Apr 25, 2014 03:56 PM EDT By Russell Westerholm, UniversityHerald Reporter

Following the death of Tom Cimochowski's student loan co-signer, his grandfather, Sallie Mae hit him with an "auto-default."

According to the Huffington Post, defaults brought on by deaths are the latest subject of borrowers' complaints against the student loan lender. In Cimochowski's case, Sallie Mae informed his mother of the default and that her son had 30 days to pay back the loan.

Cimochowski told the HP he made every monthly payment on time since May 2007 and could not figure out why Sallie Mae wanted the rest of the $34,017.02 at once. He did extensive research in relation to his predicament and contacted everyone he knew who practices law.

"It's the scummiest thing I've ever encountered," said Cimochowski, 30. "I can't think of anything worse than using a death in the family to demand money. How low can you go?"

The certified public accountant's situation is an example what the Consumer Financial Protection Bureau (CFPB) called an "auto-default." The CFPB first warned the public in 2012, but highlighted it again in a new report published this week. Auto-defaults occur when a co-signer, most often an immediate family member, dies before the loan has been paid off.

"Over time, we have updated our practice to recognize the personal challenges a customer faces in such a tragic situation," Martha Holler, Sallie Mae spokeswoman, told the HP. "Although the promissory note states that the loan may be declared in default and due and payable in the event of the cosigner's death, we do not report the loan to the credit bureaus as defaulted unless and until it reaches 211 days of delinquency. Instead we work with the customer to understand his/her ability to make ongoing payments."

Simm Associates, a debt collector, was responsible for collecting Cimochowski's default payment, which his aunt offered to pay by taking a second mortgage. Simm co-founder Jeff Simendinger told the HP he had not reviewed Cimochowski's case.

"I've never come across any accounts that were automatically defaulted based on one of the borrowers expiring," Simendinger said. "It's not a practice I've ever seen, and I would be shocked to see an instance like that."

CFPB is a federal agency devoted to advocating for borrowers' rights and they encourage people with student loans to file complaints with them.

"When tragedy triggers an automatic default, responsible borrowers are thrown into financial distress with demands of immediate repayment," Richard Cordray, the director of the CFPB, said this week. "Lenders should have clear and accessible processes in place to enable borrowers to release co-signers from loans. A borrower should not have to go through an obstacle course."

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