WASHINGTON (AP) — The Consumer Financial Protection Bureau says that after the death or bankruptcy of a parent or grandparent, some student loan borrowers who used these relatives as a co-signer learn they must immediately pay a loan in full.
Complaints related to this issue are growing because the practice is catching so many consumers by surprise. The lenders have clauses in their contract that explain this could happen, but many consumers don’t realize it. The issue affects private student loans, not federal loans.
The Consumer Bankers Association said in a statement that its members work with their customers, and it is common practice for the lenders to release co-signers from loan obligations.
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