- § 1019. Definitions
- § 1019a. Responsibilities of covered institutions, institution-affiliated organizations, and lenders
- § 1019b. Loan information to be disclosed and model disclosure form for covered institutions, institution-affiliated organizations, and lenders participating in preferred lender arrangements
- § 1019c. Loan information to be disclosed and model disclosure form for institutions participating in the William D. Ford Federal Direct Loan Program
- § 1019d. Self-certification form for private education loans
§ 1019. DefinitionsIn this part:
(1) Agent
(2) Covered institution
(3) Education loanThe term “education loan” (except when used as part of the term “private education loan”) means—
(A) any loan made, insured, or guaranteed under part B of subchapter IV;
(B) any loan made under part D of subchapter IV; or
(C) a private education loan.
(4) Eligible lender
(5) Institution-affiliated organizationThe term “institution-affiliated organization”—
(A) means any organization that—
(i) is directly or indirectly related to a covered institution; and
(ii) is engaged in the practice of recommending, promoting, or endorsing education loans for students attending such covered institution or the families of such students;
(B) may include an alumni organization, athletic organization, foundation, or social, academic, or professional organization, of a covered institution; and
(C) notwithstanding subparagraphs (A) and (B), does not include any lender with respect to any education loan secured, made, or extended by such lender.
(6) LenderThe term “lender” (except when used as part of the terms “eligible lender” and “private educational lender”)—
(A) means—
(i) in the case of a loan made, insured, or guaranteed under part B of subchapter IV, an eligible lender;
(ii) in the case of any loan issued or provided to a student under part D of subchapter IV, the Secretary; and
(iii) in the case of a private education loan, a private educational lender as defined in section 1650 of title 15; and
(B) includes any other person engaged in the business of securing, making, or extending education loans on behalf of the lender.
(7) Officer
(8) Preferred lender arrangementThe term “preferred lender arrangement”—
(A) means an arrangement or agreement between a lender and a covered institution or an institution-affiliated organization of such covered institution—
(i) under which a lender provides or otherwise issues education loans to the students attending such covered institution or the families of such students; and
(ii) that relates to such covered institution or such institution-affiliated organization recommending, promoting, or endorsing the education loan products of the lender; and
(B) does not include—
(i) arrangements or agreements with respect to loans under part D of subchapter IV; or
(ii) arrangements or agreements with respect to loans that originate through the auction pilot program under section 1099d(b) of this title.
(9) Private education loan
(Pub. L. 89–329, title I, § 151, as added Pub. L. 110–315, title I, § 120, Aug. 14, 2008, 122 Stat. 3117.)
§ 1019a. Responsibilities of covered institutions, institution-affiliated organizations, and lenders
(a) Responsibilities of covered institutions and institution-affiliated organizations
(1) Disclosures by covered institutions and institution-affiliated organizations
(A) Preferred lender arrangement disclosuresIn addition to the disclosures required by subsections (a)(27) and (h) of section 1094 of this title (if applicable), a covered institution, or an institution-affiliated organization of such covered institution, that participates in a preferred lender arrangement shall disclose—
(i) on such covered institution’s or institution-affiliated organization’s website and in all informational materials described in subparagraph (C) that describe or discuss education loans—(I) the maximum amount of Federal grant and loan aid under subchapter IV available to students, in an easy to understand format;(II) the information required to be disclosed pursuant to section 1019b(a)(2)(A)(i) of this title, for each type of loan described in section 1019(3)(A) of this title that is offered pursuant to a preferred lender arrangement of the institution or organization to students of the institution or the families of such students; and(III) a statement that such institution is required to process the documents required to obtain a loan under part B of subchapter IV from any eligible lender the student selects; and
(ii) on such covered institution’s or institution-affiliated organization’s website and in all informational materials described in subparagraph (C) that describe or discuss private education loans—(I) in the case of a covered institution, the information that the Board of Governors of the Federal Reserve System requires to be disclosed under section 1638(e)(11) of title 15, for each type of private education loan offered pursuant to a preferred lender arrangement of the institution to students of the institution or the families of such students; and(II) in the case of an institution-affiliated organization of a covered institution, the information the Board of Governors of the Federal Reserve System requires to be disclosed under section 1638(e)(1) of title 15, for each type of private education loan offered pursuant to a preferred lender arrangement of the organization to students of such institution or the families of such students.
