…the CFPB issued a consumer advisory to borrowers about how to release their co-signers from their loans. Many lenders advertise that a co-signer may be released from a private student loan after a certain number of consecutive, timely payments and a credit check to determine if the borrower is eligible to repay the loan on their own. But most student loan servicers do not tell consumers when they are eligible to release their co-signer, so consumers need to ask directly for information on how to do this.
To help borrowers release their co-signers, the CFPB has put together instructions that consumers can edit and send to their student loan servicer. They can download sample letters to send by mail, or they can just cut and paste the text when they log into their account on the servicer’s website. Sample letters include those from the student who may want to release their co-signer, and those from the co-signer who may want to be released.
The sample letter on how a borrower can release a co-signer is at:
The sample letter on how to be released as a co-signer is at:
The Dodd-Frank Wall Street Reform and Consumer Protection Act established an ombudsman for student loans within the CFPB to assist borrowers with student loan complaints. The ombudsman is submitting today’s midyear report to the Director of the CFPB, the Secretary of the Treasury, the Secretary of Education, and Congress.
The CFPB began accepting consumer complaints about private student loans in March 2012.
More information is at: consumerfinance.gov/students.
- Hidden risks on some student loans (kansascity.com)
- How to Know When It’s OK to Co-Sign a Loan (dailyfinance.com)
- Making Timely Student Loan Payments? You May Be In Default, Anyway (affordableschoolsonline.com)
- Grads hit with defaults when co-signers die, go bankrupt (ksl.com)
- Sallie Mae Under Fire For Death-Induced Defaults (huffingtonpost.com)
- Grads hit with defaults when co-signers die (localnews8.com)
- CFPB Criticizes “Auto Defaults,” Many Borrowers Told to Repay Student Loans When Co-Signer Dies (usfinancepost.com)
- Bill would end auto-default on student loans (yakimaherald.com)
- Grieving borrowers told to repay student loan (denverpost.com)