Required Disclosure Statements
Private educational loan lenders are required to disclose certain information to borrowers as a result of Title X – the Private Student Loan Transparency and Improvement Act, as a part of Regulation Z of the Higher Education Opportunity Act (HEOA). Private educational loan borrowers will receive three (3) disclosure statements from the lender from the time the loan is applied for, through the time funds are disbursed to the University, as provided through the Truth in Lending Act (TILA) to allow borrowers and students choices for loans covering educational expenses.
Application and Solicitation Disclosure (ASD) – The ASD provides general information regarding rates, fees, and loan terms for prospective borrowers. It also provides examples of loan costs, estimated interest rates, eligibility, repayment options, total amount to be repaid based on amount borrowed, and other federal loan alternatives that may be applied for. The ASD also informs borrowers of a federal student aid website for providing information on other types of loans and instructions for obtaining and completing the self-certification information.
Approval Disclosure (AD) – Lenders are required to provide an Approval Disclosure to the borrower and co-signer (if applicable) prior to the loan consummation that indicates the borrower-specific rate, fees, and other terms for the loan being approved. The AD must also provide an estimated repayment schedule and terms based on the current and/or maximum allowable interest rates. Lenders must give the borrower 30 calendar days (Right of Acceptance Period) after the date on which the borrower receives the AD to decide to accept the offered private loan term presented. During the 30-day period of acceptance, lenders are prohibited from changing the interest rate on the loan, except those on the index of the loan (prime, libor, t-bill).
Final Disclosure (FD) – The Final Disclosure is sent to the borrower after the loan terms are accepted and the school’s certification of eligibility for the loan has been received and at least 3 business days prior to the first disbursement of loan funds. The Final Disclosure gives the borrower up to a 3 business day right to cancel the loan. Within the 3 business days the borrower has the right to cancel a private educational loan without penalty and cancellations are only accepted in writing by the borrower and/or co-signer. Lenders are prohibited from disbursing funds until the expiration of the 3 day right to cancel. If the disbursement extraction process has started prior to the cancellation request, the lender will contact the school for fund return. The FD contains similar information as that included on the AD, including rate, fees, terms, and repayment schedules.
Self-Certification Form – In addition to these disclosures, a lender must receive a completed and signed Applicant Self-Certification Form from the borrower. This is a standard Department of Education form. This form will include information about the availability of federal student loans, the borrower's cost of attendance, estimated other types of financial aid, and it will also show a projected balance due.