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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

Status: Unresolved

Regulatory language:

PART 601—INSTITUTION AND LENDER REQUIREMENTS RELATING TO 

EDUCATION LOANS

Subpart A--General

Sec.

601.1 Scope.

601.2 Definitions
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Subpart B--Responsibilities of Loan Information to be 

Disclosed by Covered Institutions and InstitutionAffiliated Organizations

601.10 Preferred lender arrangement disclosures.

601.11 Private education loan disclosures and selfcertification form.

601.12 Use of institution and lender name.

Subpart C--Loan Information to be Disclosed by

Responsibilities of Covered Institutions and InstitutionAffiliated Organizations 

601.20 Providing information to students and families.

601.21 20 Annual report.

601.22 21 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
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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 

authorized by the Higher Education Act of 1965, as amended 

(HEA) and private education loans.

§601.2 Definitions.
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(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
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(3) A private education loan.

Institution-affiliated organization: (1) Any 

organization that--

(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: [Insert Definition--Team I]

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.
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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--

(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: [Insert Definition--Team I]
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Subpart B--Responsibilities of Loan Information to be 

Disclosed by Covered Institutions and InstitutionAffiliated Organizations

§601.10 Preferred lender arrangement disclosures.

[NOTE: This section has been revised to incorporate the 

substance of draft section 601.20 from the last session.]

(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 
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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

(iii) A statement that such institution is required to 

process the documents required to obtain a loan under the 

Federal Family Education Loan (FFEL) Program from any 

eligible lender the student selects; and 

(2) 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 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 (15 U.S.C. 

1638(e)(11)), 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 
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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 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

(2) Describe or discuss the financial aid 

opportunities available to students at an institution of 

higher education.

(c)(1) Each covered institution and each institutionaffiliated organization that participates in a preferred 

lender arrangement must provide the information described 

in paragraph (a)(1)(ii) of this section, and the 

information described in paragraphs (a)(2)(i) and 

(a)(2)(ii) of this section, respectively, for each type of 
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education loan offered pursuant to the preferred lender 

arrangement.

(2) The information identified in paragraph (c)(1) of 

this section must be provided to students attending the 

covered institution, or the families of such students, as 

applicable, annually and must be provided in a manner that 

allows for the students or their families to take such 

information into account before selecting a lender or 

applying for an education loan.

(c) (d) If an a covered 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) of the HEA;

(ii) Why the institution has entered into participates 

in 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
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(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) (d)

of this section--

(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;
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(3) Prominently disclose the method and criteria used 

by the institution in selecting lenders with which to 

participate in 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) (d)

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 
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who choose a lender that is not included on the preferred 

lender list. 

§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, regardless of whether the covered institution or 

institution-affiliated organization participates in a 

preferred lender arrangement.

(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--
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(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 

Board of Governors of the Federal Reserve System, to 

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

in Lending Act (15 U.S.C. 1638(e)(3)); 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.
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(a) A covered institution, or an institutionaffiliated organization of such covered institution, that 

enters into participates in a preferred lender arrangement 

with a lender regarding private education loans must--

(a) 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; and

(b) The covered institution or institution-affiliated 

organization must eEnsure 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

Responsibilities of Covered Institutions and InstitutionAffiliated Organizations
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§601.20 Providing information to students and families.

[Former Section 601.20 has been incorporated into Section 

601.10]

(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 
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private education loan offered pursuant to such preferred 

lender arrangement to students of such institution or the 

families of such students.

(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 

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.
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§601.2120 Annual report. 

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

has participates in a preferred lender arrangement, must--

(1) (a) Prepare and submit to the Secretary an annual 

report, by a date determined by the Secretary, that 

includes, for each lender that has participates in a 

preferred lender arrangement with such covered institution 

or organization--

(i) (1) The information described in §601.20(a)

§601.10(c); and

(ii)(2) A detailed explanation of why such covered 

institution or institution-affiliated organization entered 

into participates in 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; and

(2) (b) Ensure that the report required under this 

section is made available to the public and provided to 
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students attending or planning to attend such covered 

institution and the families of such students.

