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Issue 1 

Proposed Regulatory Language 

Team II—School-based Loan Issues 

Origin: HEOA sections 120 and 1021(b) 

 

Issue: Required Disclosures for Covered 

Entities 

Statutory cites: HEA Sections 151 – 155, 487(a) and (h)

Regulatory cites: New Part 601 

DCL GEN-08-12 cite: Pages 39 - 44 

Summary of issue: Sections 120 and 1021(b) of the HEOA 

amended Title I of the HEA by requiring significant new 

disclosures to borrowers of education loans and related 

institutional and lender reporting to the Department. The 

required borrower disclosures apply to both Title IV 

student loans and private education loans, and are required 

of institutions of higher education, institution-affiliated 

organizations, and lenders. The disclosures for private 

education loans are based on the Truth in Lending Act 

(TILA), and the Department is directed to work with the 

Board of Governors of the Federal Reserve System to 

implement these requirements. This issue paper discusses 

these requirements as they apply to institutions of higher 

education and their affiliated organizations. Lenderspecific requirements are discussed in Team I‘s Issue Paper 

15. 
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Note: The lender-specific responsibilities in section 

152(b), as well as the definitions for the terms ―eligible 

lender,‖ ―lender,‖ and ―private education loan,‖ will be 

addressed by Team I—General Lender/Loan Issues. The 

remaining provisions in sections 151 – 155 will be 

addressed by Team II—School-based Loan Issues. 

Definitions (Sec. 151)

The HEOA provides definitions for the following terms: 

 Agent 

 Covered institution 

 Education loan 

 Eligible lender 

 Institution-affiliated organization 

 Lender 

 Officer 

 Preferred lender arrangement 

 Private education loan 

A ―covered institution‖ is an institution of higher 

education that receives any Federal funding or assistance. 

An ―institution-affiliated organization‖ is any 

organization directly or indirectly related to a covered 

institution, including alumni organizations, foundations, 

or social organizations, that recommends, promotes, or 

endorses education loans for students attending the covered 

institution. Note that a ―covered institution‖ includes 
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institutions that receive any type of Federal funding or 

assistance, not just Title IV, HEA funding or assistance. 

An ―education loan‖ is a FFEL Loan, a Direct Loan, or a 

private education loan. A ―private education loan‖ is a 

non-Title IV loan provided by a private educational lender 

to a borrower expressly for postsecondary educational 

expenses, and that is not an extension of credit under an 

open-end consumer credit plan, or secured by real property 

or a dwelling. 

A ―preferred lender arrangement‖ is an arrangement or 

agreement between a lender and a covered institution or an 

institution-affiliated organization, under which the lender 

provides education loans to the covered institution‘s 

students or their families, and that relates to the covered 

institution or institution-affiliated organization 

recommending, promoting, or endorsing the lender‘s 

education loan products. A preferred lender arrangement 

does NOT include arrangements or agreements with respect to 

Direct Loan Program loans or loans that originate through 

the PLUS Loan auction pilot program. 

Preferred Lender Arrangement Disclosures (Sec 152(a)(1)(A))

A covered institution or an institution-affiliated 

organization with a preferred lender arrangement is 

required to provide on its website and in all informational 

materials including publications, mailings, electronic 

messages or materials that are distributed to current or 
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prospective students and that describe or discuss education 

loans, the following disclosures: 

 The maximum amount of Title IV grant and loan aid 

available to students; 

 Certain information on FFEL loans offered 

pursuant to a preferred lender arrangement, to be 

determined by the Department of Education in 

coordination with the Board of Governors of the 

Federal Reserve System; 

 A statement that the institution is required to 

process documents required to obtain a FFEL loan 

from any eligible lender the student selects. 

Any websites or other information materials including 

publications, electronic messages or materials that 

describe or discuss private education loans made pursuant 

to a preferred lender arrangement must provide the 

following disclosures: 

 For a covered institution, the information 

required by Section 128(e)(11) of the Truth in 

Lending Act; 

 For an institution-affiliated organization, the 

information required by Section 128(e)(1) of the 

Truth in Lending Act. 

