New Disclosures for Higher Education Loans

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Question:

With regard to the new disclosures for higher education loans, I have a borrower who would like to borrower money to give to his nephew to pay for tuition. Is this considered an education loan, and would the disclosures be required? Our borrower is not the one going to school and the student is not the one that will be repaying the loan.

Answer:

Regulation Z does not require that the student be the borrower for the provisions of Subpart F (Special Rules for Private Education Loans) to apply. If the borrower is a consumer, the purpose of the loan is to pay for post-secondary school expenses, and the loan is not an open-end credit extension or a loan secured by real estate or a dwelling, you need to comply with the additional disclosure rules in Subpart F.

First published on BankersOnline.com 8/09/10