(B) Private education loan disclosuresA covered institution, or an institution-affiliated organization of such covered institution, that provides information regarding a private education loan from a lender to a prospective borrower shall—
(i) provide the prospective borrower with the information the Board of Governors of the Federal Reserve System requires to be disclosed under section 1638(e)(1) of title 15 for such loan;
(ii) inform the prospective borrower that—(I) the prospective borrower may qualify for loans or other assistance under subchapter IV; and(II) the terms and conditions of loans made, insured, or guaranteed under subchapter IV may be more favorable than the provisions of private education loans; and
(iii) ensure that information regarding private education loans is presented in such a manner as to be distinct from information regarding loans that are made, insured, or guaranteed under subchapter IV.
(C) Informational materialsThe informational materials described in this subparagraph are publications, mailings, or electronic messages or materials that—
(i) are distributed to prospective or current students of a covered institution and families of such students; and
(ii) describe or discuss the financial aid opportunities available to students at an institution of higher education.
(2) Use of institution name
(3) Use of lender name
(b) Lender responsibilities
(1) Disclosures by lenders
(A) Disclosures to borrowers
(i) Federal education loans
(ii) Private education loans
(B) Disclosures to the Secretary
(i) In generalEach lender of a loan made, insured, or guaranteed under part B of subchapter IV shall, on an annual basis, report to the Secretary—(I) any reasonable expenses paid or provided under section 1085(d)(5)(D) of this title or paragraph (3)(B) or (7) of section 1094(e) of this title to any agent of a covered institution who—(aa) is employed in the financial aid office of a covered institution; or(bb) otherwise has responsibilities with respect to education loans or other financial aid of the institution; and(II) any similar expenses paid or provided to any agent of an institution-affiliated organization who is involved in the practice of recommending, promoting, or endorsing education loans.
(ii) Contents of reportsEach report described in clause (i) shall include—(I) the amount for each specific instance in which the lender provided such expenses;(II) the name of any agent described in clause (i) to whom the expenses were paid or provided;(III) the dates of the activity for which the expenses were paid or provided; and(IV) a brief description of the activity for which the expenses were paid or provided.
(iii) Report to Congress
(2) Certification by lendersNot later than 18 months after August 14, 2008—
(A) in addition to any other disclosure required under Federal law, each lender of a loan made, insured, or guaranteed under part B of subchapter IV that participates in one or more preferred lender arrangements shall annually certify the lender’s compliance with the requirements of this chapter; and
(B) if an audit of a lender is required pursuant to section 1078(b)(1)(U)(iii) of this title, the lender’s compliance with the requirements under this section shall be reported on and attested to annually by the auditor of such lender.
(Pub. L. 89–329, title I, § 152, as added Pub. L. 110–315, title I, § 120, Aug. 14, 2008, 122 Stat. 3119.)
