Private Education Loans...

I’m learning about Private Education Loans and want to know if they are a product or the disclosures are triggered by the purpose.

Employee mentioned that we don’t offer student loans (PEL) so the disclosure requirements don’t apply. Is that right? And does it have to be the student applying for the loan or could it be the parents and the disclosures apply to them too?
Thanks in advance.

http://www.bankersonline.com/regs/12-1026/12-1026-046.html

http://www.bankersonline.com/regs/12-1026/12-1026-047.html

http://www.bankersonline.com/regs/12-1026/12-1026-048.html


If the loan request meets the definition of a PEL (see section .46 and its Commentary for the definition) then it's a PEL regardless what your employee classifies the loan as.

Thanks Dan.
Also, while searching for this topic on old threads I found the answer to my other question.
If the parents apply for the student the disclosures apply to them too.

The definition of a PEL in .46 specifically identifies loans to parents for secondary educational expenses would fall within the definition.

I read the information provided in the thread above. We have a customer inquiring about refinancing a student loan (we don't do student loans- it would just be a refi to consolidate debt). From what I can tell, this doesn't fall into the student loan definition. Is my thinking correct or am I missing something? We aren't financing his current schooling (the school he went to called him on the debt and wants re-payment now).

The first link above yields the following information (bold was added by me):

46(b)(5) Private Education Loan

1. Extended expressly for postsecondary educational expenses. A private education loan is one that is extended expressly for postsecondary educational expenses. The term includes loans extended for postsecondary educational expenses incurred while a student is enrolled in a covered educational institution as well as loans extended to consolidate a consumer's pre-existing private education loans.

2. Multiple-purpose loans. i. Definition. A private education loan may include an extension of credit not excluded under §1026.46(b)(5) that the consumer may use for multiple purposes including, but not limited to, postsecondary educational expenses. If the consumer expressly indicates that the proceeds of the loan will be used to pay for postsecondary educational expenses by indicating the loan's purpose on an application, the loan is a private education loan.

It would fall within the definition.


. . . as well as loans extended to consolidate a consumer's pre-existing private education loans. . . .

Thank you both!

We're running into this recently also. The commentary on coverage refers to a loan to consolidate "private education loans", which by definition would exclude government program loans, correct? So could we do a consolidation of those government loans and not be required to issue the Reg Z disclosures? Thought I'd check. The topic of the prospect of turning away this particular loan request has raised a bit of a discussion. Thanks.

A couple years later, but we fleshed this out here: https://www.bankersonline.com/forum/ubbt...ans#Post2172085