Student Lending Analytics Blog

Final HEOA Regs Discuss Third-Party Loan Websites

After receiving multiple questions from FAAs regarding third-party websites, I posted a comment recently asking the Department of Education to clarify their position on these sites.  Here is what showed up in the Final HEOA Regulations in the Federal Register notice earlier this week:

Comment: One commenter noted that many institutions are no longer providing students and their families with a preferred lender list for private education loans. Instead, many institutions are referring borrowers to Web sites developed by third party entities that contain neutral lists of private education lenders and the loan products they offer. The commenter requested that the Department clarify its position on the use of these private education lender lists by institutions of higher education in helping students and their families explore their higher education financing options.
   
Discussion: The Department does not consider an institution that refers its students to a third party entity that maintains a comprehensive, neutral listing of private education lenders to be participating in a preferred lender arrangement as long as the institution ensures that the listing is broad in scope, does not endorse or recommend any of the lenders on the list and the lenders on the list do not pay the third party entity to be placed on the list or pay the third party entity a fee based on any loan volume generated.  However, if an institution retains a third party entity to develop a customized lender list for the institution to provide to its students as a resource, either through a Request for Information or some other process, the Department does consider the institution to be participating in, and subject to the requirements of, a preferred lender arrangement under part 601.

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Implications:

Since I have been told that a ratings system represents an endorsement or recommendation of lenders, I have recommended that schools who now link directly to SLA Private Lender Ratings change the link over to the SLA Private Loan Options webpage.  The Private Loan Options webpage, which provides a comparison table of relevant terms and conditions, meets all of the criteria laid out in the discussion above as it "is broad in scope, does not endorse or recommend any of the lenders on the list and the lenders on the list do not pay the third party entity to be placed on the list or pay the third party entity a fee based on any loan volume generated." 

I will continue to maintain and update the SLA Lender Ratings site but find it disappointing that more students and families will not benefit from having a direct link (from a school's website) to an independent and analytical ratings system to help them make more informed choices. 

Someone's Thinking About Preferred Lender Lists...

Yes, I know if seems early, but I saw this news on NASFAA News earlier this week, which came from a Harvard release:

Graduate & Professional Student Loan Programs Request for Proposal (RFP) from Lenders Offering Non-Federal Student Loans

BOSTON, October 27, 2009 -- Harvard University is seeking proposals from lenders offering non-federal student educational loans for the 2010-2011 academic year through a Request for Proposal (RFP) process. This request seeks one loan product for all our domestic and international graduate and professional students enrolled at least half-time. It does not concern Federal Stafford or PLUS loans.

With more than ten years of private lending experience and a total portfolio in excess of $350 million, Harvard's domestic and international graduate and professional student borrowers have shown an exceptionally low private loan default rate.

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If you are interested in discussing what changes are in store for 2009-10 for preferred lender lists, drop me a line at tranzetta@studentlendinganalytics.com and we can schedule a time. 

SLA To Host Webinar On Complying With Regulation Z and HEOA

Here is a link to register for the event.

Please join industry expert Tim Ranzetta of Student Lending Analytics on Tuesday, October 6th from 1:00 p.m. - 2:30 p.m. (EDT) for an informative presentation on what schools need to do now to comply with the new private student loan and preferred lender regulations in Regulation Z and HEOA. 

Get answers to such questions as:

• What constitutes a "preferred lender arrangement"?
• What new requirements are in place if a school has a "preferred lender arrangement"?
  
• What will be the new disclosure requirements for institutional loan programs?
  
• What requirements will schools have if they provide any information about private education loans?
  
• What are the new disclosures that students must see when they apply for a private student loan?  

All webinar participants will receive checklists and sample disclosures to help implement the new regulations.  Participants are also encouraged to send in any questions they might have prior to the event to ensure that they are addressed during the webinar.

The registration fee for the event is $99. 

ITT Asks ED To Require that School and Lender Acknowledge Preferred Lender Arrangement

Here is ITT Educational Services' comments on the Notice of Proposed Rulemaking (NPRM):

The proposed definition of "preferred lender arrangement," lacks a requirement that there be a meeting of the minds between a lender and a covered institution or institution-affiliated organization with respect to whether a preferred lender arrangement exists.  This requirement is important, because a preferred lender arrangement triggers a number of reporting and disclosure obligations by both the covered institution or institution-affiliated organization and the lender under 601.01, .20, .21 and .40 of the proposed rule.  Material portions of the information required in those reports and disclosures will not be prepared or consistent, unless both the covered institution or institution-affiliated organization and the lender acknowledge that a preferred lender arrangement exists..."

What Constitutes A Preferred Lender Arrangement?: The NPRM Speaks

The Notice of Proposed Rulemaking (NPRM) is out in the Federal Register.  Comments are due by August 27th for the rules pertaining to "Institutions and Lender Requirements Relating to Education Loans, Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program."

I thought it was interesting to follow the commentary that followed a question from a non-federal negotiator about what constitutes a preferred lender list:

Event: Department of Education Webinars on HEOA's Impact on FFEL and Direct Lending Programs

Here is the announcement.

The webinar will be available at four separate times:

• Thursday, April 30, 2009, 3:00 P.M. (ET)
  
• Wednesday, May 13, 2009, 2:00 P.M. (ET)
  
• Tuesday, June 2, 2009, 1:00 P.M. (ET)
  
• Monday, June 8, 2009, 12:00 P.M. Noon (ET)

To register, click on this link:
http://www.fsaregistration.ed.gov/profile/web/index.cfm?PKwebID=0x11458a0b2&varPage=location

SLA To Host February 18th Webinar on "Managing Lender Selection in Time of Financial Turmoil"

Student Lending Analytics is pleased to announce that Tim Ranzetta of Student Lending Analytics will be hosting a complimentary webinar on “Managing Lender Selection in a Time of Financial Turmoil” on Wednesday, February 18th at 1:30pm Eastern Time.  Click here to register. 

Hearing on Negotiated Rulemaking (October 15, 2008 - Cuyahoga Community College)

Here is a link to the actual transcript of the hearing. 

The attached file below is a compilation of excerpts from the hearing which focus on student loan related issues only and are not meant to capture all of the comments made by the speakers: Download Hearing on Negotiated Rulemaking on October 15

HEOA, Lender Lists and Negotiated Rulemaking Hearings (Department of Education)

Here are speakers at the recent public hearing on negotiated rulemaking for the Higher Education Opportunity Act, held on October 8, 2008 at the Department of Education (Washington, DC).  The excerpts below are comments that speakers made pertaining to student loans and are not meant to be exhaustive.  If you are interested in viewing the complete transcripts, they are available on this Department of Education website (this one is a doozy at over 100 pages).

HEOA, Lender Lists and Negotiated Rulemaking (Johnson C. Smith University)

Here are speakers at the recent public hearing on negotiated rulemaking for the Higher Education Opportunity Act, held on October 6, 2008 at Johnson C. Smith University (Charlotte, NC).  The excerpts below are comments that speakers made pertaining to student loans and are not meant to be exhaustive.  If you are interested in viewing the complete transcripts, they are available on this Department of Education website.