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Allow Extra Processing Time For Private Education Loans (Reg Z)

Summer marks a great time to be traveling on vacation, having cookouts with friends and family, and hanging out by the swimming pool. However, it is also the time of year when Fall billing statements are sent by colleges and universities around the country. I am sure if you had your choice of summer activities, paying your fall tuition bill would probably rank pretty low. But, before you put that tuition bill on the back-burner, it is important that you know the time frame that you may encounter if you are using private education loans to cover your college expenses.

Last year (February 14th to be exact), the Higher Education Opportunity Act implemented regulation Z which mandates that a series of disclosures be distributed to borrowers at key steps throughout the private education loan process. The underlying goal is to make sure students and families exhaust all of their federal loan options before moving forward with a private education loan. In addition, the disclosures serve as an educational tool to help borrowers fully understand the terms of their loan program.

There are multiple disclosures that you should encounter when applying for a private education loan:


  • Loan Application and Solicitation Disclosure: Schools or lenders are required to provide general information about loan rates, fees, and terms and must also inform a prospective borrower of the potential availability of federal student loans and the interest rates for those loans, and where to locate additional information.
  • Loan Approval Disclosure: When the school or lender approves the borrower’s application for a private education loan, they must give the borrower a transaction-specific disclosure, including information regarding the rate, fees and other terms of the loan including total repayment figures (very similar to the 1st disclosure). However, at this time, they must also notify the borrower that the rates and approval are good for 30-days. This allows the borrower time to shop-around… This disclosure is required for a first time loan as well as a private student loan consolidation.
  • Self-Certification Form(Designed by the Department of Education): Must be completed by the borrower and collected by the lender/school prior to any private loan disbursement.
  • Loan Consummation Disclosure: This, again, is very similar to the other disclosures already received by the borrower regarding terms and rates. The only additional piece of information that is provided is the 3-day right of refusal clause. Which means that funds can’t be disbursed to your college until after that Loan Consummation Disclosure is provided.

I am not sure what you think about all of these disclosures but it is starting to remind me of the paperwork that is required to be signed and initialled at a house closing. It could be very easy for your eyes to glaze over through this process but the disclosures do serve a purpose and the information provided on them is helpful when you are are trying to discern your total education loan indebtedness.

If you are getting a private education loan to cover your college expenses, the important thing for you to do is start the process as soon as possible. The earlier you get your loan paperwork complete (and all the disclosures filed away), the better your chances of meeting any payment deadlines imposed by the college. And, as we all know, paying by the due date does have it’s advantages — no late payment penalty fees and your registration doesn’t get cancelled. 😉

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