Private Education Loan Disclosures (Sec. 152(a)(1)(B))

A covered institution, or an institution-affiliated 

organization that provides information regarding a private 
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education loan from a lender to a prospective borrower, is 

required to provide the following disclosures: 

 The information required by Section 128(e)(1) of 

the Truth in Lending Act; 

 Information on the availability of Title IV loans 

or other assistance; 

 That the terms and conditions of Title IV loans 

or assistance may be more beneficial than the 

terms and conditions of private education loans. 

The HEOA specifies that the information regarding private 

education loans must be presented in a manner as to be 

distinct from information regarding Title IV loans. 

The covered institution or institution-affiliated 

organization must provide these disclosures whether or not 

the covered institution or institution-affiliated 

organization has a preferred lender arrangement with the 

lender. 

Use of Institution and Lender Name (Sec. 152(a)(2) and 

(3))

A covered institution or an institution-affiliated 

organization may not allow a lender with which it has a 

preferred lender arrangement to use the name, emblem, 

mascot, logo, or other identifiable symbol of the covered 

institution or institution-affiliated organization to 

market private education loans to students. 
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A covered institution or an institution-affiliated 

organization shall ensure that the name of a lender with 

which it has a preferred lender arrangement is displayed in 

all information and documentation related to private 

education loans offered by the lender. 

Information to be Disclosed and Model Disclosure Form (Sec. 

153(a))

The Department, in coordination with the Board of Governors 

of the Federal Reserve System, will determine the minimum 

information regarding FFEL Loans that covered institutions 

and institution-affiliated organizations participating in a 

preferred lender arrangement must provide to students and 

their families. 

The Department will develop a model disclosure form that 

includes this information. Covered institutions and 

institution-affiliated organizations may use the model 

disclosure form to provide this information to prospective 

borrowers and their families, but are not required to use 

the model disclosure form. 

Duties of Covered Institutions and Institution-Affiliated 

Organizations (Sec. 153(c))

A covered institution and each or its institutionaffiliated organizations that has a preferred lender 

arrangement must provide to students and their families, 

the following disclosures for education loans provided 

pursuant to any preferred lender arrangement: 
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 For a covered institution and each of its 

institution-affiliated organizations, the 

information to be determined by the Department in 

coordination with the Federal Reserve Board, as 

specified in Sec. 153(a); 

 For a covered institution, the information 

required under section 128(e)(11) of the Truth in 

Lending Act for private education loans offered 

pursuant to a preferred lender arrangement. 

 For an institution-affiliated organization, the 

information required under section 128(e)(1) of 

the Truth in Lending Act for private education 

loans offered to students of the institution the 

organization is affiliated with offered pursuant 

to a preferred lender arrangement. 

These disclosures must be provided in a timely manner 

allowing students and their families to take such 

information into account before selecting a lender or 

applying for an education loan. 

Annual Report (Sec. 153(c)(2))

A covered institution and an institution-affiliated 

organization that has a preferred lender arrangement must 

submit to the Department an annual report that provides the 

information described in the section above, and a detailed 

explanation of why the covered institution or institutionaffiliated organization entered into a preferred lender 

arrangement with the lender. The explanation must explain 
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how the terms, conditions, and provisions of each type of 

education loan provided pursuant to the preferred lender 

arrangement are beneficial for students attending the 

covered institution. 

Code of Conduct (Sec. 153(c)(3))

A covered institution and an institution-affiliated 

organization that has a preferred lender arrangement must 

comply with the code of conduct requirements in Section 

487(a)(25)(A) – (C) of the HEA. 

An institution-affiliated organization of a covered 

institution must comply with the code of conduct developed 

and published by the covered institution; publish the code 

of conduct prominently on its web site, if it has one; and 

administer and enforce the code of conduct. At a minimum, 

the institution-affiliated organization must require that 

all of the organization‘s agents with responsibilities with 

respect to education loans are annually informed of the 

provisions of the code of conduct. 

