(a) Coverage. The requirements of this subpart apply to private education loans
as defined in section 1026.46(b)(5). A creditor may, at its option,
comply with the requirements of this subpart for an extension of credit
subject to sections 1026.17 and 1026.18 that is extended to a consumer
for expenses incurred after graduation from a law, medical, dental,
veterinary, or other graduate school and related to relocation, study
for a bar or other examination, participation in an internship or
residency program, or similar purposes.
(1) Relation
to other subparts in this part. Except as otherwise specifically
provided, the requirements and limitations of this subpart are in
addition to and not in lieu of those contained in other subparts of
this Part.
(2) [Reserved]
(b) Definitions. For purposes of
this subpart, the following definitions apply:
(1) Covered educational institution means:
(i) An educational
institution that meets the definition of an institution of higher
education, as defined in paragraph (b)(2) of this section, without
regard to the institution’s accreditation status; and
(ii) Includes an agent, officer, or
employee of the institution of higher education. An agent means an
institution-affiliated organization as defined by section 151 of the
Higher Education Act of 1965 (20 U.S.C. 1019) or an officer or employee
of an institution-affiliated organization.
(2) Institution of higher education has the same meaning as in sections 101 and 102 of the Higher Education
Act of 1965 (20 U.S.C. 1001-1002) and the implementing regulations
published by the U.S. Department of Education.
(3) Postsecondary educational expenses means any of the expenses that are listed as part of the cost of
attendance, as defined under section 472 of the Higher Education Act
of 1965 (20 U.S.C. 1087ll), of a student at a covered educational
institution. These expenses include tuition and fees, books, supplies,
miscellaneous personal expenses, room and board, and an allowance
for any loan fee, origination fee, or insurance premium charged to
a student or parent for a loan incurred to cover the cost of the student’s
attendance.
(4) Preferred lender
arrangement has the same meaning as in section 151 of the Higher
Education Act of 1965 (20 U.S.C. 1019).
(5) Private education loan means
an extension of credit that:
(i) Is not made, insured, or guaranteed
under Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.);
(ii) Is extended
to a consumer expressly, in whole or in part, for postsecondary educational
expenses, regardless of whether the loan is provided by the educational
institution that the student attends;
(iii) Does not include open-end credit
or any loan that is secured by real property or a dwelling; and
(iv) Does not include an extension
of credit in which the covered educational institution is the creditor
if:
(A) The term of the
extension of credit is 90 days or less; or
(B) an interest rate will not be applied to
the credit balance and the term of the extension of credit is one
year or less, even if the credit is payable in more than four installments.
(c) Form of disclosures.
(1) Clear and conspicuous. The disclosures
required by this subpart shall be made clearly and conspicuously.
(2) Transaction
disclosures.
(i) The disclosures required under section 1026.47(b) and (c) shall
be made in writing, in a form that the consumer may keep. The disclosures
shall be grouped together, shall be segregated from everything else,
and shall not contain any in formation not directly related
to the disclosures required under section 1026.47(b) and (c), which
include the disclosures required under section 1026.18.
(ii) The disclosures may include an
acknowledgement of receipt, the date of the transaction, and the consumer’s
name, address, and account number. The following disclosures may be
made together with or separately from other required disclosures:
the creditor’s identity under section 1026.18(a), insurance or debt
cancellation under section 1026.18(n), and certain security interest
charges under section 1026.18(o).
(iii) The term “finance charge” and corresponding amount, when required
to be disclosed under section 1026.18(d), and the interest rate required
to be disclosed under section 1026.47(b)(1)(i) and (c)(1), shall be
more conspicuous than any other disclosure, except the creditor’s
identity under section 1026.18(a).
(3) Electronic
disclosures. The disclosures required under section 1026.47(b)
and (c) may be provided to the consumer in electronic form, subject
to compliance with the consumer consent and other applicable provisions
of the Electronic Signatures in Global and National Commerce Act (E-Sign
Act) (15 U.S.C. 7001 et seq.). The disclosures required by
section 1026.47(a) may be provided to the consumer in electronic form
on or with an application or solicitation that is accessed by the
consumer in electronic form without regard to the consumer consent
or other provisions of the E-Sign Act. The form required to be received
under section 1026.48(e) may be accepted by the creditor in electronic
form as provided for in that section.
(d) Timing of disclosures.
(1) Application
or solicitation disclosures.
(i) The disclosures required by section
1026.47(a) shall be provided on or with any application or solicitation.
For purposes of this subpart, the term solicitation means an offer
of credit that does not require the consumer to complete an application.
A “firm offer of credit” as defined in section 603(l) of the Fair
Credit Reporting Act (15 U.S.C. 1681a(l)) is a solicitation
for purposes of this section.
(ii) The creditor may, at its option, disclose orally the information
in section 1026.47(a) in a telephone application or solicitation.
Alternatively, if the creditor does not disclose orally the information
in section 1026.47(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 1026.47(b) no later than three
business days after the consumer requests the credit, the creditor
need not also provide the section 1026.47(a) disclosures.
(iii) Notwithstanding paragraph (d)(1)(i)
of this section, for a loan that the consumer may use for multiple
purposes including, but not limited to, postsecondary educational
expenses, the creditor need not provide the disclosures required by
section 1026.47(a).
(2) Approval disclosures. The creditor
shall provide the disclosures required by section 1026.47(b) before
consummation on or with any notice of approval provided to the consumer.
If the creditor mails notice of approval, the disclosures must be
mailed with the notice. If the creditor communicates notice of approval
by telephone, the creditor must mail the disclosures within three
business days of providing the notice of approval. If the creditor
communicates notice of approval electronically, the creditor may provide
the disclosures in electronic form in accordance with section 1026.46(d)(3);
otherwise the creditor must mail the disclosures within three business
days of communicating the notice of approval. If the creditor communicates
approval in person, the creditor must provide the disclosures to the
consumer at that time.
(3) Final disclosures. The disclosures required
by section 1026.47(c) shall be provided after the consumer accepts
the loan in accordance with section 1026.48(c)(1).
(4) Receipt of
mailed disclosures. If the disclosures under paragraphs (d)(1),
(d)(2) or (d)(3) of this section are mailed to the consumer, the consumer
is considered to have received them three business days after they
are mailed.
(e) Basis of
disclosures and use of estimates.
(1) Legal obligation. Disclosures shall reflect the terms of the legal obligation between
the parties.
(2) Estimates. If any information necessary
for an accurate disclosure is unknown to the creditor, the creditor
shall make the disclosure based on the best information reasonably
available at the time the disclosure is provided, and shall state
clearly that the disclosure is an estimate.
(f) Multiple creditors; multiple consumers. If a transaction involves more than one creditor, only one set of
disclosures shall be given and the creditors shall agree among themselves
which creditor will comply with the requirements that this part imposes
on any or all of them. If there is more than one consumer, the disclosures
may be made to any consumer who is primarily liable on the obligation.
(g) Effect of subsequent events.
(1) Approval disclosures. If a disclosure under
section 1026.47(b) becomes inaccurate because of an event that occurs
after the creditor delivers the required disclosures, the inaccuracy
is not a violation of Regulation Z (12 CFR part 1026), although new
disclosures may be required under section 1026.48(c).
(2) Final disclosures. If a disclosure under section 1026.47(c) becomes inaccurate because
of an event that occurs after the creditor delivers the required disclosures,
the inaccuracy is not a violation of Regulation Z (12 CFR part 1026).
