Regulators open probe of student loan practices
By Tim Devaney
Federal regulators are investigating reports that lenders are pressuring college graduates to immediately repay their full student loan debt when a relative who co-signed the loans dies or files for bankruptcy.
The Consumer Financial Protection Bureau (CFPB) said Tuesday it is probing the phenomenon, which can damage the credit reports of borrowers who are otherwise in good standing.
“Private student loans can sometimes take many years to pay off, and these parents or grandparents may be unaware that their own financial distress or death can lead to a sudden default and demand for payment,” said Rohit Chopra, the student loan ombudsman at the CFPB.
The CFPB reported it has received more than 2,300 complaints about private student loans over the last six months, many of which concern lenders’ debt collection practices. One theme throughout the complaints was that, in some cases, lenders are collecting on student loans when a co-signor dies but the primary borrower is still alive and paying on time.
Read more: https://thehill.com/blogs/regwatch/finance/204056-consumer-watchdog-investigating-student-loans-defaults#ixzz2ziH33Odu