§601.2021 Code of conduct. 

(a)(1) A covered institution that has participates in

a preferred lender arrangement must comply with the code of 

conduct requirements described in this section.

(1)(2) The covered institution must--

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

IV, HEA program loans FFEL Program loans and private

education 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

FFEL Program loans and private education loans; and

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

paragraph (b) (c) of this section;

(ii) Publish such code of conduct prominently on the 

institution’s Web site; and
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(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 FFEL Program loans or private

education loans be annually informed of the provisions of 

the code of conduct. 

(b) Any institution-affiliated organization of a

covered institution that participates in a preferred lender 

arrangement must--

(1) Comply with the code of conduct developed and 

published by such covered institution under paragraphs

(a)(1) of this section; 

(2) If such institution-affiliated organization has a 

Web site, publish such code of conduct prominently on the 

Web site; and 

(3) 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 FFEL Program loans or private education loans be 

annually informed of the provisions of such code of 

conduct.
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(b)(c) 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 a covered institution and a lender 

under which--

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

program loan FFEL Program loan or private education 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)(i) 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 FFEL
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Program loans or private education loans, or agents who 

have responsibilities with respect to FFEL Program loans or 

private education loans, must not solicit or accept any 

gift from a lender, guarantor, or servicer of FFEL Program 

loans or private education loans; 

(i) (ii) For purposes of paragraph (b) (c) of this 

section, the term gift means 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) (iii) 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 
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training session that is designed to improve the service of 

a lender, guarantor, or servicer of FFEL Program loans or 

private 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 a FFEL Program loan or private 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 

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 FFEL Program loans or 

private education loans that are unrelated to FFEL Program

loans or private education loans or any contribution from 

any lender, servicer, or guarantor, or servicer that is not 
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made in exchange for any advantage related to FFEL Program 

loans or private education loans.

(F) State education grants, scholarships, or financial 

aid funds administered by or on behalf of a State. ; and

(iii) (iv) For purposes of paragraph (b) (c) 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

is 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 FFEL Program loans or 

private education loans, or an agent who has 

responsibilities with respect to FFEL Program loans or 
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private 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 of a lender relating to FFEL Program 

loans or private education loans. Nothing in 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 FFEL Program loans or private education loans, or an 

agent who does not have responsibilities with respect to 

FFEL Program loans or private 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 FFEL Program loans 

or private education loans as a result of a position held 

at the institution, or an agent who has responsibility with 
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respect to FFEL Program loans or private education loans, 

from performing paid or unpaid service on a board of 

directors of a lender, guarantor, or servicer of FFEL

Program loans or private 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 FFEL Program loans or private education 

loans at the institution; or 

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

guarantor, or servicer of FFEL Program loans or private

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 FFEL Program loans or private education loans at 

the institution.;

(4) Directing borrowers to particular lenders or 

delaying loan certifications. The institution may must

not--
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(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)(i) Offers of funds for private loans. The 

institution shall must 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) Tthe institution providing 

concessions or promises regarding providing the lender 

with--

(A) A specified number of Title IV, HEA program FFEL 

Program loans or private education 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 
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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 must

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--

(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 
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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 FFEL 

Program loans or private 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, as that term is 

defined in §668.16(d)(2)(ii), 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. 

(a) Each covered institution participating in the 

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

IV of the HEA shall must--
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(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]
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Issue 1

Amendatory Language

Team II – School-based Loan Issues

 For the reasons discussed in the preamble, the 

Secretary proposes to amend chapter VI of title 34 of the 

Code of Federal Regulations as follows:

PART 601 [ADDED]

x. Add part 601 to read as follows:

PART 601—INSTITUTION AND LENDER REQUIREMENTS RELATING TO 

EDUCATION LOANS

Subpart A--General

Sec.

601.1 Scope.

601.2 Definitions.

Subpart B--Loan Information to be Disclosed by Covered 

Institutions and Institution-Affiliated Organizations

Sec.

