Navigating the ISIR Analysis Tool
Activity 10: Loan Disclosures
Review and record what office is responsible for reviewing and updating the information listed below. Also indicate where this information is located and when it was last updated.
|Office Responsible: | |
|Area Information is located: | |
|Date Document was last updated: | |
|Date Policy and Procedure was last updated: | |
Notice of the amount of funds a student or parent is expected to receive 668.165(a)
❑ Before the institution disburses title IV, HEA program funds for any award year, it must notify a student of the amount of funds that the student or his or her parent can expect to receive under each title IV, HEA program, and how an when those funds will be disbursed. If those funds include Direct Loan program funds, the notice must indicate which funds are from subsidized loans, which are from unsubsidized loans, and which are from PLUS loans.
❑ Except in the case of a post-withdrawal disbursement made in accordance with 668.22(a)(5), if the institution credits a student ledger account with Direct Loan, Federal Perkins Loan, or TEACH Grant program funds, the institution must notify the student or parent of:
❑ The anticipated date and amount of the disbursement;
❑ The student’s or parent’s right to cancel all of a portion of the loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement and have the loan proceeds or TEACH Grant proceeds returned to the Secretary; and
❑ The procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement
❑ The institution must provide the notice described in 668.165(a)(2) in writing:
❑ No earlier than 30 days before, and no later than 30 days after, crediting the student’s ledger account at the institution, if the institution obtains affirmative confirmation from the student under 668.165(a)(6)(i); or
❑ No earlier than 30 days before, and no later than seven days after, crediting the student’s ledger account at the institution, if the institution does not obtain affirmative confirmation from the student under 668.165(a)(6)(i)
State Grant Assistance 668.14(b)(11)
❑ If the school participates in the FFEL Program, the school informs all eligible borrowers, as defined in 34 CFR part 682, about the availability and eligibility of those borrowers for State grant assistance from the State in which the school is located, and informs borrowers from another State of the source of further information concerning State grant assistance from that State.
Student Loan Information Published by the U.S. Department of Education
❑ The school is required to provide information published by the U.S. Department of Education to students at any time that information regarding loan availability is provided. The publication includes information about rights and responsibilities of students and schools under the Title IV, HEA loan programs.
National Student Loan Data System (NSLDS)
❑ If the school enters into an agreement with a potential student, student, or parent of a student regarding a Title IV, HEA Loan the school must inform the student or parent that the loan will be submitted to the National Student Loan Data System (NSLDS), and will be accessible by guaranty agencies, lenders, and schools determined to be authorized users of the data system.
Entrance Counseling For Student Loan Borrowers 685.304(a)(6)
Note: The final regulations include the entrance counseling requirements separately for each loan program. See the program regulations for complete information.
Prior to the first disbursement, each school must provide to a first-time borrower of a Federal Direct Loan (other than consolidated or Parent PLUS loans) comprehensive information on the terms and conditions of the loan and of the borrower’s responsibilities. The information is to include:
❑ An explanation of the use of the Master Promissory Note (MPN)
❑ An emphasis to the borrower the seriousness and importance of the repayment obligation the student borrower is assuming
❑ A description of the likely consequences of default, including adverse credit reports, delinquent debt collection procedures under Federal law, and litigation
❑ The obligation of the borrower to repay the full amount of the loan regardless of whether the borrower complete program or completes within regular time for completion, is unable to obtain employment upon completion, or is otherwise dissatisfied with or does not receive the educational or other services the borrower purchased from the school
❑ Information about the monthly payment amounts based on
❑ A range of student levels of indebtedness of Direct Subsidized Loan and Direct Unsubsidized Loan borrowers, or student borrowers with Direct Subsidized, Direct Unsubsidized, and Direct PLUS Loans depending on the types of loans the borrower has obtained; or
