Sallie Mae 2007 Annual Report Download - page 111

Student Loan Sunshine Act
On May 9, 2007, the House of Representatives passed H.R. 890, a bipartisan version of the “Student
Loan Sunshine Act.” The bill would establish greater disclosure requirements on schools and lenders for both
FFELP loans and Private Education Loans. The legislation would require higher education institutions to
establish “codes of conduct” that would include prohibition on many areas that have been cited as creating
conflicts of interest. Areas specified by the legislation include gifts, consulting or other fees paid by lenders to
financial aid officers and other school officials, fees or other material benefits, including profit or revenue
sharing to institutions or their staff, staffing assistance, opportunity loans, and advisory councils. The
legislation would require that schools include at least three unaffiliated lenders on any Preferred Lender List
and disclose the rationale for recommending such lenders.
Private Student Loan Transparency and Improvement Act of 2007
On August 1, 2007, the Senate Committee on Banking, Housing, and Urban Affairs approved the Private
Student Loan Transparency and Improvement Act of 2007, legislation initially introduced by Senator
Christopher Dodd (D-CT) on June 8, 2007. The bill provides for certain disclosures and prohibits certain
activities in connection with private education loans.
The bill’s disclosure requirements would:
• Require all private education loan applications and solicitations to include a disclosure that includes the
range of interest rates and fees available, in addition to other information regarding the terms and
conditions of the loan;
• Require lenders to provide a clear and concise disclosure of the rate, terms and conditions of a private
education loan that has been approved for a student borrower and provide borrowers with a “cooling
off” period after the borrower receives the required disclosure documents within which to accept the
terms of the loan and consummate the transaction;
• Provide for a right to cancel a private education loan without penalty within three business days of
consummation;
• Require that private education lenders provide additional disclosures at the time of loan and its
consummation; and
• Apply Truth in Lending Act (TILA) provisions to all private student loans.
The bill would also prohibit:
• Private education lenders from offering or providing any gift to a covered educational institution or its
employees and bar such institutions and their officers and employees from receiving such gift in
exchange for any advantage or consideration provided to the lender related to its private education loan
activities;
• Private education lenders from engaging in revenue sharing with a covered educational institution;
• Private education lenders from co-branding their private education loans in any way that implies that
the covered educational institution endorses the private education loans offered by the lender;
• Private education loan lenders from imposing a fee or penalty for early repayment or prepayment of
any private education loans; and
• Financial aid office employees at covered educational institutions who serve on a private education
lender advisory board from receiving anything of value from the private education lender other than the
reimbursement of reasonable expenses incurred in connection with their service on the advisory board.
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