Department Issues Reminder to Schools Regarding Borrower Choice of Lender

The U.S. Department of Education recently issued a reminder to schools that a borrower under the Federal Family Education Loan Program has the right to choose a lender and guarantor. The Dear Colleague Letter, GEN-07-01, cites applicable law, the Higher Education Act of 1965, as amended, and regulations that prohibit the school from refusing to certify any loan based on a FFELP borrower’s choice of lender or guarantor. The Department also notes that these provisions apply to all schools participating in the FFELP, including those in a school-as-lender scenario.