We do not believe that the Higher Education Opportunity Act (HEOA) disclosures are required in this case, because this loan does not fit the definition of a “private education loan.”

The HEOA disclosures are required only for “private education loans,” which are loans made to a consumer for post-secondary educational expenses (in addition to having other characteristics, such as being a closed-end loan with terms longer than 90 days). A loan that refinances a private education loan also fits this definition; the Regulation Z Official Interpretations clarify that private education loans include “loans extended to consolidate a consumer’s pre-existing private education loans.” However, in this case, the original loan did not qualify as a private education loan because it was made to a business, not a consumer. Consequently, we believe that a refinancing of this loan also would be exempt from Regulation Z and the HEOA disclosure requirements.

We also note that the exclusion in Regulation Z for business loans also excludes business loans guaranteed by individuals. In other words, the existence of individual guarantees would not affect the loan’s exempt status.

For resources related to our guidance, please see:

• Regulation Z, 12 CFR 1026.46(b)(5) (“Private education loan means an extension of credit that . . . . (ii) Is extended to a consumer expressly, in whole or in part, for postsecondary educational expenses, regardless of whether the loan is provided by the educational institution that the student attends; (iii) Does not include open-end credit or any loan that is secured by real property or a dwelling; and (iv) Does not include an extension of credit in which the covered educational institution is the creditor if: (A) The term of the extension of credit is 90 days or less; or (B) an interest rate will not be applied to the credit balance and the term of the extension of credit is one year or less, even if the credit is payable in more than four installments.”)

• Regulation Z, Official Interpretations, 12 CFR 1026, Paragraph 46(b)(5), Comment 1 (“A private education loan is one that is extended expressly for postsecondary educational expenses. The term includes loans extended for postsecondary educational expenses incurred while a student is enrolled in a covered educational institution as well as loans extended to consolidate a consumer’s pre-existing private education loans.”)

• Regulation Z, 12 CFR 1026.3(a)(2) (“The following transactions are not subject to this part or, if the exemption is limited to specified provisions of this part, are not subject to those provisions: . . . . (2) An extension of credit to other than a natural person . . . .”)

• Regulation Z, Official Interpretations, 12 CFR 1026, Paragraph 3(a), Comment 9 (“The exemption for transactions in which the borrower is not a natural person applies, for example, to loans to corporations, partnerships, associations, churches, unions, and fraternal organizations. The exemption applies regardless of the purpose of the credit extension and regardless of the fact that a natural person may guarantee or provide security for the credit. . . .”)