❑ The average indebtedness of other borrowers in the same program at the same school as the borrower
❑ To the extent practicable, provide an explanation of the effect of accepting the loans to be disbursed on the eligibility of the borrower for other form of student financial assistance
❑ Information on the accrual and capitalization of interest
❑ Borrowers of unsubsidized loans have the option of paying interest while in school
❑ Definition of half-time enrollment and the consequences of not maintaining half-time enrollment
❑ Importance of contacting appropriate offices if student withdraws prior to completion of program of study
❑ Information about the NSLDS and how the borrower can access the borrowers records
❑ The name of and contact information for the individual the borrower may contact if the borrower has any questions about the borrower's rights and responsibilities or the terms and conditions of the loan;
❑ For loans first disbursed on or after July 1, 2020, if, as a condition of enrollment, the school requires borrowers to enter into a pre-dispute arbitration agreement, as defined in 34 CFR 668.41(h)(2)(iii), or to sign a class action waiver, as defined in 34 CFR 668.41(h)(2)(i) and (ii), the school must provide a written description of the school’s dispute resolution process that the borrower has agreed to pursue, including the name and contact information for the individual or office at the school that the borrower may contact if the borrower has a dispute relating to the borrower’s loans or to the provision of educational services for which the loans were provided;
❑ For loans first disbursed on or after July 1, 2020, if, as a condition of enrollment the school requires borrowers to enter into a pre-dispute arbitration agreement, as defined in 34 CFR 668.41(h)(2)(iii), the school must provide a written description of how and when the agreement applies, how the borrower enters into the arbitration process, and who to contact if the borrower has any questions; and
❑ For loans first disbursed on or after July 1, 2020, if, as a condition of enrollment, the school requires borrowers to sign a class-action waiver, as defined in 34 CFR 668.41(h)(2)(i) and (ii), the school must explain how and when the waiver applies, alternative processes the borrower may pursue to seek redress, and who to contact if the borrower has any questions; and
❑ For first-time borrowers as defined in 685.200(f)(1)(i), explain the limitation on eligibility for Direct Subsidized Loans and possible borrower responsibility for accruing interest described in 685.200(f), including:
❑ The possible loss of eligibility for additional Direct Subsidized Loans;
❑ How a borrower's maximum eligibility period, remaining eligibility period, and subsidized usage period are calculated;
❑ The possibility that the borrower could become responsible for accruing interest on previously received Direct Subsidized Loans and the portion of a Direct Consolidation Loan that repaid a Direct Subsidized Loan during in-school status, the grace period, authorized periods of deferment, and certain periods under the Income-Based Repayment and Pay As You Earn Repayment plans; and
❑ The impact of borrower responsibility for accruing interest on the borrower's total debt.
Entrance Counseling For Graduate Student Loan Borrowers 685.304(a)(7)
Entrance counseling for graduate or professional student Direct PLUS Loan borrowers must:
❑ Inform the student borrower of sample monthly repayment amounts based on:
❑ A range of student levels or indebtedness of graduate or professional student PLUS Loan borrowers, or student borrowers with Direct PLUS Loans and Direct Subsidized Loans or Direct Unsubsidized Loans, depending on the types of loans the borrower has obtained or
❑ The average indebtedness of other borrowers in the same program at the same school
❑ Inform the borrower of the option to pay interest on a PLUS Loan while the borrower is in school
❑ For a graduate or professional student Direct PLUS Loan borrower who has received a prior Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized Federal Stafford Loan, or Unsubsidized Federal Stafford Loan, provide the information specified in 685.301(a)(3)(i)(A) through (a)(3)(i)(C); and
❑ For a graduate or professional student Direct PLUS Loan borrower who has not received a prior Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized Federal Stafford Loan, or Unsubsidized Federal Stafford Loan, provide the information specified in 685.304(a)(6)(i) through (a)(6)(xii).
Exit Counseling For Student Loan Borrowers 685.304(b); 668.42; 674.42(b)
Note: The regulations include the entrance counseling requirements separately for each loan program. See the program regulations for complete information.
