(a) Coverage. The requirements of this subpart apply to private
education loans as defined in section 226.46(b)(5). A creditor may,
at its option, comply with the requirements of this subpart for an
extension of credit subject to sections 226.17 and 226.18 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.
(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
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 sections
226.47(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 information not directly
related to the disclosures required under sections 226.47(b) and (c),
which include the disclosures required under section 226.18.
(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 226.18(a), insurance
or debt cancellation under section 226.18(n), and certain security
interest charges under section 226.18(o).
(iii) The term “finance charge” and
corresponding amount, when required to be disclosed under section
226.18(d), and the interest rate required to be disclosed under sections
226.47(b)(1)(i) and (c)(1), shall be more conspicuous than any other
disclosure, except the creditor’s identity under section 228.18(a).
(3) Electronic disclosures. The disclosures
required under sections 226.47(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 226.47(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 226.48(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 226.47(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 226.47(a) 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)
no later than three business days after the consumer requests the
credit, the creditor need not also provide the section 226.47(a) disclosures.
(iii) Notwithstanding
paragraph (d)(1)(i), 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 226.47(a).
(2) Approval
disclosures. The creditor shall provide the disclosures required
by section 226.47(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 226.46(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 226.47(c) shall be provided
after the consumer accepts the loan in accordance with section 226.48(c)(1).
(4) Receipt of mailed disclosures. If the disclosures
under paragraphs (d)(1), (d)(2) or (d)(3), 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 226.47(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 226), although new disclosures may be
required under section 226.48(c).
(2) Final disclosures. If a disclosure under section 226.47(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 226).
