Student Lenders Urged to Halt Default When Co-Signers Die

[Purveyor]

By Janet Lorin Apr 22, 2014 12:01 AM ET

Some private student loan borrowers whose co-signers die are facing automatic default, even if their loans are in good standing, the U.S. Consumer Financial Protection Bureau said in a report.

The consumer bureau, which oversees private student loans, outlined the practice today in releasing a midyear report on student-loan complaints.

The federal agency received more than 2,300 private-loan and more than 1,300 debt-collection complaints between October 2013 and March 31 of this year, according to the report. Issues with co-signers, often a parent or grandparent, have “routinely emerged” as areas of concern, the agency said.

Many private loan contracts include options for lenders to demand the full balance when a co-signer dies or files for bankruptcy, according to the report. While the agency can’t quantify how often the problem is occurring, it suggested ways to protect borrowers such as releasing co-signers.

more...

http://www.bloomberg.com/news/2014-04-22/student-lenders-urged-to-halt-default-when-co-signers-die.html

[truedelphi]

1. After dealing with the student loan people,

I am more convinced than ever that our nation is one of totalitarian fascistic tendencies.

We have a government who has let an agency, a private agency, take over what should be a governmental function.

Sallie Mae has out sourced many of the jobs that once were held by Americans. Why is it that American citizens, many of them student loan debtors, cannot even find work servicing the loans that Sallie Mae holds? The customer service, loan collectors, and "ebt policy explainers" are now almost entirely third world people. The legal policies that need to be explained are complex and should be handled by someone who speaks English as their native language. (When you deal with Sallie Mae, please do yourself a favor, and if you are not being helped in the manner you need, ALWAYS ask to speak to a supervisor.)

Meanwhile very other ad on TV is for convincing young people who are not yet in total indebtedness to Sallie Mae how wonderful it is that they could start going to college online - often for degrees that will be worthless in the marketplace, and always at very inflated prices.

And at least one of my girlfriends over the age of seventy is continuously hassled by student loan debt collectors, as she made the mistake of co-signing for her son's college loans some decades back.