Should Mom Have to Pay Dead Son's Student Loans?

Mary Anne Looby December 4, 2012 at 12:57 pm

We all sign out kids student loans. None of us ever expect them to die of natural causes at the age of 24. If the fed can forgive the other two loans the private company (whose name we should know) should follow suit. To burden this senior citizen with her dead sons debt is bad business. What goes around, comes around

Mary Anne Looby December 4, 2012 at 12:58 pm

Most loans have some kind of insurance for situations like this. If this company didn't offer it then maybe they are not so on the up and up which would explain their harrassing this woman.

Krista December 4, 2012 at 01:54 pm

That is absurd! She has to relive the death of her son over and over because of this. He will never even be able to finish college and put his degree to use because he is DEAD. There is no reason why they can't write that off. They probably write off far more in one year from losses that went to collections and were never paid.

careless fills December 4, 2012 at 02:07 pm

It is her loan. She co-signed for it. That;s what co-signing means. It;s her loan, too.

Leslie December 4, 2012 at 02:50 pm

I agree. When you co-sign a loan, you are also, in good faith, advising the lender you are responsible as well. This is why I always tried to tell my clients to never co-sign a loan regardless.

Crestor Januvia December 4, 2012 at 03:59 pm

This will break down along the usual lines.... the dumb as dirt liberals, who believe nobody should have to pay for anything (heck, they think the students should not have to repay their loans when they can't get a job as a art director), and conservatives who believe if you make a committment, you should honor it.
Why should we know the name of the lender? So we can pressure them to NOT HOLD this woman responsible for a committment SHE MADE ?? The idiots could have purchased life insurance for the student. Just more of the same.... the dumb and the lazy being supported by those who are responsible. So tiring....

Lisa Bolash December 4, 2012 at 05:53 pm

When you co-sign a loan, you are agreeing to be just as financially responsible for the loan as the primary borrower. She signed a contract, she is liable to pay it back. As far as the government backed loans being forgiven- well, no wonder we are in such a financial crisis. As adults we have financial obligations, and we have methods to ensure that our loved ones are not burdened by those financial obligations if something happens to us. This woman could have taken out a dirt cheap term life insurance policy on her son for the length of the loans. That is what responsible people do, cover your bases.

careless fills December 4, 2012 at 07:28 pm

More information is needed about the federal loans. Specifically, did the parent co-sign for them? If not, they are collectible, at most, only against the child's estate, which is probably very low. I can say that I didn't have to co-sign for federal loans that my kids had. So the federal loans might not have actually been forgiven - they could have just became uncollectible.

An interested bystander December 4, 2012 at 07:57 pm

Since the majority of student loans are guaranteed by the Federal government, the question is whether the mother is liable for the loan or the taxpayer is.
I'm sorry, it's not the taxpayer's responsibility to pay this obligation. I would though be happy to contribute to a charity that pays off loans in situations like this. I don't want my taxes to fund the charity.

careless fills December 4, 2012 at 08:30 pm

After additional research:
1) Federal Stafford and Perkins loans are discharged upon the students death. 2) Federal PLUS (parent) loans are discharged upon students death or upon both (but not one) parents death. 3) Private loans like through Sallie Mae or banks depend only on the lender policy. 4) Disability of student is a bit more complicated, so I will not attempt to summarize. There is some movement in Congress to require public lenders to explain co-signer obligations and insurance options, but it hasn't gone far yet - wasn;t included in the student loan changes in either the Obama care law or the Financial Overhaul law. (so much for the 1800 pages!) And we're not even talking about forgiveness - but only a requirement that lender provide better counselling (which people would probably just sign another sheet of paper and blow it off). See: http://online.wsj.com/article/SB10001424052748704741904575409510529783860.html, which is an excellent article summarizing the status of these needed reforms.

An interested bystander December 4, 2012 at 08:53 pm

Lenders are already required to give the following notice to co-signers in writing, word for word, and in the right size font:
You are being asked to guarantee this debt. Think carefully before you do. If the borrower does not pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility. You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount. The creditor can collect this debt from you without first trying to collect from the borrower.* The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record. This notice is not the contract that makes you liable for the debt. http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre06.shtm Not sure what more counseling will do? If a lender commits fraud, hang them by a yardarm and cover them with honey and fire ants. But it's not the lender's responsibility to forgive legally owed debt nor the taxpayer's to be a charity.

careless fills December 4, 2012 at 09:39 pm

@bystander - that seems simple enuf. but some people will always ignore or think it doesn't pertain to them when the stuff hits the fan. or some may think that all student loans are an exception, when only the federal one are discharged. your point is well taken - the notice is there. thinking people will understand it, but the foolish will think they are being taken advantage of.

Chandler December 5, 2012 at 12:12 am

A sad thing to lose your child, but yes, she co-signed the loan and she is responsible. The child received the services. She would be responsible for any loan that was signed by her such as a car or a house. However, those could be sold to pay the loan.