Student loans | Consumer Financial Protection Bureau

§ 1026.48 Limitations on personal schooling loans.

(a) Co-branding prohibited.

(1) Except as offered in paragraph (b) of this part, a creditor, aside from the lined academic establishment itself, shall not use the title, emblem, mascot, or brand of a lined academic establishment, or different phrases, photos, or symbols recognized with a lined academic establishment, within the advertising of personal schooling loans in a means that suggests that the lined schooling establishment endorses the creditor’s loans.

(2) A creditor’s advertising of personal schooling loans doesn’t indicate that the lined schooling establishment endorses the creditor’s loans if the advertising features a clear and conspicuous disclosure that’s equally distinguished and intently proximate to the reference to the lined academic establishment that the lined academic establishment doesn’t endorse the creditor’s loans and that the creditor will not be affiliated with the lined academic establishment.

(b) Endorsed lender preparations. If a creditor and a lined academic establishment have entered into an association the place the lined academic establishment agrees to endorse the creditor’s personal schooling loans, and such association will not be prohibited by different relevant legislation or regulation, paragraph (a)(1) of this part doesn’t apply if the personal schooling loan advertising features a clear and conspicuous disclosure that’s equally distinguished and intently proximate to the reference to the lined academic establishment that the creditor’s loans usually are not supplied or made by the lined academic establishment, however are made by the creditor.

(c) Consumer’s proper to simply accept.

1. 30 day acceptance interval. The creditor should present the buyer with not less than 30 calendar days from the date the buyer receives the disclosures required below § 1026.47(b) to simply accept the phrases of the loan. The creditor could present the buyer with an extended time frame. If the creditor locations the disclosures within the mail, the buyer is taken into account to have acquired them three enterprise days after they’re mailed below § 1026.46(d)(4). For functions of figuring out when a client receives mailed disclosures, “business day” means all calendar days besides Sundays and the authorized public holidays referred to in § 1026.2(a)(6). See remark 46(d)-1. The client could settle for the loan at any time earlier than the top of the 30-day interval.

2. Method of acceptance. The creditor should specify a technique or strategies by which the buyer can settle for the loan at any time inside the 30-day acceptance interval. The creditor could require the buyer to speak acceptance orally or in writing. Acceptance can also be communicated electronically, however digital communication should not be the one means offered for the buyer to speak acceptance until the creditor has offered the approval disclosure electronically in compliance with the buyer consent and different relevant provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.). If acceptance by mail is allowed, the buyer’s communication of acceptance is taken into account well timed if positioned within the mail inside the 30-day interval.

3. Prohibition on adjustments to charges and phrases. The prohibition on adjustments to the charges and phrases of the loan applies to adjustments that have an effect on these phrases which can be required to be disclosed below §§ 1026.47(b) and (c). The creditor is permitted to make adjustments that don’t have an effect on any of the phrases disclosed to the buyer below these sections.

4. Permissible adjustments to charges and phrases – re-disclosure not required. Creditors usually are not required to consummate a loan the place the extension of credit can be prohibited by legislation or the place the creditor has cause to consider that the buyer has dedicated fraud. A creditor could make adjustments to the speed based mostly on changes to the index used for the loan and adjustments that can unequivocally profit the buyer. For instance, a creditor is permitted to scale back the rate of interest or decrease the quantity of a charge. A creditor can also cut back the loan quantity based mostly on a certification or different data acquired from a lined academic establishment or from the buyer indicating that the student’s value of attendance has decreased or the quantity of different monetary assist has elevated. A creditor can also withdraw the loan approval based mostly on a certification or different data acquired from a lined academic establishment or from the buyer indicating that the student will not be enrolled within the establishment. For these adjustments permitted by § 1026.48(c)(3), the creditor will not be required to supply a brand new set of approval disclosures required below § 1026.47(b) or present the buyer with a brand new 30-day acceptance interval below § 1026.48(c)(1). The creditor should present the ultimate disclosures below § 1026.47(c).

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5. Permissible adjustments to charges and phrases – college certification. If the creditor reduces the loan quantity based mostly on data that the student’s value of attendance has decreased or the quantity of different monetary assist has elevated, the creditor could make sure corresponding adjustments to the speed and phrases. The creditor could change the speed or phrases to those who the buyer would have acquired if the buyer had utilized for the lowered loan quantity. For instance, assume a client applies for, and is authorized for, a $10,000 loan at a 7% rate of interest. However, after the buyer receives the approval disclosures, the buyer’s college certifies that the buyer’s monetary want is barely $8,000. The creditor could cut back the loan quantity for which the buyer is authorized to $8,000. The creditor can also, for instance, improve the rate of interest on the loan to 7.125%, however provided that the buyer would have acquired a charge of seven.125% if the buyer had initially utilized for an $8,000 loan.

