May 4, 2010

Do You Know: What about Reg Z?

On July 30, 2009, the Federal Reserve approved the final amendments to Regulation Z -- part of the Truth in Lending Act (TILA). These amendments revise disclosure requirements for private education loans and implement provisions of the Higher Education Opportunity Act (HEOA). The amendments provide for a disclosure with the application that includes loan terms and features of the private loan as well as information on federal student loan programs.

Additional disclosures must be provided by the creditor when the loan is approved and when the loan is disbursed. Lenders were required to be in compliance as of Feb. 14, 2010. In addition, Regulation Z has substantive restrictions, including a prohibition on co-branding (not applicable for school as lender), a required 30-day firm offer period and a required 3-day right to cancel before the funds are disbursed. Title IV loans (Stafford, Perkins and PLUS) are exempt from TILA and Regulation Z.