601.10 Preferred lender arrangement disclosures.

601.11 Private education loan disclosures and selfcertification form.

601.12 Use of institution and lender name.

Subpart C--Responsibilities of Covered Institutions and 

Institution-Affiliated Organizations 

Sec.

601.20 Annual report.

601.21 Code of conduct.
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Subpart D--Loan Information to be Disclosed by Institutions 

Participating in the William D. Ford Direct Loan Program

Sec.

601.30 Duties of institutions.

Authority: 20 U.S.C. 1019-1019d, 1021, 1094(a) and 

(h).

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 

authorized by the Higher Education Act of 1965, as amended 

(HEA) and private education loans.

(Authority: 20 U.S.C. 1019-1019d, 1021, 1094(a)(25) and 

(e))

§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
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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 34 

CFR 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--

(i) Is directly or indirectly related to a covered 

institution; and
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(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: [Insert Definition--Team I]

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--
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(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--

(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: [Insert Definition--Team I]

(Authority: 20 U.S.C. 1019)

Subpart B--Loan Information to be Disclosed by 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 
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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

(iii) A statement that such institution is required 

to process the documents required to obtain a loan under 

the Federal Family Education Loan (FFEL) Program from any 

eligible lender the student selects; and 

(2) On such covered institution’s or institutionaffiliated organization’s Web site and in all informational
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materials described in paragraph (b) of this section 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 (15 U.S.C. 

1638(e)(11)), 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 (15 U.S.C. 1638(e)(1)), 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--
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(1) Are distributed to prospective or current 

students of a covered institution and families of such 

students; and

(2) Describe or discuss the financial aid 

opportunities available to students at an institution of 

higher education.

(c)(1) Each covered institution and each institutionaffiliated organization that participates in a preferred 

lender arrangement must provide the information described 

in paragraph (a)(1)(ii) of this section, and the 

information described in paragraphs (a)(2)(i) and 

(a)(2)(ii) of this section, respectively, for each type of 

education loan offered pursuant to the preferred lender 

arrangement. 

(2) The information identified in paragraph (c)(1) of 

this section must be provided to students attending the 

covered institution, or the families of such students, as 

applicable, annually and must be provided in a manner that 

allows for the students or their families to take such 

information into account before selecting a lender or 

applying for an education loan.
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(d) If a covered institution 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) of the HEA;

(ii) Why the institution participates in 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 
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affiliates of each other included on the preferred lender 

list; and 

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

this section--

(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 

participate in 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
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(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 (d) 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. 

(Authority: 20 U.S.C. 1019a(a)(1)(A) and 1019b(c))

§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, regardless of whether the covered institution or 
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institution-affiliated organization participates in a 

preferred lender arrangement.

(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--
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(1) The self-certification form for private education 

loans developed by the Secretary in consultation with the 

Board of Governors of the Federal Reserve System, to 

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

in Lending Act (15 U.S.C. 1638(e)(3)); and

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

the extent the institution possesses such information.

(Authority: 20 U.S.C. 1019a(a)(1)(B) and 1019d)

§601.12 Use of institution and lender name.

A covered institution, or an institution-affiliated 

organization of such covered institution, that participates 

in a preferred lender arrangement with a lender regarding 

private education loans must--

(a) 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; and 
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(b) Ensure that the name of the lender is displayed 

in all information and documentation related to the private 

education loans described in this section. 

(Authority: 20 U.S.C. 1019a(a)(2)-(a)(3))

Subpart C--Responsibilities of Covered Institutions and 

Institution-Affiliated Organizations

§601.20 Annual report.

Each covered institution, and each institutionaffiliated organization of such covered institution, that 

participates in a preferred lender arrangement, must--

(a) Prepare and submit to the Secretary an annual 

report, by a date determined by the Secretary, that 

includes, for each lender that participates in a preferred 

lender arrangement with such covered institution or 

organization--

(1) The information described in §601.10(c); and

(2) A detailed explanation of why such covered 

institution or institution-affiliated organization 

participates in 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 
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attending such institution, or the families of such 

students, as applicable; and

(b) 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.

