We recently reported that Sallie Mae was overcharging active-duty soldiers For student loans.

Now, The Huffington Post’s Shahien Nasiripour has a chilling tale of harassment being experienced by several recipients of government student loans.

Seven borrowers who had been paying their Sallie Mae student loans on time for years were unexpectedly threatened with asset seizures after a Sallie Mae contractor demanded they immediately repay tens of thousands of dollars simply because a family member had died.

Regina Kibler, a retiree who lives off payments from her late husband’s life insurance policy, spent days agonizing over how to help her son, Christopher, pay back nearly $22,000 neither had. Samantha Flora hired a lawyer to fight attempts to recoup some $20,000 from her dead grandmother’s estate that have turned members of her family against one another.

Tony Muzzatti, a 31-year-old Washington, D.C., resident who works in television and who owed Sallie Mae about $60,000, was asked to make a $10,000 down payment in January following the 2012 death of his grandmother, despite six years of on-time payments to Sallie Mae.

Valerie Terray and Karen Saxe, sisters who each had been repaying their loans for the past seven years, enlisted their husbands as they spent hours pleading with debt collectors before they finally begged their mother’s congressman to help. Cathryn Keller endured weeks of frantic calls from aggrieved family members who thought she was to blame for the stress Sallie Mae had caused her 82-year-old widowed grandmother. Tom Cimochowski’s aunt offered to take out a second mortgage on her house.

All were victims of what the Consumer Financial Protection Bureau calls “auto-defaults,” or the largely legal practice of immediately declaring borrowers’ private student loans in default after the death or bankruptcy of a loan co-signer.

Since an April report by the CFPB highlighted the troubling practice, the financial services industry has spent four weeks on the defensive, arguing that borrowers who face the demands are often delinquent on their debts, or are just out of college and thus unable to shoulder the burden. What’s more, they argue, borrowers should’ve known they could face auto-defaults because it’s detailed in their loan contracts.

But the experiences of seven Americans, who independently contacted The Huffington Post to share their stories, documents, correspondence and conversation notes detailing their interactions with Delaware-based Sallie Mae and its debt collector, Simm Associates, suggest that the practice ensnares even good borrowers who have faithfully repaid their student loans on time for years.

Seemingly out of nowhere, they’re treated like deadbeats and face financial ruin based on what seems to them an arbitrary demand to immediately pay up.


 
 0 
 
 0