Truth in Lending Disclosure

When borrowing student loans for college, it is important to be aware of the following:

You should always exhaust all federal student loan borrowing before considering borrowing private student loans because the federal student loans typically have better terms, i.e.: fixed interest rate, more flexible repayment terms, etc. However, if you find you are in need of additional loan funds after borrowing all of the federal loans available to you, below is some important information.

Private loans differ from lender to lender. It’s important to ask questions when seeking a private student loan, so you can compare loans and choose the one that best fits your needs.

Research before you borrow:

• Will I need a cosigner?
  
• What is the interest rate?
  
• Will I need to make payments while I’m in school?
  
• Is there a minimum or maximum amount I can borrow?
  
• When does the lender capitalize accrued interest? (add any unpaid interest to the principal loan balance, which increases the amount of money you have to pay back).
  
• Does the lender offer electronic payments?
  
• Does the lender offer interest rate reductions or other incentives to borrowers?
  
• Is the interest based on Prime Rate or LIBOR (London Interbank Offered Rate)? Both are interest rates on which lenders may base your loan. You can compare these interest rate methods by going to the money rate tables published in the Wall Street Journal.

Choosing a Cosigner

Since private student loans are credit based, you will probably need a cosigner to qualify. A cosigner is a person who agrees to assume responsibility for repaying your private student loan if you fail to repay.

Budgeting for Repayment:

You should plan ahead when taking out student loans so you know how much to budget for repayment.

Add up the total you will owe on your student loans. Your lender will send you a disclosure statement for each loan that you borrow before the loan is disbursed. Review your disclosure statement for each loan. Estimate what your monthly payments will total. Lenders usually have a sample repayment schedule on their website. It will be helpful to review that schedule when planning your monthly budget.

Your Rights as a Student Loan Borrower:

You have the right to:

• Cancel your loan
  
• Obtain a copy of your Promissory Note; this is a legal agreement to repay your loan under the terms stated.
  
• A notification of loan sale or transfer, your lender must notify you if your loan is sold or transferred to another organization. In the notification, you should have the new organizations name, address to where payments should be sent, and the telephone numbers for the new organization and a telephone number of the original lender from whom you borrowed.
• A repayment schedule, you should receive this information before your first loan payment is due.

Your Responsibilities as a Borrower:

You are responsible for:

• Repaying the loan as agreed, even if you do not complete your education, are unable to find employment or are dissatisfied with the education you received.
• Repaying the loan even if a bill is not sent; failure to receive a bill does not relieve you of the obligation to repay your loans on schedule.

You must notify your lender or servicer if you:

• Change your name, address and/or phone number
  
• You drop below half time enrollment
  
• You transfer to a different school.
  
• You are unable to meet the agreed upon payment terms. Your bank may be able to work with you by setting up a forbearance which is a period of time when you are allowed to postpone or temporarily reduce the amount of the loan payment due to financial hardship.

New Lender Requirements for Lending Private Student Loans:

Once you have been credit approved for a private student loan, the lender will send you the following:

• Application for Solicitation Disclosure: This will provide information about the range of rates, fees and other terms that apply.
  
• Approval Disclosure: This notice contains the terms specific to your approved loan. The borrower has 30 calendar days to accept this offer. Upon loan acceptance, the borrower would be provided a promissory note from the lender to complete, sign and return to the lender.
  
• Private Education Loan Applicant Self Certification Form: Applicant completes this self certification form and submits it to the lender.
  
• Final Disclosure: Presented to the borrower after the loan is accepted and all required documentation is on file with the lender. This disclosure is made 3 business days before the loan is disbursed. The loan will not be disbursed until the 3 business days have elapsed. The borrower may cancel the loan within this 3 day period.

New York Institute of Technology does not have a “Preferred Lender List” of private loan lenders that we recommend to students. Students are asked to research and select a lender independently of New York Tech. The Financial Aid Office will support every effort made by a student to secure a private student loan, as needed.

References

The Higher Education Opportunity Act (HEOA);
Enacted August 14, 2008
Public Law 110-35
Dear Colleague Letter GEN-10-01