(Authority: 20 U.S.C. 1019b(c)(2))

§601.21 Code of conduct.

(a)(1) A covered institution that participates in a 

preferred lender arrangement must comply with the code of 

conduct requirements described in this section.

(2) The covered institution must--

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

Program loans and private education 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 FFEL Program loans and private 

education loans; and

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

paragraph (c) of this section;
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(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 

FFEL Program loans or private education loans be annually 

informed of the provisions of the code of conduct. 

(b) Any institution-affiliated organization of a 

covered institution that participates in a preferred lender 

arrangement must--

(1) Comply with the code of conduct developed and 

published by such covered institution under paragraph 

(a)(1) of this section; 

(2) If such institution-affiliated organization has a 

Web site, publish such code of conduct prominently on the 

Web site; and 

(3) 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 FFEL Program loans or private education loans be 

annually informed of the provisions of such code of

conduct.
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(c) 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 a covered institution and a lender 

under which--

(i) A lender provides or issues a FFEL Program loan 

or private education 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)(i) 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 FFEL 

Program loans or private education loans, or agents who 
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have responsibilities with respect to FFEL Program loans or 

private education loans, must not solicit or accept any 

gift from a lender, guarantor, or servicer of FFEL Program 

loans or private education loans; 

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

the term gift means 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;

(iii) 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 
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a lender, guarantor, or servicer of FFEL Program loans or 

private 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 a FFEL Program loan or private 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 

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 FFEL Program loans 

or private education loans that are unrelated to FFEL 

Program loans or private education loans or any 

contribution from any lender, servicer, or guarantor, that 
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is not made in exchange for any advantage related to FFEL 

Program loans or private education loans.

(F) State education grants, scholarships, or 

financial aid funds administered by or on behalf of a 

State; and

(iv) For purposes of paragraph (c) 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, is 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 FFEL Program loans or 

private education loans, or an agent who has 

responsibilities with respect to FFEL Program loans or 
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private 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 of a lender relating to FFEL Program 

loans or private education loans. Nothing in paragraph 

(c)(3) of this section 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 FFEL Program loans or private education loans, or an 

agent who does not have responsibilities with respect to 

FFEL Program loans or private 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 FFEL Program loans 

or private education loans as a result of a position held 

at the institution, or an agent who has responsibility with 

respect to FFEL Program loans or private education loans, 
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from performing paid or unpaid service on a board of 

directors of a lender, guarantor, or servicer of FFEL 

Program loans or private 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 FFEL Program loans or private education 

loans at the institution; or 

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

lender, guarantor, or servicer of FFEL Program loans or 

private 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 FFEL Program loans or private 

education loans at the institution;

(4) Directing borrowers to particular lenders or 

delaying loan certifications. The institution must not—

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

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

particular lender; or 
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(ii) Refuse to certify, or delay certification of, 

any loan based on the borrower’s selection of a particular 

lender or guaranty agency;

(5)(i) Offers of funds for private loans. The 

institution must not request or accept from any lender any 

offer of funds to be used for private education loans, 

including funds for an opportunity pool loan, to students 

in exchange for the institution providing concessions or 

promises regarding providing the lender with--

(A) A specified number of FFEL Program loans or 

private education 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;
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(6) Staffing assistance. The institution must 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--

(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 FFEL 
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Program loans or private 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, as that term is 

defined in §668.16(d)(2)(ii), incurred in serving on such 

advisory board, commission, or group.

(Authority: 20 U.S.C. 1019b(c)(2)), 1094(a)(25) and (e))

Subpart D--Loan Information to be Disclosed by Institutions 

Participating in the William D. Ford Direct Loan Program

§601.30 Duties of institutions.

(a) Each covered institution participating in the 

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

IV of the HEA must--

(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
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(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.

(Authority: 20 U.S.C. 1019c(b))