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Truth In Private Education Lending

WASHINGTON (CN) - The Federal Reserve Board is increasing disclosure requirements on loans offered to students that are privately funded and are not backed by the Education Department.

Such loans have played an increasing role in financing higher education as federal student loan assistance has not kept pace with the rising costs of tuition and living expenses at most schools.

The Board will require creditors to disclose the full costs of a loan, monthly repayment rates at the lowest and highest rates of interest allowed, available federal student loans, the borrower's right to back out of a loan agreement up to three days after its consummation. In addition, the board is specifically banning the practice of co-branding where private lenders adopt the brand of a particular institution when offering loans to its students.

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