On May 9, 2008, the Department released Dear Colleague Letter GEN-08-06, FP-08-06 which provides updated guidance for schools that need to conform to the new regulations (effective July 1, 2008) on Preferred Lender Lists (PLL). Below is a list of the three issues discussed, along with the Department's guidance:

What happens if a school is unable to find the minimum of three lenders to include on a PLL?

If a school is unable to list at least three lenders on their PLL, they may provide the names of the lenders that have indicated they would provide FFEL loans to the students and parents. The school must also provide a clear statement that they are not endorsing the lenders, and inform borrowers that they can choose to use any FFEL lender.

If a school includes a lender on a PLL and that lender drops from the program, is the school considered out of compliance if they no longer have a minimum of three lenders?

In circumstances such as this one, where the school has no control of the lenders leaving the program, the Department will take that into consideration when determining compliance until at least July 1, 2009.

Must all lenders on the PLL be unaffiliated or is the requirement that at least three lenders on the PLL be unaffiliated?

The Department has reviewed this issue and determined that the regulations only require that at least three lenders on the school’s PLL must be unaffiliated with each other regardless of the number of lenders on that list.

Direct questions regaring this guidance to the Office of Regulatory Compliance at (518) 473-3986, toll free at: 1-866-431-HESC (1-866-431-4372) press 6, or via e-mail: AskPolicy@hesc.org

Posted: 5/13/08