CFPB Publishes Mid-Year Report on Student-Loan Complaints against Lenders

By on April 24, 2014

The Consumer Financial Protection Bureau (CFPB) issued a mid-year update report on student-loan complaints regarding alleged improper industry practices.  “The CFPB received more than 2,300 private student loan complaints and more than 1,300 debt collection complaints related to student loans between October 1, 2013,and March 31, 2014,” according to the executive summary of the CFPB report.

The most significant complaint was “auto-default,” a situation in which lenders demanded immediate full repayment of loan balances from student borrowers after the death or bankruptcy of their loan co-signer.  Borrowers reported that lenders demanded full payment even when their loan was payments were current.

In addition, while many private student loan lenders advertise an option to release a borrower’s co-signer from obligation after a certain period of time, borrowers indicated that they faced significant obstacles when seeking to obtain these releases.

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