May 29, 2008
Preferred Lender List Guidance
The U.S. Department of Education (ED) has issued new guidance on the school's use of a preferred lender list (PLL) in DCL GEN-08-06/FP-08-06. Due to the significant changes in the student loan marketplace, ED issued PLL guidance for the final regulations published on November 1, 2007 and effective July 1, 2008.
Highlights of New Requirements
Minimum of Three Lenders
A school that has been unable to identify three or more unaffiliated lenders that will make FFELP loans to its students or parents may provide the names of lenders that will offer loans to the school's students and their parents. In providing this information, the school must make it clear that:
- It is not endorsing the lenders
- The borrower can choose to use any FFELP lender that will make loans to enable the borrower to attend that institution
Schools that include a minimum of three lenders on their lists to meet PLL requirements may be notified that one or more of those lenders has discontinued making loans to that school's students and parents. Recognizing that such circumstances are out of a school's control and may affect compliance with regulations, ED will take those circumstances into account until at least July 1, 2009.
Comprehensive List of Lenders
A school that wants to provide basic information to the school's students and their parents may provide a comprehensive list of lenders that have made loans to the school's students or parent in the past, and that have indicated that they would continue to make such loans. In this instance, the school:
- Should not provide any additional information about the lender, including, for example, the percentage of the school's loans made by the lender
- Must provide a clear statement that a borrower can choose to use any FFELP lender
Unaffiliated Lender
ED has determined that the regulations only require that at least three lenders on a school's PLL must be unaffiliated regardless of the number of lenders on the list. While not required, ED believes that it would be helpful to consumers for a school to identify, as part of its PLL disclosures, any affiliations among the lenders on the institution's list.
OGSLP will continue to keep you informed about DCL guidance, Higher Education Act (HEA) issues, and other legislative activity. We encourage you to visit our Legislation Page often to view important updates and access more detailed information. If you have questions, please contact Policy, Compliance, and Training at (405) 234-4432 or pct@ogslp.org.