private-loan-checklist-disclosures

The Truth in Lending Act requires private loan lenders to provide specific disclosures in three separate steps:

1. Application and Solicitation Disclosure – This disclosure is required to provide information on the cost of the loan, such as the interest rate, application fees, costs associated with default or late repayment, and the terms of repayment. The disclosure must provide consumer information regarding alternatives to private education loans, notably Federal student financial assistance programs, and noting the interest rates of Federal student loans. The disclosure must also note that if the loan is approved the loan terms will not change for thirty days except for allowable changes, including adjustments to the interest rate.
2. Loan Approval Disclosure – This disclosure is required to be sent to the applicant upon conditional approval for the loan, providing borrower-specific rates and fees, and the amount of the loan which has been approved. The lender must provide an estimate of the total amount of payments to be made based on the interest rate as well as the maximum rate of interest for the loan. The disclosure must again advise on the availability of Federal student aid. Borrowers have thirty days to accept the terms and conditions of the loan.
3. Final Disclosure – This disclosure is required to be sent to the applicant upon conditional approval for the loan, providing borrower-specific rates and fees, and the amount of the loan which has been approved. The lender must provide an estimate of the total amount of payments to be made based on the interest rate as well as the maximum rate of interest for the loan. The disclosure must again advise on the availability of Federal student aid. Borrowers have thirty days to accept the terms and conditions of the loan.

The Board of Governors of the Federal Reserve System provides both Model Forms and examples of each disclosure.