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With over 90 percent of private loans being co-signed, the Consumer Financial Protection Bureau (CFPB) is urging private lenders to ease automatic default rules on student loans. Complaints have risen dramatically within the last five months concerning the trigger of a default when a co-signer of a student loan dies or declares bankruptcy, even if the loan was being paid on time. “Auto defaults” force student borrowers to either immediately repay the full loan balance or the result is to issue a bad credit alert to agencies, which then hurts the student’s chances of getting a job, renting an apartment or buying a car.

1. Compare the private student loans with federal student loans. What are some of the differences?
2. What alternatives to auto defaults is the CFPB asking the private lenders to consider?
3. What percentage are private student loans of the total of all outstanding student loan debt?
4. The majority of student loan complaints about private lenders have been filed with the CFPB about which companies?

Douglas, D. (2014). U.S. Agency Urges Private Lenders to Ease Automatic Default Rules on Student Loans. The Washington Post, April 22 (Retrievable online at