20 USC 1019a - Responsibilities of covered institutions, institution-affiliated organizations, and lenders

U.S Code last checked for updates: Nov 22, 2024

§ 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 disclosures

In 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 disclosures

A 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 materials

The 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 general

Each 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 reports

Each 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 lenders

Not 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.)

cite as: 20 USC 1019a