Required Disclosures for Private Education Loans

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Question:

Our software only supports 2 of the 3 required disclosures for private education loans. They claim that if you approve the loan within 3 days of receiving the application, that you are not required to give the customer the "application" disclosure, only the approval and final disclosures. Is this true or do I need to find the other disclosure somewhere else?

Answer:

If you deny within 3 days of application or approve and send the approval disclosures within 3 days of application you do not have to send the application disclosures.

If you are not certain you will always accomplish those actions within 3 days, you are better off sending (or supplying at time of application) the application disclosure. Banks who provide private education loans have generally set up an application disclosure using the model forms.

From Reg Z:
226.46(d)(i)(2)
(ii) The creditor may, at its option, disclose orally the information in Section 226.47(a) [the application disclosure] in a telephone application or solicitation. Alternatively, if the creditor does not disclose orally the information in Section 226.47(a), the creditor must provide the disclosures or place them in the mail no later than three business days after the consumer has applied for the credit, except that, if the creditor either denies the consumer's application or provides or places in the mail the disclosures in Section 226.47(b) [the approval disclosures] no later than three business days after the consumer requests the credit, the creditor need not also provide the Section 226.47(a) disclosures.

First published on BankersOnline.com 7/25/11