Each school must provide counseling to borrowers of loans under the FFEL, Federal Direct Loan, or Perkins Loan programs (other than consolidated or Parent PLUS loans) shortly before the student borrower ceases at least half-time study at the school. The counseling will provide information on:
❑ Average anticipated monthly repayment amount
❑ Repayment plan options
❑ Options to prepay or pay on shorter schedule
❑ Debt Management Strategies
❑ Use of Master Promissory Note
❑ Explain to first-time borrowers, as defined in 685.200(f)(1)(i):
❑ How the borrower's maximum eligibility period, remaining eligibility period, and subsidized usage period are determined under 685.200(f);
❑ The sum of the borrower's subsidized usage periods, as determined under 685.200(f)(1)(iii), at the time of the exit counseling;
❑ The consequences of continued borrowing or enrollment, including:
❑ The possible loss of eligibility for additional Direct Subsidized Loans; and
❑ The possibility that the borrower could become responsible for accruing interest on previously received Direct Subsidized Loans and the portion of a Direct Consolidation Loan that repaid a Direct Subsidized Loan during in-school status, the grace period, authorized periods of deferment, and certain periods under the Income-Based Repayment and Pay As You Earn Repayment plans;
❑ The impact of the borrower becoming responsible for accruing interest on total student debt;
❑ That the Secretary will inform the student borrower of whether he or she is responsible for accruing interest on his or her Direct Subsidized Loans; and
❑ That the borrower can access NSLDS to determine whether he or she is responsible for accruing interest on any Direct Subsidized Loans as provided in 685.200(f)(3);
❑ The seriousness and importance of student’s repayment obligation
❑ Terms and conditions for forgiveness or cancellation
❑ Copy of information provided by the U.S. Department of Education
❑ Terms and conditions for deferment or forbearance
❑ Consequences of default
❑ Options and consequences of loan consolidation
❑ Tax benefits available to borrowers
❑ The obligation of the borrower to repay the full amount of the loan regardless of whether the borrower completes program or completes within regular time for completion, is unable to obtain unemployment upon completion, or is otherwise dissatisfied with or did not receive the educational or other services the borrower purchased from the school
❑ Availability of the Student Loan Ombudsman’s office
❑ Information about NSLDS. The U.S. Department of Education is required to provide a disclosure form for students and prospective students about NSLDS
Private Education Loan Disclosures (Including Self-Certification Form) 601.2; 601.11; 601.30; 668.14(b)(29)
Schools or school-affiliated organizations (e.g., alumni organizations, foundations) that provide information regarding a private education loan from a lender to a prospective borrower must provide information to the prospective borrower, including:
❑ Information required under Section 128(e) of the Truth in Lending Act (15 U.S.C. 1638(e))
❑ That the prospective borrower may qualify for loans or other assistance under the Title IV, HEA programs
❑ That the terms and conditions of the Title IV, HEA program loans may be more favorable than the provisions of the private education loans.
The information regarding private education loans must be presented in a manner that makes it distinct from information regarding Title IV, HEA program Loans.
Self-Certification Form 601.2; 601.11; 601.30; 668.14(b)(29)
❑ The school must, upon request provide in written or electronic form to an enrolled or admitted student applicant for a private education loan the self-certification form for private education loans required under Section 128(e)(3) of the Truth in Lending Act (15 U.S.C. 1638(e)(3)), and the information required to complete the form, to the extent the school possesses the information. The U.S. Department of Education has developed the form and it is available on the IFAP website (ifap.).
Code of Conduct for Education Loans 601.2; 601.21; 668.14(b)(27)
Each school must prominently publish on the school’s website a code of conduct that prohibits a conflict of interest with the responsibilities of an agent of the school with respect to FFELP or private education loans. All agents with responsibility for loans must be informed annually of the provisions of the code. The code of conduct must prohibit:
❑ Revenue-sharing arrangements with any lender
❑ Receiving gifts from a lender, a guarantor, or a loan services
❑ Contracting arrangement providing financial benefit from any lender or affiliate of a lender
❑ Directing borrowers to particular lenders, or refusing or delaying loan certifications
❑ Offers of funds for private loans
❑ Call center or financial aid office staffing assistance
❑ Advisory board compensation
Preferred Lender Lists 601.2; 601.21; 668.14(b)(28); 601.10
Each school must annually make available in print or other medium to students attending the school and their families a list of the specific lenders for private education loans or for Title IV, HEA loans that the school recommends, promotes, or endorses in accordance with a preferred lender arrangement. The list must prominently disclose the method and criteria used by the school in selecting lenders for preferred lender arrangements to ensure that such lenders are selected on the basis of the best interests of the borrower. The list must also clearly and fully disclose:
❑ The minimum information determined by the U.S. Department of Education (HEA Section 153(a)) (20 U.S.C.1019b)
❑ Why the school participates in a preferred lender arrangement with each lender, particularly with respect to terms and conditions or provisions favorable to the borrower
❑ That the students or their families do not have to borrow from a lender on the list
❑ The list must have at least three FFELP lenders that are not affiliates or each other. If the list includes lenders of private education loans, there must be at least two lenders who are not affiliates. The list must indicate for each lender whether it is or is not an affiliate of the other lenders on the list. The details of each affiliation are to be disclosed. The U.S. Department of Education is required to provide to schools a list of the lender affiliates of all eligible lenders.
