Alert August 06, 2013

Federal Banking Agencies Urge Lenders to Work with Student Loan Borrowers

The FDIC, OCC, and FRB issued a joint statement encouraging financial institutions to work with private student loan borrowers that are encountering financial difficulty. The agencies noted that “[p]rudent workout arrangements are consistent with safe-and-sound lending practices.” The agencies also noted that financial institutions’ student loan workout arrangements resulting in adverse credit classifications or troubled debt restructurings under GAAP will not be criticized. Finally, the agencies stated that financial institutions should provide clear and easily accessible information to student loan borrowers regarding available workout arrangements, including eligibility requirements and the modification process.