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

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Joint Release
Office of the Comptroller of the Currency
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Consumer Financial Protection Bureau
Federal Housing Finance Agency
National Credit Union Administration

​For Immediate Release

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.

 
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Media Contacts:               

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

 


NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At MyCreditUnion.gov, NCUA also educates the public on consumer protection and financial literacy issues.

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Office of Public & Congressional Affairs

703.518.6330
pacamail@ncua.gov

Contacts:

John Fairbanks
Office: 703.518.6336
Mobile: 571.438.0801
jfairbanks@ncua.gov

Ben C. Hardaway
Office: 703.518.6333
Mobile: 703.298.5223
bhardaway@ncua.gov

Kenzie Snowden
Office: 703.518.6334
ksnowden@ncua.gov

"Protecting credit unions and the consumers who own them through effective regulation"

9/20/2018 6:00 PM