Disclosure Requirements for Direct Loan Schools (Sec. 154)

The Department will develop a model disclosure form for 

Direct Loans, based on the model disclosure form described 

in Sec. 153(a). The Department will provide the Direct 

Loan model disclosure form to Direct Loan schools, within 

180 days of the development of the FFEL model disclosure 

form. A Direct Loan school must provide the information 

required on the model disclosure form to students attending 
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or planning to attend the school, or their families. If 

the Direct Loan school provides information regarding a 

private education loan to a prospective borrower, it must 

provide the information from the Direct Loan model 

disclosure form at the same time. 

The Direct Loan school may use the Direct Loan model 

disclosure form for this purpose, or may use a comparable 

form designed by the school. 

Self-Certification Form for Private Education Loans (Sec. 

155)

The Department, in consultation with the Board of Governors 

of the Federal Reserve System, will develop a selfcertification form for private education loans, to meet the 

requirements of Sec. 128(e)(3) of the Truth in Lending Act. 

The self-certification form will be developed in a 

standardized format and must be made available to the 

applicant at the institution of higher education upon the 

request of the applicant. The form will contain only the 

disclosures specified in Sec. 155(a)(3) and include a place 

for the applicant to provide information on the 

applicant‘s—

 Cost of Attendance 

 Expected Family Contribution 

 Estimated Financial Assistance 

 The difference between the applicant‘s COA and 

EFA 

 The sum of that difference plus EFC. 
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The self-certification form must disclose to the applicant 

that the information that the applicant is required to 

provide on the form is available from officials at the 

financial aid office of the institution of higher 

education. 

The self-certification form must include a place for the 

applicant‘s signature, in written or electronic form.

Regulatory language:

PART 601—INSTITUTION AND LENDER REQUIREMENTS RELATING TO 

EDUCATION LOANS 

Subpart A--General 

Sec. 

601.1 Scope. 

601.2 Definitions 

Subpart B--Responsibilities of Covered Institutions and 

Institution-Affiliated Organizations 

601.10 Preferred lender arrangement disclosures. 

601.11 Private education loan disclosures and self- 

 certification form. 

601.12 Use of institution and lender name. 

Subpart C--Loan Information to be Disclosed by Covered 

Institutions and Institution-Affiliated Organizations 
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601.20 Providing information to students and families. 

601.21 Annual report. 

601.22 Code of conduct. 

Subpart D--Loan Information to be Disclosed by Institutions 

Participating in the William D. Ford Direct Loan Program 

601.30 Duties of institutions 

Subpart E--Lender Responsibilities 

601.40 Disclosure and reporting requirements for 

lenders. 

[See Team I’s Issue Paper 15 For Proposed Reg Language]

Subpart A--General 

§ 601.1 Scope. 

This part establishes disclosure and reporting 

requirements for covered institutions, institutionaffiliated organizations, and lenders that provide, issue, 

recommend, promote, endorse, or provide information 

relating to education loans. Education loans include loans 
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authorized by the Higher Education Act of 1965, as amended 

(HEA) and private education loans. 

§601.2 Definitions. 

(a) The definitions of the following terms used in 

this part are set forth in the regulations for 

Institutional Eligibility under the Higher Education Act of 

1965, as amended, 34 CFR part 600: 

Federal Family Education Loan (FFEL) Program 

Secretary 

Title IV HEA program 

(b) The following definitions also apply to this 

part: 

Agent: An officer or employee of a covered institution 

or an institution-affiliated organization. 

Covered institution: Any institution of higher 

education, proprietary institution of higher education, 

postsecondary vocational institution, or institution 

outside the United States, as these terms are defined in 

Part 600, that receives any Federal funding or assistance. 

Education loan: Except when used as part of the term 

―private education loan‖, 

(1) Any loan made, insured, or guaranteed under the 

Federal Family Education Loan (FFEL) Program; 

(2) Any loan made under the William D. Ford Federal 

Direct Loan Program; or 

(3) A private education loan. 

Institution-affiliated organization: (1) Any 

organization that-- 
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(i) Is directly or indirectly related to a covered 

institution; and 

(ii) Is engaged in the practice of recommending, 

promoting, or endorsing education loans for students 

attending such covered institution or the families of such 

students. 

