The Consumer Financial Protection Bureau is clamping down on student loan lenders and servicers that automatically default on loans when a co-signer declared bankruptcy or dies.

The agency said this week in its latest supervision report that such defaults are an unfair practice. The majority of private student lenders have contracts that include so-called auto-default clauses, whereby a lender or servicer accelerates a default if a co-signer declares bankruptcy or dies, even if the primary borrower continues to make on-time payments.

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