❑ Prominently disclose the method and criteria used by the institution in selecting lenders with which to participate in preferred lender arrangements to ensure that such lenders are selected on the basis of the best interests of the borrowers, including:
❑ Payment of origination or other fees on behalf of the borrower;
❑ Highly competitive interest rates, or other terms and conditions or provisions of Title IV, HEA program loans or private education loans;
❑ High-quality servicing for such loans; or
❑ Additional benefits beyond the standard terms and conditions or provisions for such loans;
❑ Exercise a duty of care and a duty of loyalty to compile the preferred lender list under paragraph (d) of this section without prejudice and for the sole benefit of the students attending the institution, or the families of such students; and
❑ Not deny or otherwise impede the borrower's choice of a lender or cause unnecessary delay in loan certification under title IV of the HEA for those borrowers who choose a lender that is not included on the preferred lender list.
Preferred Lender Arrangements 601.2; 601.10; 601.12; 601.20; 601.21
A school or school-affiliated organization (e.g. alumni organizations, foundations) that participates in a preferred lender arrangement must comply with the code of conduct provisions in HEA Section 487(a)(25) (20 U.S.C. 1094(a(25)) and HEA Section 487(h) (20 U.S.C. 1094(h)). School-affiliated organizations are required to prominently publish the code of conduct on their websites (if any) and annually inform agents with responsibility for education loans of the provisions of the code.
Note: The Secretary, together with the Federal Reserve has developed a model disclosure form. The Federal Register published August 14, 2009 by the Federal Reserve System covering Truth in Lending contains a model disclosure form: . (If the pdf link does not open, copy and paste the link into a browser other than Explorer)
In addition to the information required for the Preferred Lender Lists, each school or school-affiliated organization in a preferred lender arrangement must disclose information on its website and in publications, mailings, or electronic messages, or materials that are distributed to prospective or current students and their families that describe the financial aid opportunities available to students attending the school and that describe or discuss education loans.
The information must include:
❑ The maximum amount of Title IV, HEA grant and loan aid available to students in an easy-to-understand format
❑ The Truth in Lending information (15 U.S.C. 1638(e)(11)) for each type of private education loan offered through a preferred lender arrangement to the school’s students and their families, and
❑ When available, the information identified on a model disclosure form developed by the Department for each type of education loan that is offered through a preferred lender arrangement to the school’s students or their families.
Private Education Loans 601.2; 601.10; 601.12; 601.20; 601.21
❑ Each school must provide on its website, and in publications, mailings, or electronic messages, or materials that are distributed to prospective or current students and their families that describe the financial aid opportunities available to students attending the school and that describe or discuss private education loans, the information required to be disclosed under Section 128(e)(11) of the Truth in Lending Act (15 U.S.C. 1638(e)(11)) for each type of private loan offered pursuant to a preferred lender arrangement.
❑ Each school-affiliated organization must provide on its website, and in publications, mailings, or electronic messages, or materials distributed to students and families that describe private education loans and the information required to be disclosed under Section 128(e)(1) of the Truth in Lending Act (15 U.S.C. 1638(e)(1) for each type of private loan offered pursuant to a preferred lender arrangement.
The name of the lender must be displayed in all information and documentation related to private education loans.
❑ The information in the model disclosure form and the Truth in Lending Act information must be provided annually in a manner that allows students and families to take the information into account before selecting a lender or applying for an education loan.
Annual report on Preferred Lender Arrangements 601.2; 601.10; 601.12; 601.20; 601.21
Each school and school-affiliated organization must make an annual report to the U.S. Department of Education that includes for each lender in a preferred lender arrangement with the school or school-affiliated organization
❑ The minimum information the Department determines must be disclosed
❑ Information required for private loans under the Truth in Lending Act
❑ Detailed explanation of the reasons a school or school-affiliated organization participates in a preferred lender arrangement with the lender, including why the terms, conditions, and provisions of each type of loan are beneficial to the school’s students or their families.
The information in the report must be made available to the public and provided to current students and students planning to attend the school and their families.
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