Fitch Ratings is proposing changes to the way it rates bonds backed by government-guaranteed student loans to account for the slower pace at which these loans are being repaid.

The impetus for the proposals is the introduction of generous repayment plans for Federal Family Education Loans (FFEL) that base monthly payments on a borrower’s level of income. As these income-based repayment (IBR) plans become more popular, FFEL loans are paying off more slowly, creating a risk that FFEL bonds won’t pay off at maturity, which is an event of default.

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