When a person dies and their estate is settled, any remaining debt dies with them, including student loans. But there's an exception: if a parent or other responsible grown-up co-signs a loan and the borrower dies a tragic young death, that co-signer is on the hook for the entire amount of the loan. That's how co-signing works, after all. But after a Rutgers student died in 2006 after two years in a coma, most of his lenders (credit cards and student loans) deferred, then forgave his debts. Key Bank was the holdout, since the student's father had co-signed his college loans at Key. Since 2006, the family has paid $20,000 of the $50,000 balance. It took an awful lot of negative publicity, but Key says that they will forgive the debt, and might not even put future families in the same terrible situation.
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DelMarVa's Premier Source for News, Opinion, Analysis, and Human Interest Contact Publisher Joe Albero at alberobutzo@wmconnect.com or 410-430-5349
Simple solution... Life Insurance policy... when you co-sign for anyone you should include a policy with the deal... especially on a college loan because the policy on a short term, 50k for a college student is incredibly cheap. Make no sense to me not to have one
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