(2) An institution-affiliated organization-- 

(i) May include an alumni organization, athletic 

organization, foundation, or social, academic, or 

professional organization, of a covered institution; and 

(ii) Does not include any lender with respect to any 

education loan secured, made, or extended by such lender. 

Lender: [See Team I’s Issue Paper 15]

Officer: A director or trustee of a covered 

institution or institution-affiliated organization, if such 

individual is treated as an employee of such covered 

institution or institution-affiliated organization, 

respectively. 

Preferred lender arrangement: (1) An arrangement or 

agreement between a lender and a covered institution or an 

institution-affiliated organization of such covered 

institution—

(i) Under which a lender provides or otherwise issues 

education loans to the students attending such covered 

institution or the families of such students; and 

(ii) That relates to such covered institution or such 

institution-affiliated organization recommending, 

promoting, or endorsing the education loan products of the 

lender. 

(2) A preferred lender arrangement does not include-- 
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(i) Arrangements or agreements with respect to loans 

made under the William D. Ford Federal Direct Loan Program; 

or 

(ii) Arrangements or agreements with respect to loans 

that originate through the PLUS Loan auction pilot program 

under section 499(b) of the HEA. 

Private education loan: [See Team I’s Issue Paper 15]

Subpart B--Responsibilities of Covered Institutions and 

Institution-Affiliated Organizations 

§601.10 Preferred lender arrangement disclosures. 

(a) A covered institution, or an institutionaffiliated organization of such covered institution, that 

participates in a preferred lender arrangement must 

disclose-- 

(1) On such covered institution‘s or institutionaffiliated organization‘s Web site and in all informational 

materials described in paragraph (b) of this section that 

describe or discuss education loans—

(i) The maximum amount of Federal grant and loan aid 

under title IV of the HEA available to students, in an easy 

to understand format; 

(ii) The information identified on a model disclosure 

form developed by the Secretary pursuant to section 

153(a)(2)(B) of the HEA, for each type of education loan 

that is offered pursuant to a preferred lender arrangement 

of the institution or institution-affiliated organization 

to students of the institution or the families of such 

students; and 
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(iii) A statement that such institution is required to 

process the documents required to obtain a loan under the 

Federal Family Education Loan Program from any eligible 

lender the student selects. 

(2) On such covered institution‘s or institutionaffiliated organization‘s Web site and in all informational 

materials that describe or discuss private education loans-

- 

(i) In the case of a covered institution, the 

information that the Board of Governors of the Federal 

Reserve System requires to be disclosed under section 

128(e)(11) of the Truth in Lending Act, for each type of 

private education loan offered pursuant to a preferred 

lender arrangement of the institution to students of the 

institution or the families of such students; and 

(ii) In the case of an institution-affiliated 

organization of a covered institution, the information the 

Board of Governors of the Federal Reserve System requires 

to be disclosed under section 128(e)(1) of the Truth in 

Lending Act, for each type of private education loan 

offered pursuant to a preferred lender arrangement of the 

organization to students of such institution or the 

families of such students. 

(b) The informational materials described in 

paragraphs (a) (1) and (a)(2) of this section are 

publications, mailings, or electronic messages or materials 

that-- 

(1) Are distributed to prospective or current students 

of a covered institution and families of such students; and 
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(2) Describe or discuss the financial aid 

opportunities available to students at an institution of 

higher education. 

