WASHINGTON (6/23/15)--Private student loan lenders rejected nine out of 10 co-signers who applied for a co-signer release from the loans, a service the lenders and servicers often advertise, according to the Consumer Financial Protection Bureau’s (CFPB) Student Loan Ombudsman’s Mid-year Update.
“Private student loan companies should own up to borrowers when they qualify for valuable benefits, clean up contracts with surprises buried in the fine print, and step up to provide borrowers and their co-signers the service they deserve,” said CFPB Student Loan Ombudsman Rohit Chopra.
The report collected information from industry participants, more than 3,100 private student loan complaints and roughly 1,100 debt collection complaints about student loan debt between Oct. 1, 2014, and March 31, 2015. Overall complaints about private student loans rose 34% over the same period a year earlier, said CFPB.
CFPB identified three practices that would benefit consumers and the industry:
CFPB has published sample letters for borrowers and co-signers to send to loan servicers instructing them to provide clear information about co-signer release policies.