The Federal Reserve and FDIC today issued an advisory on voluntary private education loan rehabilitation programs to alert banks to an amendment to the Fair Credit Reporting Act that was included in the S. 2155 regulatory reform law.
Under the law, consumers may request that a financial institution remove a reported default regarding a private education loan under certain conditions. Banks have the option to establish loan rehabilitation programs and, provided they meet the statutory requirements, become entitled to a safe harbor from potential claims under the FCRA of inaccurate reporting for removing a reported default from a consumer’s credit report.
The advisory directs banks wishing to offer these programs to submit a written request to their appropriate regulatory agency. The agencies will provide a decision or feedback within 120 days of receiving a program approval request.