(c) If an institution recommends, promotes or endorses 

loans made by any lender and compiles, maintains, and makes 

available a preferred lender list as required under 

§668.14(b)(28), the institution must-- 

(1) Clearly and fully disclose on such preferred 

lender list-- 

(i) Not less than the information required to be 

disclosed under section 153(a)(2)(A); 

(ii) Why the institution has entered into a preferred 

lender arrangement with each lender on the preferred lender 

list, particularly with respect to terms and conditions or 

provisions favorable to the borrower; and 

 (iii) That the students attending the institution, or 

the families of such students, do not have to borrow from a 

lender on the preferred lender list; 

(2) Ensure, through the use of the list of lender 

affiliates provided by the Secretary under section 

487(h)(2) of the HEA, that—

(i) There are not less than three FFEL lenders that 

are not affiliates of each other included on the preferred 

lender list and, if the institution recommends, promotes, 

or endorses private education loans, there are not less 

than two lenders of private education loans that are not 

affiliates of each other included on the preferred lender 

list; and 

(ii) The preferred lender list under paragraph (c) of 

this section-- 
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(A) Specifically indicates, for each listed lender, 

whether the lender is or is not an affiliate of each other 

lender on the preferred lender list; and 

(B) If a lender is an affiliate of another lender on 

the preferred lender list, describes the details of such 

affiliation; 

(3) Prominently disclose the method and criteria used 

by the institution in selecting lenders with which to enter 

into preferred lender arrangements to ensure that such 

lenders are selected on the basis of the best interests of 

the borrowers, including-- 

(i) Payment of origination or other fees on behalf of 

the borrower; 

(ii) Highly competitive interest rates, or other terms 

and conditions or provisions of Title IV, HEA program loans 

or private education loans; 

(iii) High-quality servicing for such loans; or 

(iv) Additional benefits beyond the standard terms and 

conditions or provisions for such loans; 

(4) Exercise a duty of care and a duty of loyalty to 

compile the preferred lender list under paragraph (c) of 

this section without prejudice and for the sole benefit of 

the students attending the institution, or the families of 

such students; and 

(5) Not deny or otherwise impede the borrower‘s choice 

of a lender or cause unnecessary delay in loan 

certification under title IV of the HEA for those borrowers 

who choose a lender that is not included on the preferred 

lender list. 
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§601.11 Private education loan disclosures and selfcertification form. 

(a) A covered institution, or an institutionaffiliated organization of such covered institution, that 

provides information regarding a private education loan 

from a lender to a prospective borrower must provide 

private education loan disclosures to the prospective 

borrower. 

(b) The private education loan disclosures must-- 

(1) Provide the prospective borrower with the 

information the Board of Governors of the Federal Reserve 

System requires to be disclosed under section 128(e)(1) of 

the Truth in Lending Act (15 U.S.C. 1638(e)(1)) for such 

loan; 

(2) Inform the prospective borrower that—

(i) The prospective borrower may qualify for loans or 

other assistance under title IV of the HEA; and 

(ii) The terms and conditions of Title IV, HEA program 

loans may be more favorable than the provisions of private 

education loans. 

(c) The covered institution or institution-affiliated 

organization must ensure that information regarding private 

education loans is presented in such a manner as to be 

distinct from information regarding Title IV, HEA program 

loans. 

(d) Upon an applicant‘s request for a private 

education loan self-certification form, an institution must 

provide to the applicant, in written or electronic form-- 

(1) The self-certification form for private education 

loans developed by the Secretary in consultation with the 
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Board of Governors of the Federal Reserve System, to 

satisfy the requirements of section 128(e)(3) of the Truth 

in Lending Act; and 

(2) The information required to complete the form, to 

the extent the institution possesses such information. 

§601.12 Use of institution and lender name.

(a) A covered institution, or an institutionaffiliated organization of such covered institution, that 

enters into a preferred lender arrangement with a lender 

regarding private education loans must not agree to the 

lender‘s use of the name, emblem, mascot, or logo of such 

institution or organization, or other words, pictures, or 

symbols readily identified with such institution or 

organization, in the marketing of private education loans 

to students attending such institution in any way that 

implies that the loan is offered or made by such 

institution or organization instead of the lender. 

(b) The covered institution or institution affiliated 

organization must ensure that the name of the lender is 

displayed in all information and documentation related to 

the private education loans described in paragraph (a) of 

this section. 

