Department of Education and loans covered by Truth in Lending protections;
Enables consideration of loans outside assessment areas if the needs are adequately addressed inside assessment areas; and
Does not require any institution to make low-cost loans to low-income students or change how consumer loans are otherwise considered during CRA evaluations.

Quote:

Thanks for the response. My question is not clear. I was asking whether or not the educ. loans had to be developed by the bank, should the bank wish to offer such loans or are there educ. loan products/programs, gteed by the government, still available?

Trees:

The program of guaranteed student loans has been discontinued to the best of my knowledge. All student loans are now extended directly by Sallie Mae. I think this changed in July of 2010.

I don't see how a bank could compete with the rates the Student Loan Admin is offering.....

The original proposed definition of a low cost education loan was:

"The Agencies proposed to define
‘‘low-cost education loans’’ as education
loans that are originated by financial
institutions through a program of the
U.S. Department of Education; or any
private education loans, including loans
under state or local education loan
programs, originated by financial
institutions with interest rates and fees
no greater than those of comparable
education loan programs offered by the
U.S. Department of Education."

The final definition leaves out loans under a federal program:

"For purposes of this paragraph, ‘‘low-cost
education loans’’ means any education
loan, as defined in section 140(a)(7) of
the Truth in Lending Act (15 U.S.C.
1650(a)(7)) (including a loan under a
state or local education loan program),
originated by the bank for a student at
an ‘‘institution of higher education,’’ as
that term is generally defined in
sections 101 and 102 of the Higher
Education Act of 1965 (20 U.S.C. 1001
and 1002) and the implementing
regulations published by the U.S.
Department of Education, with interest
rates and fees no greater than those of
comparable education loans offered
directly by the U.S. Department of
Education. Such rates and fees are
specified in section 455 of the Higher
Education Act of 1965 (20 U.S.C.
1087e)."

This definition is totally separate from defining a low income borrower or measuring the rates against a federal rate.

Hmmm. Doesn't sound very appealing. A bank would have to come up with a product that offers very little financial incentive....

So, am I understanding this correctly?

It must be a consumer loan that is not open-ended or secured by real property or a dwelling,
the rates must be 4.5% or less at this time and
it must be to a consumer who has income less than 50% of the areas median income?