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:

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:

• 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.

Marc Levinson
Former Executive Director, MISBO