 Subpart C--Loan Information to be Disclosed by Covered 

Institutions and Institution-Affiliated Organizations 

§601.20 Providing information to students and families.
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(a) Each covered institution, and each institutionaffiliated organization of such covered institution, that 

has a preferred lender arrangement must provide the 

following information to students attending such 

institution, or the families of such students, as 

applicable: 

(1) The information included on a model disclosure 

form developed by the Secretary pursuant to section 

153(a)(2)(B) of the HEA, for each type of education loan 

that is offered pursuant to a preferred lender arrangement 

of the institution or organization to students of the 

institution or the families of such students; and-- 

(i) In the case of a covered institution, the 

information that the Board of Governors of the Federal 

Reserve System requires to be disclosed under section 

128(e)(11) of the Truth in Lending Act (15 U.S.C. 

1638(e)(11) to the covered institution, for each type of 

private education loan offered pursuant to such preferred 

lender arrangement to students of such institution or the 

families of such students; or 

(ii) In the case of an institution-affiliated 

organization, the information the Board of Governors of the 

Federal Reserve System requires to be disclosed under 

section 128(e)(1) of the Truth in Lending Act (15 U.S.C. 

1638(e)(11)) for each type of private education loan 

offered pursuant to such preferred lender arrangement to 

students of the institution with which such organization is 

affiliated or the families of such students. 

(b) The covered institution or institution-affiliated 

organization must provide the information described in this 

section in a manner that allows for the students or their 
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families to take such information into account before 

selecting a lender or applying for an education loan. 

(c) The covered institution or institution-affiliated 

organization must provide the information described in this 

section at least annually to students attending the 

institution or to the families of such students, as 

applicable. 

§601.21 Annual report. 

(a) Each covered institution, and each institutionaffiliated organization of such covered institution, that 

has a preferred lender arrangement, must-- 

(1) Prepare and submit to the Secretary an annual 

report, by a date determined by the Secretary, that 

includes, for each lender that has a preferred lender 

arrangement with such covered institution or organization—

(i) The information described in §601.20(a); and 

(ii) A detailed explanation of why such covered 

institution or institution-affiliated organization entered 

into a preferred lender arrangement with the lender, 

including why the terms, conditions, and provisions of each 

type of education loan provided pursuant to the preferred 

lender arrangement are beneficial for students attending 

such institution, or the families of such students, as 

applicable. 

(2) Ensure that the report required under this section 

is made available to the public and provided to students 

attending or planning to attend such covered institution 

and the families of such students. 
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§601.22 Code of conduct. 

(a) Each covered institution that has a preferred 

lender arrangement must comply with the code of conduct 

requirements described in this section. 

(1) The covered institution must-- 

(i) Develop a code of conduct with respect to Title 

IV, HEA program loans with which the institution‘s 

officers, employees, and agents must comply. The code of 

conduct must-- 

(A) Prohibit a conflict of interest with the 

responsibilities of an officer, employee, or agent of an 

institution with respect to Title IV, HEA program loans, 

and 

(B) At a minimum, include the provisions specified in 

paragraph (b) of this section. 

(ii) Publish such code of conduct prominently on the 

institution‘s Web site; and 

(iii) Administer and enforce such code by, at a 

minimum, requiring that all of the institution‘s officers, 

employees, and agents with responsibilities with respect to 

Title IV, HEA program loans be annually informed of the 

provisions of the code of conduct. 

(2) Any institution-affiliated organization of the 

covered institution must—

(i) Comply with the code of conduct developed and 

published by such covered institution under paragraphs 

(a)(1) of this section; 

 (ii) If such institution-affiliated organization has 

a Web site, publish such code of conduct prominently on the 

Web site; and 
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(iii) Administer and enforce such code of conduct by, 

at a minimum, requiring that all of such institutionaffiliated organization‘s agents with responsibilities with 

respect to education loans be annually informed of the 

provisions of such code of conduct. 

(b) A covered institution‘s code of conduct must 

prohibit-- 

(1) Revenue-sharing arrangements with any lender. The 

institution must not enter into any revenue-sharing 

arrangement with any lender. For purposes of this 

paragraph, the term  ̳revenue-sharing arrangement‘ means an 

arrangement between an institution and a lender under 

which—

(i) A lender provides or issues a Title IV, HEA 

program loan to students attending the institution or to 

the families of such students; and 

(ii) The institution recommends the lender or the loan 

products of the lender and in exchange, the lender pays a 

fee or provides other material benefits, including revenue 

or profit sharing, to the institution, an officer or 

employee of the institution, or an agent. 