§ 1019b. Loan information to be disclosed and model disclosure form for covered institutions, institution-affiliated organizations, and lenders participating in preferred lender arrangements
(a) Duties of the Secretary
(1) Determination of minimum disclosures
(A) In general
(B) Consultation and span of minimum disclosuresIn carrying out subparagraph (A), the Secretary shall—
(i) consult with students, the families of such students, representatives of covered institutions (including financial aid administrators, admission officers, and business officers), representatives of institution-affiliated organizations, secondary school guidance counselors, lenders, loan servicers, and guaranty agencies;
(ii) include, in the minimum information under subparagraph (A) that is required to be made available, the information that the Board of Governors of the Federal Reserve System requires to be disclosed under section 1638(e)(1) of title 15, modified as necessary to apply to such loans; and
(iii) consider the merits of requiring each covered institution, and each institution-affiliated organization of such covered institution, with a preferred lender arrangement to provide to prospective borrowers and the families of such borrowers the following information for each type of education loan offered pursuant to such preferred lender arrangement:(I) The interest rate and terms and conditions of the loan for the next award year, including loan forgiveness and deferment.(II) Information on any charges, such as origination and Federal default fees, that are payable on the loan, and whether those charges will be—(aa) collected by the lender at or prior to the disbursal of the loan, including whether the charges will be deducted from the proceeds of the loan or paid separately by the borrower; or(bb) paid in whole or in part by the lender.(III) The annual and aggregate maximum amounts that may be borrowed.(IV) The average amount borrowed from the lender by students who graduated from such institution in the preceding year with certificates, undergraduate degrees, graduate degrees, and professional degrees, as applicable, and who obtained loans of such type from the lender for the preceding year.(V) The amount the borrower may pay in interest, based on a standard repayment plan and the average amount borrowed from the lender by students who graduated from such institution in the preceding year and who obtained loans of such type from the lender for the preceding year, for—(aa) borrowers of loans made under section 1078 of this title;(bb) borrowers of loans made under section 1078–2 or 1078–8 of this title, who pay the interest while in school; and(cc) borrowers of loans made under section 1078–2 or 1078–8 of this title, who do not pay the interest while in school.(VI) The consequences for the borrower of defaulting on a loan, including limitations on the discharge of an education loan in bankruptcy.(VII) Contact information for the lender.(VIII) Other information suggested by the persons and entities with whom the Secretary has consulted under clause (i).
(2) Required disclosuresAfter making the determinations under paragraph (1), the Secretary, in coordination with the Board of Governors of the Federal Reserve System and after consultation with the public, shall—
(A)
(i) provide that the information determined under paragraph (1) shall be disclosed by covered institutions, and institution-affiliated organizations of such covered institutions, with preferred lender arrangements to prospective borrowers and the families of such borrowers regarding the education loans described in section 1019(3)(A) of this title that are offered pursuant to such preferred lender arrangements; and
(ii) make clear that such covered institutions and institution-affiliated organizations may provide the required information on a form designed by the institution or organization instead of the model disclosure form described in subparagraph (B);
(B) develop a model disclosure form that may be used by covered institutions, institution-affiliated organizations, and preferred lenders that includes all of the information required under subparagraph (A)(i) in a format that—
(i) is easily usable by students, families, institutions, institution-affiliated organizations, lenders, loan servicers, and guaranty agencies; and
(ii) is similar in format to the form developed by the Board of Governors of the Federal Reserve System under paragraphs (1) and (5)(A) of section 1638(e) 1
1 See References in Text note below.
of title 15, in order to permit students and the families of students to easily compare private education loans and education loans described in section 1019(3)(A) of this title; and(C) update such model disclosure form periodically, as necessary.
(b) Duties of lenders
(c) Duties of covered institutions and institution-affiliated organizations
(1) Providing information to students and families
(A) In generalEach covered institution, and each institution-affiliated organization of such covered institution, that has a preferred lender arrangement shall provide the following information to students attending such institution, or the families of such students, as applicable:
(i) The information the Secretary requires pursuant to subsection (a)(2)(A)(i), for each type of education loan described in section 1019(3)(A) of this title offered pursuant to a preferred lender arrangement to students of such institution or the families of such students.
(ii)(I) In the case of a covered institution, the information that the Board of Governors of the Federal Reserve System requires to be disclosed under section 1638(e)(11) of title 15 to the covered institution, for each type of private education loan offered pursuant to such preferred lender arrangement to students of such institution or the families of such students.(II) In the case of an institution-affiliated organization, the information the Board of Governors of the Federal Reserve System requires to be disclosed under section 1638(e)(1) of title 15, for each type of private education loan offered pursuant to such preferred lender arrangement to students of the institution with which such organization is affiliated or the families of such students.
