Section 601.40 - Disclosure and reporting requirements for lenders(a)Disclosures to borrowers.(1) A lender must, at or prior to disbursement of a FFEL loan, provide the borrower, in writing (including through electronic means), in clear and understandable terms, the disclosures required in § 682.205(a) and (b) .(2) A lender must, for each of its private education loans, comply with the disclosure requirements under section 128(e) of the Truth in Lending Act (15 U.S.C. 1638(e) ).(b)Reports to the Secretary. Each FFEL lender must report annually to the Secretary-(1) Any reasonable expenses paid or provided to any agent of a covered institution who is employed in the financial aid office or has other responsibilities with respect to education loans or other student financial aid of the institution for service on a lender advisory board, commission or group established by a lender or group of lenders; or(2) Any similar expenses paid or provided to any agent of an institution-affiliated organization who is involved in recommending, promoting, or endorsing education loans.(3) The report required by this paragraph must include-(i) The amount of expenses paid or provided for each specific instance in which the lender provided expenses;(ii) The name of any agent described in paragraph (b)(1) of this section to whom the expenses were paid or provided;(iii) The dates of the activity for which the expenses were paid or provided; and(iv) A brief description of the activity for which the expenses were paid or provided.(c)Lender certification of compliance.(1) Any FFEL lender participating in one or more preferred lender arrangements must annually certify to the Secretary its compliance with the Higher Education Act of 1965, as amended; and(2) If the lender is required to submit an audit under 34 CFR 682.305(c) , the lender's compliance with the requirements under this section must be reported on and attested to annually by the lender's auditor.(3) A lender may comply with the certification requirements of this section if the certifications are provided as part of the annual audit required by 34 CFR 682.305(c) .(4) A lender who is not required to submit an audit must submit the required certification at such time and in such manner as directed by the Secretary.(d)Annual lender report to covered institutions. A FFEL lender with a preferred lender arrangement with a covered institution or an institution-affiliated organization relating to FFEL loans must annually, on a date prescribed by the Secretary, provide to the covered institution or the institution-affiliated organization and to the Secretary, such information required by the Secretary in relation to the FFEL loans the lender plans to offer pursuant to that preferred lender arrangement for the next award year. Authority: 20 U.S.C. 1019a(b) and 1019b(b)
Approved by the Office of Management and Budget under control number 1845-XXXA