Summary of Federal Laws

 

Financial Aid Programs

 

Financial Services Modernization Act (The Gramm-Leach-Bliley Act)

Pub. L. 106-102 (codified at 15 U.S.C. § 6801 et seq.)

 

This law requires a financial institution to provide a clear and conspicuous notice that accurately reflects its privacy policies and practices to a customer before establishing a customer relationship, and to a consumer before the financial institution discloses any non-public personal information to a nonaffiliated third party.  The distinction between consumers and customers determines what notices a financial institution must provide.  This law may be applicable to colleges and universities participating in the Perkins Loan Program, an institutionally-based student loan program, or the Federal Direct Student Loan Program.  The institution would be required to provide borrowers with an initial and annual privacy notice that includes school-specific information on disclosure practices.  The notices must also explain the right to opt out of disclosures of nonpublic personal information to nonaffiliated third parties, including the methods available to exercise that right.  For more information, see the proposed rule issued by the Federal Trade Commission (FTC).

 

Once specifics of disclosure requirements are finalized, query whether the institution’s student records policy and annual notice of the student record policy will result in compliance with this new regulatory requirement.  It may be that only minimal adjustments will be necessary.  See also the Family Educational Rights and Privacy Act (FERPA).




links updated 6/17/08 rab