(2) Employees of the financial aid office receiving 

gifts from a lender, a guarantor, or a loan servicer. 

Officers or employees of the institution who are employed 

in the financial aid office of the institution or who 

otherwise have responsibilities with respect to education 

loans, or agents who have responsibilities with respect to 

education loans, must not solicit or accept any gift from a 

lender, guarantor, or servicer of education loans. 

(i) For purposes of paragraph (b) of this section, the 

term gift means—
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(A) Any gratuity, favor, discount, entertainment, 

hospitality, loan, or other item having a monetary value of 

more than a de minimus amount. The term includes a gift of 

services, transportation, lodging, or meals, whether 

provided in kind, by purchase of a ticket, payment in 

advance, or reimbursement after the expense has been 

incurred. 

(ii) The term gift does not include any of the 

following-- 

(A) Standard material, activities, or programs on 

issues related to a loan, default aversion, default 

prevention, or financial literacy, such as a brochure, a 

workshop, or training. 

(B) Food, refreshments, training, or informational 

material furnished to an officer or employee of an 

institution, or to an agent, as an integral part of a 

training session that is designed to improve the service of 

a lender, guarantor, or servicer of education loans to the 

institution, if such training contributes to the 

professional development of the officer, employee, or 

agent. 

(C) Favorable terms, conditions, and borrower benefits 

on an education loan provided to a student employed by the 

institution if such terms, conditions, or benefits are 

comparable to those provided to all students of the 

institution. 

(D) Entrance and exit counseling services provided to 

borrowers to meet the institution‘s responsibilities for 

entrance and exit counseling as required by §§682.604(f) 

and 682.604(g), as long as the institution‘s staff are in 

control of the counseling, (whether in person or via 
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electronic capabilities) and such counseling does not 

promote the products or services of any specific lender. 

(E) Philanthropic contributions to an institution from 

a lender, servicer, or guarantor of education loans that 

are unrelated to education loans or any contribution from 

any lender, guarantor, or servicer that is not made in 

exchange for any advantage related to education loans. 

(F) State education grants, scholarships, or financial 

aid funds administered by or on behalf of a State. 

(iii) For purposes of paragraph (b) of this section, 

a gift to a family member of an officer or employee of an 

institution, to a family member of an agent, or to any 

other individual based on that individual‘s relationship 

with the officer, employee, or agent, shall be considered a 

gift to the officer, employee, or agent if-- 

(A) The gift is given with the knowledge and 

acquiescence of the officer, employee, or agent; and 

(B) The officer, employee, or agent has reason to 

believe the gift was given because of the official position 

of the officer, employee, or agent. 

(3) Consulting or other contracting arrangements. An 

officer or employee who is employed in the financial aid 

office of the institution or who otherwise has 

responsibilities with respect to education loans, or an 

agent who has responsibilities with respect to education 

loans, must not accept from any lender or affiliate of any 

lender any fee, payment, or other financial benefit 

(including the opportunity to purchase stock) as 

compensation for any type of consulting arrangement or 

other contract to provide services to a lender or on behalf 
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3/25/2009 

of a lender relating to education loans. Nothing paragraph 

(c)(3) of this subsection will be construed as prohibiting—

(i) An officer or employee of an institution who is 

not employed in the institution‘s financial aid office and 

who does not otherwise have responsibilities with respect 

to education loans, or an agent who does not have 

responsibilities with respect to education loans, from 

performing paid or unpaid service on a board of directors 

of a lender, guarantor, or servicer of education loans; 

(ii) An officer or employee of the institution who is 

not employed in the institution‘s financial aid office but 

who has responsibility with respect to education loans as a 

result of a position held at the institution, or an agent 

who has responsibility with respect to education loans, 

from performing paid or unpaid service on a board of 

directors of a lender, guarantor, or servicer of education 

loans, if the institution has a written conflict of 

interest policy that clearly sets forth that officers, 

employees, or agents must recuse themselves from 

participating in any decision of the board regarding 

education loans at the institution; or 

(iii) An officer, employee, or contractor of a lender, 

guarantor, or servicer of education loans from serving on a 

board of directors, or serving as a trustee, of an 

institution, if the institution has a written conflict of 

interest policy that the board member or trustee must 

recuse themselves from any decision regarding education 

loans at the institution. 