(B) Timely provision of information
(2) Annual reportEach covered institution, and each institution-affiliated organization of such covered institution, that has a preferred lender arrangement, shall—
(A) prepare and submit to the Secretary an annual report, by a date determined by the Secretary, that includes, for each lender that has a preferred lender arrangement with such covered institution or organization—
(i) the information described in clauses (i) and (ii) of paragraph (1)(A); and
(ii) a detailed explanation of why such covered institution or institution-affiliated organization entered into a preferred lender arrangement with the lender, including why the terms, conditions, and provisions of each type of education loan provided pursuant to the preferred lender arrangement are beneficial for students attending such institution, or the families of such students, as applicable; and
(B) ensure that the report required under subparagraph (A) is made available to the public and provided to students attending or planning to attend such covered institution and the families of such students.
(3) Code of conduct
(A) In general
(B) Applicable code of conductFor purposes of subparagraph (A), an institution-affiliated organization of a covered institution shall—
(i) comply with the code of conduct developed and published by such covered institution under subparagraphs (A) and (B) of section 1094(a)(25) of this title;
(ii) if such institution-affiliated organization has a website, publish such code of conduct prominently on the website; and
(iii) administer and enforce such code of conduct by, at a minimum, requiring that all of such organization’s agents with responsibilities with respect to education loans be annually informed of the provisions of such code of conduct.
(Pub. L. 89–329, title I, § 153, as added Pub. L. 110–315, title I, § 120, Aug. 14, 2008, 122 Stat. 3122; amended Pub. L. 111–39, title I, § 101(b)(6), July 1, 2009, 123 Stat. 1935.)
§ 1019c. Loan information to be disclosed and model disclosure form for institutions participating in the William D. Ford Federal Direct Loan Program
(a) Provision of disclosures to institutions by the Secretary
(b) Duties of institutions
(1) In general
Each institution of higher education participating in the William D. Ford Direct Loan Program under part D of subchapter IV shall—
(A) make the information the Secretary provides to the institution under subsection (a) available to students attending or planning to attend the institution, or the families of such students, as applicable; and
(B) if the institution provides information regarding a private education loan to a prospective borrower, concurrently provide such borrower with the information the Secretary provides to the institution under subsection (a).
(2) Choice of forms
(Pub. L. 89–329, title I, § 154, as added Pub. L. 110–315, title I, § 120, Aug. 14, 2008, 122 Stat. 3125.)
§ 1019d. Self-certification form for private education loans
(a) In generalThe Secretary, in consultation with the Board of Governors of the Federal Reserve System, shall develop the self-certification form for private education loans that shall be used to satisfy the requirements of section 1638(e)(3) of title 15. Such form shall—
(1) be developed in a standardized format;
(2) be made available to the applicant by the relevant institution of higher education, in written or electronic form, upon request of the applicant;
(3) contain only disclosures that—
(A) the applicant may qualify for Federal student financial assistance through a program under subchapter IV of this chapter, or State or institutional student financial assistance, in place of, or in addition to, a private education loan;
(B) the applicant is encouraged to discuss the availability of Federal, State, and institutional student financial assistance with financial aid officials at the applicant’s institution of higher education;
(C) a private education loan may affect the applicant’s eligibility for free or low-cost Federal, State or institutional student financial assistance; and
(D) the information that the applicant is required to provide on the form is available from officials at the financial aid office of the institution of higher education;
(4) include a place to provide information on—
(A) the applicant’s cost of attendance at the institution of higher education, as determined by the institution under part F of subchapter IV;
(B) the applicant’s estimated financial assistance, including amounts of financial assistance used to replace the student aid index, as determined by the institution, in accordance with subchapter IV, for students who have completed the Free Application for Federal Student Aid; and
(C) the difference between the amounts under subparagraphs (A) and (B), as applicable; and
(5) include a place for the applicant’s signature, in written or electronic form.
(b) Limit on liability
(Pub. L. 89–329, title I, § 155, as added Pub. L. 110–315, title X, § 1021(b), Aug. 14, 2008, 122 Stat. 3487; amended Pub. L. 111–39, title I, § 101(b)(7), July 1, 2009, 123 Stat. 1935; Pub. L. 116–260, div. FF, title VII, § 704(1), Dec. 27, 2020, 134 Stat. 3199.)