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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551 

DIVISION OF SUPERVISION 

AND REGULATION

SR 19-2 

February 4, 2019 

TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH

FEDERAL RESERVE BANK 

SUBJECT: Voluntary Private Education Loan Rehabilitation Programs 

Applicability to Community Banking Organizations: This advisory applies to all financial 

institutions supervised by the Federal Reserve, regardless of the institution’s asset size.

Purpose

The Board of Governors of the Federal Reserve System (the Board) and the Federal 

Deposit Insurance Corporation are issuing the attached advisory to inform financial institutions 

about the provisions in section 602 of the Economic Growth, Regulatory Relief, and Consumer 

Protection Act (EGRRCPA).1 Section 602 establishes requirements for voluntary private 

education loan rehabilitation programs, under which a consumer may request the removal of a 

reported default on a private education loan from his or her credit report. Section 602 does not 

require a financial institution to offer a loan rehabilitation program that meets the conditions set 

forth in the statute, as participation is voluntary. 

Financial institutions choosing to offer a private education loan rehabilitation program

under section 602 should take into account safety and soundness factors, such as safe and sound 

lending practices and underwriting principles, and must seek the written approval of the terms 

and conditions of the program from the appropriate federal banking agency. Institutions 

supervised by the Board should submit approval requests to the appropriate Reserve Bank, to 

which the Board has delegated the authority to provide approval. A financial institution 

supervised by the Board is encouraged to contact the appropriate Reserve Bank prior to 

requesting approval. In reviewing a financial institution’s request for approval, the appropriate 

Reserve Bank will consider the basis for the financial institution’s assessment of the number of 

consecutive on-time monthly payments that demonstrate the consumer’s renewed ability and 

willingness to repay the loan in light of safety and soundness factors. 

 

1 Pub. L. No. 115-174, 132 Stat. 1296 (May 24, 2018).
 

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Federal Reserve Banks should distribute this advisory to state member banks, bank and 

savings and loan holding companies (including their non-bank subsidiaries), and U.S. branches 

and agencies of foreign banking organizations and to appropriate supervisory staff. 

Questions regarding this advisory may be directed to Peter Clifford, Manager, Risk 

Policy, at (202) 785-6057; and Donald N. Gabbai, Lead Financial Institution and Policy Analyst, 

Risk Policy, at (202) 452-3358. In addition, questions may be sent via the Board’s public 

website.2

Michael S. Gibson

Director

Attachment:

• Advisory on Voluntary Private Education Loan Rehabilitation Programs 

 

2 See http://www.federalreserve.gov/apps/contactus/feedback.aspx. 
Board of Governors of the Federal Reserve System

Federal Deposit Insurance Corporation

Advisory on Voluntary Private Education Loan Rehabilitation Programs 

February 4, 2019 

The Board of Governors of the Federal Reserve System and the Federal Deposit 

Insurance Corporation are providing this advisory to make financial institutions aware of the 

provisions for voluntary loan rehabilitation programs under section 602 of the Economic 

Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).1 

Section 602 of the EGRRCPA (section 602) amended section 623(a)(1) of the Fair Credit 

Reporting Act (FCRA).2 Under section 602, a financial institution may, but is not required to, 

offer a loan rehabilitation program (hereinafter, referred to as a Section 602 Program) to private 

education loan consumers who have a reported default on a private education loan on their credit 

report. 

If a borrower meets the requirements of a financial institution’s Section 602 Program, the 

financial institution may remove a reported default from the borrower’s credit report and the 

removal of a reported default shall not be considered inaccurate under the FCRA for a Section 

602 Program that satisfies the statutory requirements. 

Section 602 Requirements

In order to satisfy the requirements of section 602, a loan rehabilitation program must, 

without limitation, include a requirement that the consumer make consecutive on-time monthly 

payments in a number that demonstrates, in the assessment of the financial institution offering 

the Section 602 Program, a renewed ability and willingness to repay the loan. A consumer that 

successfully meets the program requirements may obtain the benefits available under a Section 

602 Program only once per loan. 

Financial institutions intending to offer a Section 602 Program should submit a written 

request for approval of their program to their appropriate federal banking agency. A financial 

institution’s request for approval of a Section 602 Program must address the statutory 

requirements of section 602. The appropriate federal banking agency will provide a decision or 

feedback to a supervised financial institution within 120 days of receiving a written request for 

approval of a Section 602 Program. 

 

1 Pub. L. No. 115-174, 132 Stat. 1296 was enacted on May 24, 2018.

2 15 U.S.C. 1681s-2(a)(1)(E).