(4) Directing borrowers to particular lenders or 

delaying loan certifications. The institution may not—
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DRAFT for discussion at 2nd session 

3/25/2009 

(i) For any first-time borrower, assign, through 

award packaging or other methods, the borrower‘s loan to a 

particular lender; or 

 (ii) Refuse to certify, or delay certification of, any 

loan based on the borrower‘s selection of a particular 

lender or guaranty agency. 

(5) Offers of funds for private loans. The 

institution shall not request or accept from any lender any 

offer of funds to be used for private education loans (as 

defined in section 140 of the Truth in Lending Act), 

including funds for an opportunity pool loan, to students 

in exchange for—

(i) The institution providing concessions or promises 

regarding providing the lender with—

(A) A specified number of Title IV, HEA program loans; 

(B) A specified loan volume of such loans; or 

(C) A preferred lender arrangement for such loans. 

(ii) For purposes of paragraph (c) of this section, 

the term opportunity pool loan means a private education 

loan made by a lender to a student attending the 

institution or the family member of such a student that 

involves a payment, directly or indirectly, by such 

institution of points, premiums, additional interest, or 

financial support to such lender for the purpose of such 

lender extending credit to the student or the family. 

(6) Staffing assistance. The institution shall not 

request or accept from any lender any assistance with call 

center staffing or financial aid office staffing, except 

that nothing in this paragraph will be construed to 

prohibit the institution from requesting or accepting 

assistance from a lender related to—
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DRAFT for discussion at 2nd session 

3/25/2009 

(i) Professional development training for financial 

aid administrators; 

(ii) Providing educational counseling materials, 

financial literacy materials, or debt management materials 

to borrowers, provided that such materials disclose to 

borrowers the identification of any lender that assisted in 

preparing or providing such materials; or 

(iii) Staffing services on a short-term, nonrecurring 

basis to assist the institution with financial aid-related 

functions during emergencies, including State-declared or 

federally declared natural disasters, federally declared 

national disasters, and other localized disasters and 

emergencies identified by the Secretary; and 

(7) Advisory board compensation. Any employee who is 

employed in the financial aid office of the institution, or 

who otherwise has responsibilities with respect to 

education loans or other student financial aid of the 

institution, and who serves on an advisory board, 

commission, or group established by a lender, guarantor, or 

group of lenders or guarantors, must not receive anything 

of value from the lender, guarantor, or group of lenders or 

guarantors, except that the employee may be reimbursed for 

reasonable expenses incurred in serving on such advisory 

board, commission, or group. 

Subpart D—Loan Information to be Disclosed by Institutions 

Participating in the William D. Ford Direct Loan Program 

§601.30 Duties of institutions. 
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DRAFT for discussion at 2nd session 

3/25/2009 

 (a) Each covered institution participating in the 

William D. Ford Direct Loan Program under part D of title 

IV of the HEA shall—

(1) Make the information identified in a model 

disclosure form developed by the Secretary pursuant to 

section 154(a) of the HEA available to students attending 

or planning to attend the institution, or the families of 

such students, as applicable; and 

(2) If the institution provides information regarding 

a private education loan to a prospective borrower, 

concurrently provide such borrower with the information 

identified on the model disclosure form that the Secretary 

provides to the institution under section 154(a) of the 

HEA. 

(b) In providing the information required under 

paragraph (a) of this section, a covered institution may 

use a comparable form designed by the institution instead 

of the model disclosure form. 

Subpart E—Lender Responsibilities 

[See Team 1’s Issue Paper 15]