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TILA for Independent Schools

by on July 23, 2014

Truth in Lending Information

There has been much discussion about whether independent schools are subject to the provisions for the Truth in Lending Act (TILA). My research and conversations with a number of experts indicate to me that most of our schools will be subject to the TILA provisions.

The main TILA regulation may be found at: www.cardreport.com/laws/tila/tila.html. Your school should review all of the information and consult your attorney to determine if you must comply with TILA.

TILA applies when the following four conditions are met:

  1. Credit is offered or extended to consumers;
  2. Offer or extension of credit is done regularly (more than 25 times in the preceding or current calendar year or 5 times if secured by dwelling);
  3. Credit is subject to a finance charge (such as interest) or is payable by a written agreement in more than 4 installments; and
  4. The credit is primarily for personal, family or household purposes.

The trigger that is difficult for most of our schools to overcome is the 4 installments (# 3). Since most independent schools offer a variety of payment plan options including 9, 10, or 12 month payment plans, it seems clear that TILA is applicable.

Please see a number of attached documents with more information:

Bottom Line: take this seriously / do your homework / review your enrollment agreements / review the terms of your payment plans / consult with legal counsel / take the appropriate steps to be in compliance if required.

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