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Higher Education Opportunity ActHigher Education Opportunity Act

Overview of Title X Private Student Loan Transparency &

Improvement Act

Presented by:Cherrie ChampieAVP-Account ManagerCiti-The Student Loan Corporation

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Agenda

• Regulatory Overview

• Process Changes for Students and Families

• Process Changes for Financial Aid Offices

• Q & A

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Regulatory Overview - HEOA

Higher Education Opportunity Act (HEOA) signed into law August 2008:

• Includes legislation to specifically regulate private education loans through amendments to the Truth in Lending Act.

• Mandatory compliance date of February 14, 2010.

Key concern of Congress and policymakers: • Data indicates that many students obtain private education loans

without first taking advantage of less expensive options such as federal loans.

Intent of the Act:• Provide greater transparency.• Improve the information provided to students regarding cost.• Ensure students are aware of federal loan options.• Encourage students to consult with their Financial Aid Office before

making education financing decisions to prevent over-borrowing.

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Regulatory Overview – Key Changes

1. Provide students with three new disclosures:– Application Disclosure– Approval Disclosure– Final Disclosure

2. Allow students at least a 30-day period after approval to accept the loan offer.

3. Students must complete a Self-certification Form and submit it to the lender prior to disbursement.

4. Lenders must provide a three business day ‘right to cancel’ period after customer receipt of the Final Disclosure. Loan funds cannot be disbursed until after the end of the cancellation period.

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Regulatory Overview TransparencyLenders are required to clearly communicate loan information in a consistent format, facilitating comparisons between lenders and loan products.

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Regulatory OverviewImproved Information on Cost

Cost examples must be provided several times during the origination process:

– With the application– At approval– Prior to disbursement

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Regulatory Overview Federal Loan Options

Highlighting federal loan options on the Application and Approval Disclosures ensures students are aware of all their education financing options.

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Process Changes - Overview

New regulations expand the timeline to process private student loans , due to the right of rescission (which includes notification days) so encourage your students to begin the process early

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Process Changes Students and Families

Lender DiscussionLender Discussion

Step 1.Submit your application

Step 2. Get approved

Step 3.Get your money

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Process Changes – Application Lender Discussion cont.

Step 1.Submit your application

■ ■ Application Process for Co-Signed LoansApplication Process for Co-Signed Loans- Will the applicant be able to submit co-signer data - Will the applicant be able to submit co-signer data

on application?on application?

■■ Electronic Delivery of Disclosure DocumentsElectronic Delivery of Disclosure Documents -Will students be required to opt-in for electronic -Will students be required to opt-in for electronic document delivery?document delivery?

■■ Will students be required to open the Application Will students be required to open the Application Disclosure?Disclosure?

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Regulatory Overview – Financial Aid Office Involvement

The Self-certification Form must be completed prior to loan disbursement and suggests the student contact the FAA to discuss education financing options

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Process Changes – Application Lender Discussion cont.

■■ How many days will student (and co-signer) have to accept loan offer?

■■ Can students download the Self-certification Form from website?

When will it be available for download?

■ ■ Will lenders accept faxed copy of Self-certification Form?

■■ How will lenders handle missing information on the Self-certification Form?

Step 2. Get approved

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Process Changes – Disbursement Lender Discussion cont.

Step 3.Get your money

■■ Final DisclosureFinal Disclosure details rescission process details rescission process - How many days will the lender- How many days will the lender use for the rescission use for the rescission period before disbursing?period before disbursing?

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Process Changes for Financial Aid Offices

■■ Impact on School Certification Process and TimingImpact on School Certification Process and Timing■■ Identification of Missing InformationIdentification of Missing Information■■ Impact of Hold/ReleaseImpact of Hold/Release

-Loan changes are prohibited between -Loan changes are prohibited between Final Disclosure issuance and first Final Disclosure issuance and first disbursement. disbursement.

-If a borrower or school try to cancel or -If a borrower or school try to cancel or change a loan after the final approval change a loan after the final approval disclosure is issued, a new application is disclosure is issued, a new application is requiredrequired

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Process Changes for Financial Aid Offices

School DiscussionSchool Discussion

■ ■ What role will your office play in distributing and collecting the Self-certification Form?

■ ■ How will you provide Cost of Attendance information to borrowers?

■ ■ Will you proactively communicate these requirements on your website (or some other means) or will you rely on the lender?

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Questions

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CHANGES TO PREFERRED LENDER ARRANGEMENTS

•To be considered a Preferred Lender, a school or lender must:– • Respond to an RFP– • List lender on a lender list located on the school’s website or on a third party site– • Provide the school with interest rates, fees, repayment terms, and eligibility requirements

for each applicable private loan

•If a school includes certain lenders on the list and leaves off other lenders, the Department of Education will view the school as recommending or endorsing the lenders on the list over the lenders not included in the list

•If a school has a preferred lender list, they must:– • Clearly disclose why the school participates in a preferred lender arrangement with each

lender on the list– • State that applicants do not have to borrow from a lender on the list– • Indicate if a lender is affiliated with another lender on the list– • Include at least two lenders of private education loans that are not affiliated with each other– • Disclose the method used by the school in selecting the lenders– • Not impeded certification for applicants who choose a lender not listed on the preferred

lender list