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Board of Governors of the Federal Reserve System
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Federal Reserve Board of Governors

Joint Press Release

Office of the Comptroller of the Currency
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
National Credit Union Administration
Consumer Financial Protection Bureau
State Liaison Committee
For release at 3:00 p.m. EST
January 29, 2015

Regulators Release Guidance on Private Student Loans With Graduated Repayment Terms at Origination

Federal financial regulatory agencies, in partnership with the State Liaison Committee (SLC) of the Federal Financial Institutions Examination Council, today issued guidance for financial institutions on private student loans with graduated repayment terms at origination.

This guidance provides principles that financial institutions should consider in their policies and procedures for originating private student loans with graduated repayment terms.

The agencies--the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency--and the SLC recognize that the competitive job market, traditionally low entry-level salaries, and higher student debt loads can contribute to some borrowers preferring greater flexibility with their payments as they transition into the labor market. Graduated repayment terms are structured to provide for lower initial monthly payments that gradually increase.

Financial institutions that originate private student loans with graduated repayment terms should prudently underwrite the loans in a manner consistent with safe and sound lending practices. Additionally, financial institutions should provide disclosures that clearly communicate the timing and the amount of payments to facilitate a borrower's understanding of the loan's terms and features.

Related Links: Guidance on Private Student Loans With Graduated Repayment Terms at Origination (PDF)

 

Media Contacts:
CFPB Moira Vahey (202) 435-9151
FDIC Greg Hernandez (202) 898-6984
FRB Eric Kollig (202) 452-2955
NCUA Ben Hardaway (703) 518-6333
OCC Stephanie Collins (202) 649-6870
SLC Catherine Woody (202) 728-5733

 

 
Last update: January 29, 2015