The School Panel Jackie Lewis, Missouri State University

Al Hermsen, Wayne State University Keith Broadus, University of Missouri

Associate Member Facilitators: Becky Davis, Great Lakes

Mindy Hager, First Marblehead

Evaluating Alternatives

1) No List 2) Comprehensive/Historical List3) 3rd Party List4) Preferred Lender List

No List

• No information provided on private loans• NO ONE at your institution provides any guidance• Residence hall, Bursar, President

• No detail on types of loans • International • Past Due Balance • Certification programs through Continuing Education

Google “Private Student Loan”

Comprehensive or Historical Comprehensive Lender ListList of all private education lenders that provide private student loans (thatare currently providing private loans) and cannot exclude any lender

Historical Lender ListList of all private education lenders that were used by students attending the institution within a defined time frame (last academic year, or last three to five years, etc.) and cannot exclude any lender

-The DOE recommended that the school must have a process defined for when they review the lender list (i.e. annually, semi-annually or evenmonthly)

Note: It is required for both comprehensive and historical lists, that youprovide the Application Solicitation Disclosure (ASD) link for each lender and it is“recommended” that if you have an electronic lender list, that the ASD is provided electronically (i.e. on the list) as well.

True Historical List

3rd Party list 3rd Party Lender List Entity that maintains neutral, comprehensive list and institution ensuresthat the list is broad in scope, does not endorse any lender and lenderdoes not pay to be placed on the list or pay the 3rd party entity a fee basedOn loan volume generated

Please note: The DOE recently shared that 3rd Party Lender lists that rank the lenders compromises the neutrality of the list

Also note – your institution is 100% liable for information linking from your website.

Private Lender Arrangement (PLA)

As defined by HEA, a PLA exists when both of the following conditionsoccur:- A lender provides or issues education loans to students, or the families of the

students, attending a covered institution; and- The covered institution or an institution-affiliated organization recommends,

promotes, or endorses the education loan products of the lender

You do not have to have a formal agreement with a lender to have aPLA. A PLA can include providing brochures in your lobby, listing

some of the lenders who have lent to students at your institution ona website, verbally providing information on lenders, etc.

[HEA §151(8); §601.2(b)]

Preferred Lender List

The Value Of A Preferred List

Students and Families :

• Provides a starting point for families to begin researching private loans• Makes it easier for families to make private loan decisions by having

reliable information in one place

Schools :

• Helping to Educate the uneducated • This is a completely different process than anything other loan

• Allows faster, easier private loan processing• Lender representative that will keep you updated and informed on

product changes

Regulation Intention • When we published the final regulations, we expressed our view that a preferred lender list

can be an effective tool to help families looking for federal student loans to finance the costs of postsecondary education, when the list reflects the school’s unbiased research to identify lenders providing the best combination of services and benefits to borrowers at that school.

• Additionally, by providing this information, schools may help students and their parents navigate the increasingly complex student loan landscape.

• Further, we believe that a borrower’s choice of lender may be better informed by preferred lender lists and other consumer information on the federal student loan process, which play a useful role in assisting financial aid administrators in dealing with the large volume of requests for information and assistance, and in informing borrower choice.

Dear Colleague Letter GEN-08-06 posted May 8, 2008Subject: School Use of a Preferred Lender List in the FFEL Program

Eight Step process to PLAWhat you are already doing……

1. Publish your schools code of conductPart of Program Participation Agreement

2. Publish a statement that students should exhaust all Federal aid(grants and loans) before borrowing from a private loan

Of course!

Selection Requirements3-6. Evaluate and choosing – Quantitative or Qualitative process

• List at least 2 unaffiliated lenders • Publish your schools method of choosing lenders• Publish the reasons why the lenders were selected• Publish that your students have the right to choose any lender not just

ones on your lender

7. Disclose rates, fees, loan cost, repayment terms, and eligibility criteria used by lenders by placing pdf’s or linking to lenders ASD

Reporting Department of Education has yet to announce what this will look like

– It could be ASD’s from each lender you’ve selected– It could be a couple of statements as to why you’ve chosen a particular

lender

• At the FSA Conference in December 2010, DOE stated that there is a good chance the Department of Education will not regulate this and schools may not ever have to report

• In a June 2011 email Gail McLarnon indicated that they have not implemented the annual reporting requirement and it is uncertain when they will

University of Missouri – No List

Missouri State – PLA • Provides a reliable resource for our students

– Cuts down on students working with the ‘mom & pop’ shops– Cuts down on loan scams

• Provides an opportunity to educate about loans• Better insures a working relationship with the school

– School is able to get the money for their students– Lender understands requirements of school so student receives their funding

• Better insures good customer service– For students, parents and school If the school receives bad service it is most

likely the students and parents are being treated just as poorly, if not worse.• Schools must be able to receive answers on behalf of students and

parents and know what is going on, as it is the school who is first contacted with the “where is my money” questions.

• Lists can provide info students need that they may not know to ask or look for• Can better compare lenders and their products

Summary • A lender list can be an effective tool for guiding students and

their families• Reporting on PLA criteria does not appear as though it will be

burdensome• Any verbal or physical distribution of lender information

creates a PLL (even if this information is shared by another office)

• Students and their families rely on you for guidance

Sources

• Federal Register, October 28,2009, 34 CFR 601– http://edocket.access.gpo.gov/2009/pdf/E9-25073.pdf

• Dear Colleague Letter 08-06, May 9 2008– http://www.ifap.ed.gov/dpcletters/GEN0806.html

• Gail McLarnon, Department of Education Email & Supporting Documentation received on June 09-2011

Legal Disclaimer

This information is not comprehensive and is based onreview and interpretation of regulations. This document

should not be construed to be legal advice.