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Model Student Loan Disclosure

According to Iowa Code section 261F.5(3), a lending institution included on a covered institution's preferred lender list shall disclose, clearly and conspicuously, in any application for a private educational loan, all of the following:

  1. The rate of interest or the potential range of rates of interest applicable to the loan and whether such rates are fixed or variable.
  2. Limitations, if any, on interest rate adjustments, both i terms of frequency and amount, or lack thereof.
  3.  Co-borrower requirements, including changes in interest rates.
  4.  Any fees associated with the loan.
  5. The repayment terms available on the loan.
  6. The opportunity for deferment or forbearance in repayment of the loan, including whether the loan payments can be deferred if the borrower is in school.
  7. Any additional terms and conditions applied to the loan, including any benefits that are contingent on the repayment behavior of the borrower.
  8.  Information comparing federal and private educational loans.
  9. An example of the total cost of the educational loan over the life of the loan which shall be calculated using the following:

(1)  A principal amount and the maximum rate of interest actually offered by the lender, or, if there is no maximum rate provided under the terms of the loan agreement or applicable state or federal law, a statement to that effect.

(2)  Both with and without capitalization of interest, if that is an option for postponing interest payments.

  1. The consequences for the borrower of defaulting on a loan, including any limitations on the discharge of an educational loan in bankruptcy.
  2. Contact information for the lender.

The attorney general has two model disclosure forms (A & B) that are based on the requirements of Iowa Code section 261F.5(3).

Use of the model disclosure forms by a lending institution in a manner consistent with this chapter constitutes compliance with Iowa Code section 261F.5(3).

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