TILA for Independent Schools
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:
- Credit is offered or extended to consumers;
- 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);
- Credit is subject to a finance charge (such as interest) or is payable by a written agreement in more than 4 installments; and
- 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:
- Presentation by Suzanne Bogdan, Chair, Education Practice Group, Fisher & Philips, LLP given at the May 2014 FISBO MISBO conference
- Sample TILA disclosure statement provided by Fisher & Phillips, LLP
- An article by Debra Wilson, Legal Counsel, NAIS (authored 2002, updated July 2014; only available to NAIS members)
- A short article by FACTS Management about TILA
- A checklist provided by NACUBO
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.
Former Executive Director, MISBO