Preferred Lender List Compliance Guidance for Schools

SLATE Compliance Checklist for Schools Using Preferred Lender Lists

Maintaining compliance with the SLATE (Student Lending Accountability, Transparency, and Enforcement) Act and Title IV federal regulations when selecting and posting preferred lender lists is important. The following checklist will assist you.

SLATE Compliance Checklist for Schools Using Preferred Lender Lists
Schools must not direct students to an MPN that does not include the ability to choose alternative lenders Schools must review their preferred lenders annually to ensure compliance with their posted criteria, and update accordingly Elements of a preferred lender list – whether on the school’s Web site, a third-party hosted comparative Web site, or in print – should be arranged in alphabetical order or in a format easy to be understood by the student The rationale for the list’s order must be clearly written, easily understood by members of the general public, and include disclosures of interest rates, fees, terms and benefits for each loan The preferred lender list shall contain a statement communicating that students are neither limited to, nor required to select from any of the listed lending institutions, and that the school is required to process the loan documents from any eligible lending institution that the student selects At least three of the lenders on a preferred lender list must be unaffiliated with each other regardless of the number of lenders on list. Although not required, it would be helpful to have any affiliations among the lenders on the preferred lender list identified A school that has been unable to identify at least three lenders that will make loans to its students or parents sufficient to meet the requirements of a preferred lender list may provide the names of the lenders that have indicated that they would provide FFEL loans to the school’s students and parents. In providing this information, the school must make it clear that it is not endorsing the lenders, and that the borrower can choose to use any FFEL lender that will make loans to the borrower for attendance at their institution Likewise, a school may provide basic information to its students and parents by providing a comprehensive list of lenders that have made loans to the school’s students or parents in the past three to five years (or some period) and that have indicated that they would continue to make such loans. The school should not provide any additional information about the lender, including, for example, the percentage of the school’s loans made by the lender. The school must provide a clear statement that a borrower can choose to use any lender For more information on federal requirements for preferred lender lists, please refer to Dear Colleague Letter (GEN-08-06).

SLATE Compliance Checklist
for Schools Using Preferred Lender Lists

Schools must not direct students to an MPN that does not include the ability to choose alternative lenders
Schools must review their preferred lenders annually to ensure compliance with their posted criteria, and update accordingly
Elements of a preferred lender list – whether on the school’s Web site, a third-party hosted comparative Web site, or in print – should be arranged in alphabetical order or in a format easy to be understood by the student
The rationale for the list’s order must be clearly written, easily understood by members of the general public, and include disclosures of interest rates, fees, terms and benefits for each loan
The preferred lender list shall contain a statement communicating that students are neither limited to, nor required to select from any of the listed lending institutions, and that the school is required to process the loan documents from any eligible lending institution that the student selects
At least three of the lenders on a preferred lender list must be unaffiliated with each other regardless of the number of lenders on list. Although not required, it would be helpful to have any affiliations among the lenders on the preferred lender list identified
A school that has been unable to identify at least three lenders that will make loans to its students or parents sufficient to meet the requirements of a preferred lender list may provide the names of the lenders that have indicated that they would provide FFEL loans to the school’s students and parents. In providing this information, the school must make it clear that it is not endorsing the lenders, and that the borrower can choose to use any FFEL lender that will make loans to the borrower for attendance at their institution
Likewise, a school may provide basic information to its students and parents by providing a comprehensive list of lenders that have made loans to the school’s students or parents in the past three to five years (or some period) and that have indicated that they would continue to make such loans. The school should not provide any additional information about the lender, including, for example, the percentage of the school’s loans made by the lender. The school must provide a clear statement that a borrower can choose to use any lender

For more information on federal requirements for preferred lender lists, please refer to Dear Colleague Letter (GEN-08-06).

Education Loan Information Schools Must Disclose

In addition, SLATE provisions require schools to disclose the certain information for each type of educational loan including, but not limited to, consolidation loans. Following is a checklist of that information.

Checklist of Information Schools Must Disclose for Each Type of Education Loan
The interest rate of each loan and whether such interest rate is fixed or variable; and for variable interest rate loans, a statement as to when the interest rate may change, how much the interest rate may increase, whether there is a cap on any change in the interest rate, and the annual percentage rate (APR) computed in the manner required under section 107 of the Truth in Lending Act (15 U.S.C. 1606) on the basis of the actual net disbursed amount of the loan Any fees associated with each type of loan The repayment terms available for each loan Any additional terms and conditions applied to each loan Any benefits that may be applied to each loan and an explanation of those benefits that is easily understood by members of the general public, the percentage of borrowers from the lender that have benefited, and whether the benefits would still apply if the loan were consolidated Language explaining the opportunity for deferment and forbearance in repayment of the loan, a definition of deferment and forbearance, and information about whether or not the loan payments may be deferred if the student is in school The definition of loan consolidation and whether or not there is a penalty for early repayment Examples of a borrower’s estimated monthly payment, total payment using the interest rate being offered, and, if the interest rate offered is variable, examples of estimated monthly payments and the total loan payment utilizing both the initial interest rate and the maximum potential interest rate for loans of five thousand dollars, ten thousand dollars and twenty thousand dollars, for periods of both ten and fifteen years The average amount borrowed from the lending institution by students enrolled in the school for the preceding academic year Whether or not the lending institution anticipates selling the loans to another lending institution Late payment penalties, if any Whether, and under what conditions, early repayment may be available without penalty

Checklist of Information Schools Must Disclose
for Each Type of Education Loan

The interest rate of each loan and whether such interest rate is fixed or variable; and for variable interest rate loans, a statement as to when the interest rate may change, how much the interest rate may increase, whether there is a cap on any change in the interest rate, and the annual percentage rate (APR) computed in the manner required under section 107 of the Truth in Lending Act (15 U.S.C. 1606) on the basis of the actual net disbursed amount of the loan
Any fees associated with each type of loan
The repayment terms available for each loan
Any additional terms and conditions applied to each loan
Any benefits that may be applied to each loan and an explanation of those benefits that is easily understood by members of the general public, the percentage of borrowers from the lender that have benefited, and whether the benefits would still apply if the loan were consolidated
Language explaining the opportunity for deferment and forbearance in repayment of the loan, a definition of deferment and forbearance, and information about whether or not the loan payments may be deferred if the student is in school
The definition of loan consolidation and whether or not there is a penalty for early repayment
Examples of a borrower’s estimated monthly payment, total payment using the interest rate being offered, and, if the interest rate offered is variable, examples of estimated monthly payments and the total loan payment utilizing both the initial interest rate and the maximum potential interest rate for loans of five thousand dollars, ten thousand dollars and twenty thousand dollars, for periods of both ten and fifteen years
The average amount borrowed from the lending institution by students enrolled in the school for the preceding academic year
Whether or not the lending institution anticipates selling the loans to another lending institution
Late payment penalties, if any
Whether, and under what conditions, early repayment may be available without penalty

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