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Fair and Accurate Credit Transaction Act
Part B - § 1650
Preventing unfair and deceptive private educational lending practices and eliminating conflicts of interest
(a) Definitions
As used in this section—
(B) includes an agent, officer, or employee of the educational institution;
(2) the term “gift”—
(ii) includes an item described in clause (i) provided to a family member of an officer, employee, or agent of a covered educational institution, or to any other individual based on that individual’s relationship with the officer, employee, or agent, if—
(II) the officer, employee, or agent has reason to believe the item was provided because of the official position of the officer, employee, or agent; and
(ii) food, refreshments, training, or informational material furnished to an officer, employee, or agent of a covered educational institution, as an integral part of a training session or through participation in an advisory council that is designed to improve the service of the private educational lender to the covered educational institution, if such training or participation contributes to the professional development of the officer, employee, or agent of the covered educational institution;
(iii) favorable terms, conditions, and borrower benefits on a private education loan provided to a student employed by the covered educational institution, if such terms, conditions, or benefits are not provided because of the student’s employment with the covered educational institution;
(iv) the provision of financial literacy counseling or services, including counseling or services provided in coordination with a covered educational institution, to the extent that such counseling or services are not undertaken to secure—
(II) applications or loan volume for any loan made, insured, or guaranteed under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) [and 42 U.S.C. 2751 et seq.]; or
(III) the purchase of a product or service of a specific private educational lender;
(vi) State education grants, scholarships, or financial aid funds administered by or on behalf of a State;
(3) the term “institution of higher education” has the same meaning as in section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002);
(4) the term “postsecondary educational expenses” means any of the expenses that are included as part of the cost of attendance of a student, as defined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll);
(5) the term “preferred lender arrangement” has the same meaning as in section 151 of the Higher Education Act of 1965 [20 U.S.C. 1019];
(6) the term “private educational lender” means—
(B) a Federal credit union, as defined in section 1752 of title 12 that solicits, makes, or extends private education loans; and
(C) any other person engaged in the business of soliciting, making, or extending private education loans;
(7) the term “private education loan”—
(ii) is issued expressly for postsecondary educational expenses to a borrower, regardless of whether the loan is provided through the educational institution that the subject student attends or directly to the borrower from the private educational lender; and
(8) the term “revenue sharing” means an arrangement between a covered educational institution and a private educational lender under which—
(B) the covered educational institution recommends to students or others the private educational lender or the private education loans of the private educational lender; and
(C) the private educational lender pays a fee or provides other material benefits, including profit sharing, to the covered educational institution in connection with the private education loans provided to students attending the covered educational institution or a borrower acting on behalf of a student.
(b) Prohibition on certain gifts and arrangements
A private educational lender may not, directly or indirectly—
(2) engage in revenue sharing with a covered educational institution.
(c) Prohibition on co-branding
A private educational lender may not use the name, emblem, mascot, or logo of the covered educational institution, or other words, pictures, or symbols readily identified with the covered educational institution, in the marketing of private education loans in any way that implies that the covered educational institution endorses the private education loans offered by the private educational lender.
(d) Advisory Board compensation
Any person who is employed in the financial aid office of a covered educational institution, or who otherwise has responsibilities with respect to private education loans or other financial aid of the institution, and who serves on an advisory board, commission, or group established by a private educational lender or group of such lenders shall be prohibited from receiving anything of value from the private educational lender or group of lenders. Nothing in this subsection prohibits the reimbursement of reasonable expenses incurred by an employee of a covered educational institution as part of their service on an advisory board, commission, or group described in this subsection.
(e) Prohibition on prepayment or repayment fees or penalty
It shall be unlawful for any private educational lender to impose a fee or penalty on a borrower for early repayment or prepayment of any private education loan.