In the 1970’s when government-insured student loans (and electronic servicing systems) were in their relative infancy, lenders making Federally Insured Student Loans (FISL, or FIZZLE as it was affectionately known in those days…) would tweak consumer credit servicing systems to manage FISLs.
Nationally chartered lender can export their home state rate which includes the rate and fees/charges within the definition of interest), but only using federal law to do so, and the interplay between state and federal law on fees and charges is particularly complicated
Some FFELP programs have more borrower benefits, which means less revenue to support bonds.
Issuing of debt requires projections of cash flows (interest rate assumptions, defaults, and other use of cash flow like payment of administrative expenses such as lender premiums and borrower benefits.
The biggest challenge in funding private education loan programs is projecting default risk. Clearly, if a creditor maintains a FFELP loan guarantee, its exposure to default risk is less than that of the private education loan lender.
The authority and rationale for disclosures of nonpublic personal information concerning FFELP borrowers is clearer than for private education loan lenders given the FFELP statutory and regulatory references
The federal Higher Education Act of 1965 provides for the sharing of information of borrower NPI between schools, lenders and guarantee agencies that are not generally available to holders of private loans
There is no umbrella federal law such as HEA that allows private education loan lenders to share borrower NPI with non-authorized third parties. Private education lenders must strictly follow the privacy provisions of Gramm-Leach-Bliley.
The purpose of the private education loan program policy function is to provide sales, marketing, loan operations, and in certain circumstances accounting departments with the guidance they need to comply with state and federal consumer protection and credit, and privacy laws.
The consumer credit program policy function is so broad in scope and detailed in execution it is difficult for one person to know and understand all of the laws that go into making private education loans.
Federal Trade Commission (FTC): Retailers, finance companies, creditors (including most mortgage companies) that are not assigned to another agency. This includes student loan secondary markets that originate loans in their own names.