Private Loan Disclosures
Federal regulations require all private education loan lenders to produce the following disclosures to borrowers:
- Application Disclosure: The lender must provide a general range of rates and fees so that borrowers can make informed decisions when choosing a private loan lender.
- The Application Disclosure provides general information about interest rates, fees, default or late payment costs, and repayment terms. In addition, it includes an example of the total cost of a loan based on the maximum interest rate offered by a lender, a defined loan amount, and calculations for each payment option.
- Loan Approval Disclosure: When an applicant is conditionally approved for a loan, the lender must send this disclosure with borrower-specific rates and fees.
- The Approval Disclosure must be provided before the consummation of the loan on (or with) any notice to the applicant that the creditor has approved the consumer’s application for a loan.
- The Approval Disclosure provides information specific to the loan being approved by the lender, including detailed information on the interest rate and itemization of fees associated with the loan application (including fees associated with late payments and defaults).
- Borrowers typically have thirty calendar days to accept the loan terms offered. The borrower can accept the terms of the loan by mail, by phone, or electronically.
- Final Disclosure: This is sent to the borrower after the loan terms are accepted and the school has certified the student’s eligibility for the loan. The Final Disclosure gives the borrower a right-to-cancel period of three business days.