6. Permissible adjustments to charges and phrases – re-disclosure required. A creditor could make adjustments to the rate of interest or phrases to accommodate a request from a client. For instance, assume a client applies for a $10,000 loan and is authorized for the $10,000 quantity at an rate of interest of 6%. After the creditor has offered the approval disclosures, the buyer’s monetary want will increase, and the buyer requests to a loan quantity of $15,000. In this example, the creditor is permitted to supply a $15,000 loan, and to make every other adjustments similar to elevating the rate of interest to 7%, in response to the buyer’s request. The creditor should present a brand new set of disclosures below § 1026.47(b) and supply the buyer with 30 days to simply accept the supply below § 1026.48(c) for the $15,000 loan supplied in response to the buyer’s request. However, as a result of the buyer could select to not settle for the supply for the $15,000 loan on the increased rate of interest, the creditor could not withdraw or change the speed or phrases of the supply for the $10,000 loan, besides as permitted below § 1026.48(c)(3), until the buyer accepts the $15,000 loan.

See interpretation of 48(c) Consumer’s Right to Accept in Supplement I

(1) The client has the appropriate to simply accept the phrases of a non-public schooling loan at any time inside 30 calendar days following the date on which the buyer receives the disclosures required below § 1026.47(b).

(2) Except for adjustments permitted below paragraphs (c)(3) and (c)(4), the speed and phrases of the personal schooling loan which can be required to be disclosed below §§ 1026.47(b) and (c) is probably not modified by the creditor previous to the sooner of:

(i) The date of disbursement of the loan; or

(ii) The expiration of the 30 calendar day interval described in paragraph (c)(1) of this part if the buyer has not accepted the loan inside that point.

(3) Exceptions not requiring re-disclosure.

(i) Notwithstanding paragraph (c)(2) of this part, nothing on this part prevents the creditor from:

(A) Withdrawing a suggestion earlier than consummation of the transaction if the extension of credit can be prohibited by legislation or if the creditor has cause to consider that the buyer has dedicated fraud in reference to the loan software;

(B) Changing the rate of interest based mostly on changes to the index used for a loan;

(C) Changing the rate of interest and phrases if the change will unequivocally profit the buyer; or

(D) Reducing the loan quantity based mostly upon a certification or different data acquired from the lined academic establishment, or from the buyer, indicating that the student’s value of attendance has decreased or the buyer’s different monetary assist has elevated. A creditor could make corresponding adjustments to the speed and different phrases solely to the extent that the buyer would have acquired the phrases if the buyer had utilized for the lowered loan quantity.

(ii) If the creditor adjustments the speed or phrases of the loan below this paragraph (c)(3), the creditor needn’t present the disclosures required below § 1026.47(b) for the brand new loan phrases, nor want the creditor present an extra 30-day interval to the buyer to simply accept the brand new phrases of the loan below paragraph (c)(1) of this part.

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(4) Exceptions requiring re-disclosure.

(i) Notwithstanding paragraphs (c)(2) or (c)(3) of this part, nothing on this part prevents the creditor, at its choice, from altering the speed or phrases of the loan to accommodate a particular request by the buyer. For instance, if the buyer requests a unique compensation choice, the creditor could, however needn’t, supply to supply the requested compensation choice and make every other adjustments to the speed and phrases.

(ii) If the creditor adjustments the speed or phrases of the loan below this paragraph (c)(4), the creditor shall present the disclosures required below § 1026.47(b) and shall present the buyer the 30-day interval to simply accept the loan below paragraph (c)(1) of this part. The creditor shall not make additional adjustments to the charges and phrases of the loan, besides as laid out in paragraphs (c)(3) and (4) of this part. Except as permitted below § 1026.48(c)(3), until the buyer accepts the loan supplied by the creditor in response to the buyer’s request, the creditor could not withdraw or change the charges or phrases of the loan for which the buyer was authorized previous to the buyer’s request for a change in loan phrases.

(d) Consumer’s proper to cancel. The client could cancel a non-public schooling loan, with out penalty, till midnight of the third enterprise day following the date on which the buyer receives the disclosures required by § 1026.47(c). No funds could also be disbursed for a non-public schooling loan till the three-business day interval has expired.

1. Right to cancel. If the creditor mails the disclosures, the disclosures are thought-about acquired by the buyer three enterprise days after the disclosures had been mailed. For functions of figuring out when the buyer receives the disclosures, the time period “business day” is outlined as all calendar days besides Sunday and the authorized public holidays referred to in § 1026.2(a)(6). See § 1026.46(d)(4). The client has three enterprise days from the date on which the disclosures are deemed acquired to cancel the loan. For instance, if the creditor locations the disclosures within the mail on Thursday, June 4, the disclosures are thought-about acquired on Monday, June 8. The client could cancel any time earlier than midnight Thursday, June 11. The creditor could present the buyer with extra time to cancel the loan than the minimal three enterprise days required below this part. If the creditor gives the buyer with an extended time frame during which to cancel the loan, the creditor could disburse the funds three enterprise days after the buyer has acquired the disclosures required below this part, however the creditor should honor the buyer’s later well timed cancellation request.

