Cancellation period. (1) In any application for a private education loan, or a solicitation for a private education loan without requiring an application, the private educational lender shall disclose to the borrower, clearly and conspicuously: (a) the potential range of rates of interest applicable to the private education loan; (b) whether the rate of interest applicable to the private education loan is fixed or variable; (c) limitations on interest rate adjustments, both in terms of frequency and amount, or the lack thereof, if applicable; (d) requirements for a co-borrower, including any changes in the applicable interest rates without a co- borrower; (e) potential finance charges, late fees, penalties, and adjustments to principal, based on defaults or late payments of the borrower; (f) fees or range of fees applicable to the private education loan; (g) the term of the private education loan; (h) whether interest will accrue while the student to whom the private education loan relates is enrolled at a covered educational institution; (i) payment deferral options; (j) general eligibility criteria for the private education loan; (k) an example of the total cost of the private education loan over the life of the loan: (i) which shall be calculated using the principal amount and the maximum rate of interest actually offered by the private educational lender; and (ii) calculated both with and without capitalization of interest, if an option exists for postponing interest payments; (l) that a covered educational institution may have school-specific education loan benefits and terms not detailed on the disclosure form; (m) that the borrower may qualify for federal student financial assistance through a program under Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addition to, a loan from a nonfederal source; (n) the interest rates available with respect to such federal student financial assistance through a program under Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); (o) that, as provided in subsection (6) of this section: (i) the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within thirty (30) calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower receives the disclosure documents required under this subsection for the loan; and (ii) except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender during the period described in subparagraph (i) of this paragraph; (p) that before a private education loan may be consummated, the borrower must obtain from the relevant institution of higher education the form required under subsection (3) of this section, and complete, sign, and return such form to the private educational lender; (q) that the consumer may obtain additional information concerning such federal student financial assistance from their institution of higher education, or at the website of the United States Department of Education; and (r) such other information as the Administrator shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrowing decisions. (2) Contemporaneously with the approval of a private education loan application, and before the loan transaction is consummated, the private educational lender shall disclose to the borrower, clearly and conspicuously: (a) the applicable rate of interest in effect on the date of approval; (b) whether the rate of interest applicable to the private education loan is fixed or variable; (c) limitations on interest rate adjustments, both in terms of frequency and amount, or the lack thereof, if applicable; (d) the initial approved principal amount; (e) applicable finance charges, late fees, penalties, and adjustments to principal, based on borrower defaults or late payments, including limitations on the discharge of a private education loan in bankruptcy; (f) fees or range of fees applicable to the private education loan; (g) the maximum term under the private education loan program; (h) an estimate of the total amount for repayment, at both the interest rate in effect on the date of approval and at the maximum possible rate of interest offered by the private educational lender and applicable to the borrower, to the extent that such maximum rate may be determined, or if not, a good-faith estimate thereof; (i) any principal and interest payments required while the student for whom the private education loan is intended is enrolled at a covered educational institution and unpaid interest that will accrue during such enrollment; (j) payment deferral options applicable to the borrower; (k) whether monthly payments are graduated; (l) that, as provided in subsection (6) of this section: (i) the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within thirty (30) calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower receives the disclosure documents required under this subsection for the loan; and (ii) except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender during the period described in subparagraph (i) of this paragraph; (m) that the borrower: (i) may qualify for federal financial assistance through a program under Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addition to, a loan from a nonfederal source; and (ii) may obtain additional information concerning such assistance from their institution of higher education or the website of the United States Department of Education; (n) the interest rates available with respect to such federal financial assistance through a program under Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); (o) the maximum monthly payment, calculated using the maximum rate of interest actually offered by the private educational lender and applicable to the borrower, to the extent that such maximum rate may be determined, or if not, a good-faith estimate thereof; and (p) such other information as the Administrator shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrowing decisions. (3) Before a private educational lender may consummate a private education loan with respect to a student attending an institution of higher education, the lender shall obtain from the applicant for the private education loan the form developed by the Secretary of the United States Department of Education under Section 155 of the Higher Education Act of 1965, signed by the applicant, in written or electronic form. No other provision of this section shall be construed to require a private educational lender to perform any additional duty under this subsection, other than collecting the form required under this subsection. (4) Contemporaneously with the consummation of a private education loan, a private educational lender shall make to the borrower each of the disclosures described in: (a) paragraph (a) of subsection (2) of this section (adjusted, as necessary, for the rate of interest in effect on the date of consummation, based on the index used for the loan); (b) paragraphs (b) through (k) and (m) through (p) of subsection (2) of this section; and (c) subsection (7) of this section. (5) The Administrator shall publish model forms that may be used, at the option of the private educational lender, for the provision of disclosures required under this section. (a) Model forms developed under this subsection shall: (i) be comprehensible to borrowers, with a clear format and design; (ii) provide for clear and conspicuous disclosures; (iii) enable borrowers easily to identify material terms of the loan and to compare such terms among private education loans; and (iv) be succinct, and use an easily readable type font. (b) Any private educational lender that elects to provide a model form developed under this subsection that accurately reflects the practices of the private educational lender shall be deemed to be in compliance with the disclosures required under this section. (6) With respect to a private education loan, the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within thirty (30) calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower receives the disclosure documents required for the loan, and the rates and terms of the loan may not be changed by the private educational lender during that period. Except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender prior to the earlier of: (a) the date of acceptance of the terms of the loan and consummation of the transaction by the borrower, as described in this subsection; or (b) the expiration of the period described in this subsection. (7) With respect to a private education loan, the borrower may cancel the loan, without penalty to the borrower, at any time within three (3) business days of the date on which the loan is consummated, and the private educational lender shall disclose such right to the borrower in accordance with subsection (4) of this section. (8) No funds may be disbursed with respect to a private education loan until the expiration of the three-day period described in subsection (7) of this section. (9) In issuing regulations under this section, the Administrator shall prevent, to the extent possible, duplicative disclosure requirements for private educational lenders that are otherwise required to make disclosures under this title, except that in any case in which the disclosure requirements of this section differ or conflict with the disclosure requirements of any other provision of this title, the requirements of this section shall be controlling. (10) Each private educational lender that has a preferred lender arrangement with a covered educational institution shall annually provide to the covered educational institution such information as the Administrator determines to include in the model form developed under subsection (5) of this section for each type of private education loan that the lender plans to offer to students attending the covered educational institution, or to the families of such students, for the next award year (as that term is defined in Section 481 of the Higher Education Act of 1965).
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