What Is A PEL?

Over the next couple weeks we will be featuring some blogs of little tid bits we learned at the ABA Conference this past June. First on the list, “what is a Jerod11PEL”?

PEL simply stands for Private Education Loan. If you didn’t already know, Regulation Z now has very specific disclosure and timing rules concerning closed end consumer loans not secured by a dwelling that are intended to be used in whole or in part for education expenses. Sounds pretty simple right, well…. not quite.

Many banks have indicated they have not and do not intend to make private education loans only to find out through an audit that their lenders do in fact make these types of loans. For example, a PEL includes funds used to purchase books, boarding, tuition, computers, consolidation loans and yes, even transportation (i.e. a car).

At the very least lenders need to know what is considered a PEL so they can confidently explain to an examiner that they do not make PELs. Now may be a good time to review this with your lending personnel.

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