July 5, 2017 / 12:19 PM / 6 months ago

Brazil to toughen student loan rules as defaults rise -paper

SAO PAULO, July 5 (Reuters) - The Brazilian government will toughen the rules for a public student loan program as it tries to tackle soaring defaults, the Folha de S. Paulo newspaper reported on Wednesday.

Under the new rules for the so-called Fies program, lower-income students must agree to have up to 30 percent of their monthly wages automatically deducted to pay back the loans, Folha said, without naming its sources.

The government will also demand that borrowers begin to pay off the loans earlier, it reported. Currently, students can wait a year and a half after graduation before doing so.

The new rules, which would apply to loans granted from 2018 onward, may be announced as soon as Thursday, according to the paper.

A representative for the Education Ministry declined to comment immediately on when and how the Fies program would be restructured.

Fies, which was created to help low-income students pay for tuition at nongovernment universities, has seen its costs skyrocket in recent years as Brazil slipped into a deep recession, stoking delinquencies. (Reporting by Ana Mano; Editing by Jeffrey Benkoe)

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