Our bank currently performs Financial Aid Analysis for several private high schools, which are customers of ours for tuition lending. We have been asked by the church to perform this analysis in association with their local scholarship.

We are contemplating putting the application online, so applicants to the scholarship could submit their financial info to our bank for review. It could be well over 1,000 applications for each scholarship. Some, but not all, of the applicants would be kids that go to the schools were we are providing the tuition financing.

We would not make any loans or use the info provided other than as part of the requested analysis. We would collect a small fee from the applicant for each analysis.

Disclosures contemplated include: privacy notice that providing the info to us means directing us to share the info with the church’s scholarship program; disclosure that the fee pays only for the bank’s analysis, and does NOT imply that a scholarship will be received.

What compliance issues do you foresee?

And you want to stick the bank in the middle of this for what reason?

To make that extra $1.50?

OP: Randy, because money.

ACB, way way more than $1.50 per app. Like 34 times more than that.

OP here again: I kinda thought it was, generally speaking, supposed to be free to apply for a scholarship, but I don't know, it's been years since I had to apply for one.

You don't say who your regulator might be or how this is set up, but since you are charging for the service, I would suggest contacting your Federal and State regulators (if you have one) and make sure this falls into a permissible nonbanking activity. The only area it might fall into for a holding company is management consulting - but that might be a real stretch:

https://www.law.cornell.edu/cfr/text/12/225.28

OP: thank you!

Your bank is assuming that analyzing a scholarship application involves the same set of skills as analyzing a loan application? To be clear, most loan officers would not be competent to reach a conclusion. You need to verify practicality before you research legality.

OP here: Management seems to feel that the skill set is the same. Using our back-office underwriters, we would basically do the reverse of the underwriting process: If you AREN'T qualified for a loan (low income, etc.) then you ARE qualified for a scholarship. Kind of like that, anyway.... It would definitely not be loan officers, but someone back-of-the-house with (we imagine) appropriately related expertise that could be applied to this new skill.

Would concerns be lessened by having the scholarship organization, that is, the Church (rather than the students) pay our fee?

I'm not on the compliance side of the house specifically, but I can say as an underwriter this seems fraught with risk and should absolutely be avoided. If my VP came to me with this assignment I'd immediately reply I'm not qualified to make an assessment on a needs-based scholarship. For example, if the application process includes intangibles (i.e. volunteer hours) how do I as an underwriter value that? And more specifically, how do I value that on a consistent basis in the face of other contributing factors? The bank's underwriters have expertise in a narrow field; it's unfair to apply that to a wholly unrelated product.

our bank offers college scholarships to kids of employees and retirees, there is a formal application process and also an essay is required. It used to be handled internally, we actually moved the review process and selection to a 3rd party non-profit that manages this on our behalf. That is what they do, it is not what we do. Can't imagine that a bank can do this and it becomes profitable unless they are reviewing thousands.