Know the Law: School’s in for the Truth in Lending Act

Q: I work at an independent school that allows families to pay tuition in installments. Does this make us subject to TILA?

A: The Truth in Lending Act (TILA) is a federal law that was enacted, in large part, to protect the interests of borrowers relative to loans issued by creditors for specific purposes. The act was passed to curb unfair and predatory lending practices by requiring transparency so that consumers can understand loans offered to them. TILA was not, as one may assume, designed specifically with independent schools in mind; however, TILA also was not narrowly tailored to fit only one type of lender or loan. As a consequence, some of the lending practices that independent schools routinely engage in may fall under TILA’s coverage.