261F.6 - STANDARDS FOR PREFERRED LENDER LISTS.
261F.6 STANDARDS FOR PREFERRED LENDER LISTS.{
1. A covered institution may make available a list of preferred
lenders, in print or any other medium or form, for use by the covered
institution's students or their parents, provided the list meets the
following conditions:
a. The list is not used to deny or otherwise impede a
borrower's choice of lender.
b. The list contains at least three lenders that are not
affiliated and will make loans to borrowers or students attending the
school. For the purposes of this paragraph, a lender is affiliated
with another lender if any of the following applies:
(1) The lenders are under the ownership or control of the same
entity or individuals.
(2) The lenders are wholly or partly owned subsidiaries of the
same parent company.
(3) The directors, trustees, or general partners, or individuals
exercising similar functions, of one of the lenders constitute a
majority of the persons holding similar positions with the other
lender.
c. The list does not include lenders that have offered, or
have offered in response to a solicitation by the covered
institution, financial or other benefits to the covered institution
in exchange for inclusion on the list or any promise that a certain
number of loan applications will be sent to the lender by the covered
institution or its students.
2. A covered institution that provides or makes available a
preferred lender list shall do the following:
a. Disclose to prospective borrowers, as part of the list,
the method and criteria used by the covered institution in selecting
any lender that it recommends or suggests.
b. Provide comparative information to prospective borrowers
about interest rates and other benefits offered by the lenders.
c. Include a prominent statement in any information related
to its preferred lender list advising prospective borrowers that the
borrowers are not required to use one of the covered institution's
recommended or suggested lenders.
d. For first-time borrowers, refrain from assigning, through
award packaging or other methods, a borrower's loan to a particular
lender.
e. Not cause unnecessary certification delays for borrowers
who use a lender that is not included on the covered institution's
preferred lender list.
f. Update the preferred lender list and any information
accompanying the list at least annually.
3. If the servicer of a private educational loan is changed by a
lending institution, the lending institution shall disclose the
change to the affected borrower.
4. A lending institution shall not be placed on a covered
institution's preferred lender list or in favored placement on a
covered institution's preferred lender list for a particular type of
loan, in exchange for benefits provided to the covered institution or
to the covered institution's students in connection with a different
type of loan. Section History: Recent Form
2008 Acts, ch 1132, §8, 15