Disclosures for Private Education Loans

Answered by:

Question:

Concerning the new disclosures for private education loans, we do not have a special type set up for these loans, but we do make loans to consumers, and the purpose that is given is for education purposes. Does the new Reg.Z requirement for the additional disclosures apply to these loans? I have been told that if we do not have a loan type that is specific for the education loans, we would not need to do the disclosures, but in what I read, it refers only to the purpose as being the trigger for the new disclosures. Can you clarify this for me?

Answer:

You are correct, it is driven by purpose, regardless of how you might code them on your loan system:

(5)Private education loan means an extension of credit that:

(i) Is not made, insured, or guaranteed under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq. );

(ii) Is extended to a consumer expressly, in whole or in part, for postsecondary educational expenses, regardless of whether the loan is provided by the educational institution that the student attends;

First published on BankersOnline.com 9/20/10