Fed Offers Guidance On Private Student Loans

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Fed Offers Guidance On Private Student Loans
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Federal regulators offered new guidance for some private student loans on Thursday

Five federal regulatory agencies (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) issued new guidance regarding private student loans with graduated repayment on Thursday, January 29th.

Understanding graduated repayment

Graduated repayment means making lower monthly payments at first, and the payments gradually increase over time (ideally along with your income). The regulatory agencies recognize that “students leaving higher education programs may prefer more flexibility to transition into the labor market because of a number of factors, such as competitive job markets, traditionally low entry-level salaries, and higher student debt loads.”

With graduated repayment terms it is easier to keep borrowers’ income levels balanced with loan repayment requirements, and you also have the flexibility to repay the debt sooner if your income increa