2. Method of cancellation. The creditor should specify a technique or strategies by which the buyer could cancel. For instance, the creditor could require the buyer to speak cancellation orally or in writing. Cancellation can also be communicated electronically, however digital communication should not be the one means by which the buyer could cancel until the creditor offered the ultimate disclosure electronically in compliance with the buyer consent and different relevant provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.). If the creditor permits cancellation by mail, the creditor should specify an handle or the title and handle of an agent of the creditor to obtain discover of cancellation. The creditor should wait to disburse funds till it’s fairly happy that the buyer has not canceled. For instance, the creditor could fulfill itself by ready an affordable time after expiration of the cancellation interval to permit for supply of a mailed discover. The creditor can also fulfill itself by acquiring a written assertion from the buyer, which have to be offered to and signed by the buyer solely on the finish of the three-day interval, that the appropriate has not been exercised.

3. Cancellation with out penalty. The creditor could not cost the buyer a charge for exercising the appropriate to cancel below § 1026.48(d). The prohibition extends solely to charges charged particularly for canceling the loan. The creditor will not be required to refund charges, similar to an software charge, which can be charged to all shoppers whether or not or not the buyer cancels the loan.

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See interpretation of 48(d) Consumer’s Right to Cancel in Supplement I

(e) Self-certification type. For a non-public schooling loan meant for use for the postsecondary academic bills of a student whereas the student is attending an establishment of upper schooling, the creditor shall receive from the buyer or the establishment of upper schooling the shape developed by the Secretary of Education below part 155 of the Higher Education Act of 1965, signed by the buyer, in written or digital type, earlier than consummating the personal schooling loan.

1. General. Section 1026.48(e) requires that the creditor receive the self-certification type, signed by the buyer, earlier than consummating the personal schooling loan. The rule applies solely to non-public schooling loans that will probably be used for the postsecondary academic bills of a student whereas that student is attending an establishment of upper schooling as outlined in § 1026.46(b)(2). It doesn’t apply to all lined academic establishments. The requirement applies even when the student will not be presently attending an establishment of upper schooling, however will use the loan proceeds for postsecondary academic bills whereas attending such establishment. For instance, a creditor is required to acquire the shape earlier than consummating a non-public schooling loan offered to a highschool senior for bills to be incurred in the course of the client’s first yr of school. This provision doesn’t require that the creditor receive the self-certification type in situations the place the loan will not be meant for a student attending an establishment of upper schooling, similar to when the buyer is consolidating loans after commencement. Section 155(a)(2) of the Higher Education Act of 1965 gives that the shape shall be made obtainable to the buyer by the related establishment of upper schooling. However, § 1026.48(e) gives flexibility to establishments of upper schooling and collectors as to how the finished self-certification type is offered to the lender. The creditor could obtain the shape immediately from the buyer, or the creditor could obtain the shape from the buyer by way of the establishment of upper schooling. In addition, the creditor could present the shape, and the knowledge the buyer would require to finish the shape, on to the buyer.

2. Electronic signature. Under part 155(a)(2) of the Higher Education Act of 1965, the establishment of upper schooling could present the self-certification type to the buyer in written or digital type. Under part 155(a)(5) of the Higher Education Act of 1965, the shape could also be signed electronically by the buyer. A creditor could settle for the self-certification type from the buyer in digital type. A client’s digital signature is taken into account legitimate if it meets the necessities issued by the Department of Education below part 155(a)(5) of the Higher Education Act of 1965.

See interpretation of 48(e) Self-Certification Form in Supplement I

(f) Provision of knowledge by most well-liked lenders. A creditor that has a most well-liked lender association with a lined academic establishment shall present to the lined academic establishment the knowledge required below §§ 1026.47(a)(1) by way of (5), for every sort of personal schooling loan that the lender plans to supply to shoppers for students attending the lined academic establishment for the interval starting July 1 of the present yr and ending June 30 of the next yr. The creditor shall present the knowledge yearly by the later of the first day of April, or inside 30 days after getting into into, or studying the creditor is a celebration to, a most well-liked lender association.

1. General. Section 1026.48(f) doesn’t specify the format during which collectors should present the required data to the lined academic establishment. Creditors could select to supply solely the required data or could present copies of the shape or types the lender makes use of to adjust to § 1026.47(a). A creditor is barely required to supply the required data if the creditor is conscious that it’s a celebration to a most well-liked lender association. For instance, if a creditor is positioned on a lined academic establishment’s most well-liked lender listing with out the creditor’s data, the creditor will not be required to adjust to § 1026.48(f).

See interpretation of 48(f) Provision of Information by Preferred Lenders in Supplement I