should a lender or loan servicer try to alter those terms or charge the student for filling out the free application for federal student aid fafsa that would also make for an unlawful loan 
unlawful loans and the truth in lending actthe truth in lending act applies to most types of credit whether it be closed end credit such as an auto loan or mortgage or open ended credit such as a credit card the act regulates what companies can advertise and say about the benefits of their loans or services the truth in lending act tila is part of the consumer credit protection act and was signed into law on may 29 1968 2the act requires lenders to disclose the cost of the loan to enable consumers to do comparison shopping the act also provides for a three day period in which the consumer may rescind the loan agreement without a financial loss this provision is intended to protect consumers against unscrupulous lending tactics 3the act doesn t dictate who can receive or be denied credit other than general discrimination standards of race sex creed etc nor does it regulate the interest rates a lender may charge unlawful loans and usury lawsinterest rates fall under the provision and definition of local usury laws usury laws govern the amount of interest that can be charged on a loan by a lender based in a certain area in the u s each state sets its own usury laws and usurious rates so a loan or line of credit is deemed unlawful if the interest rate on it exceeds the amount mandated by state law usury laws are designed to protect consumers however the laws that apply are those of the state in which the lender is incorporated not the state where the borrower lives unlawful loans vs predatory loansunlawful loans are often seen as the province of predatory lending a practice that imposes unfair or abusive loan terms on a borrower or convinces a borrower to accept unfair terms or unwarranted debt through deceptive coercive or other unscrupulous methods interestingly however a predatory loan may not technically be an unlawful loan case in point payday loans a type of short term personal loan that charges an amount that can equal 300 to 500 of the borrowed sum often used by people with poor credit and few savings payday loans could certainly be considered predatory taking advantage of those who can t pay urgent bills any other waybut unless the lender s state or municipality expressly sets a cap below such amounts on loan interest or loan fees the payday loan isn t actually illegal if you re considering a payday loan it might be worth first using a personal loan calculator to determine what the total interest paid will be at the end of the loan to ensure it s within your means to repay it 