Student loan borrowers are suddenly being thrown into default when the co-signer on their loan -- often a parent or grandparent -- dies or files for bankruptcy.
Even if they are current on their payments, some borrowers are immediately being placed in default and told to repay the loan in full because their co-signer can no longer back them financially, according to a report from the Consumer Financial Protection Bureau.
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5 comments:
Deadbeat insurance.The fact that a student needed a co signer to begin with suggests that he/she either had bad credit or no credit.That's why it's called a loan as opposed to a gift.
8:53 What does your comment even mean? Deadbeat insurance? bad credit or no credit? Did you read the post? Even if current with payments? Nobody was asking for the loan to be forgiven or erased.
Not everyone is able to have adequate insurance to cover expenses after death , whether it is the cost, health conditions or BOTH. In addition, most student loans requiring a co-signer are due to the fact that the student is right out of high school, with no credit and no job history because once again they have been a student. My husband co-signed a small loan for our daughter, he has since passed away very unexpectedly due to a health issue that made a large life insurance policy not affordable. Some people have to make choices when a health condition arises to pay expensive premiums now or to take that same money and live what is left of your life to the fullest. I am able to keep payments current for our daughter, but I did request that the loan be reevaluated as the interest rate is based on my deceased husbands credit and not mine (in hopes for a reduced rate) and was told it could not be done, so I just continue to pay. It is difficult losing a parent on several levels, the financial aspect only being one of them. Then to have their death affect the Grad's loan history and credit is just another sting from the loss.
Why are you having to keep the payments current for your daughter 10:12? If it became apparent there was no way that your daughter could have ever made payments on her own, the lenders see this as using the role of co signer loosely and not it's intent. In retrospect (but since your husband died unexpectedly no way of knowing) you would have been better off to either get both as borrowers or just your husband and then most likely loan would have been reevaluated and adjusted.
10:12-As long as the co signer status remains intact per the original agreement,students feel a degree of responsibility to make scheduled payments.That is a statistical fact.When the element of responsibility to a co signer has ended,students tend to fall behind in their payments or not pay their loans back period.That too is a statistical fact.Lenders must deal with statistical averages or go broke.Aforementioned stats are not included in that link,but should be.
A co-signer guarantees the loan. A co-signer is not vouching for the borrower's ability to repay the loan, they are promising to pay it if the borrower defaults. If a co-signer dies or goes bankrupt they are no longer in a position to guarantee the loan, in other words the contract made becomes broken, therefore the loan can be called.
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