Imagine this scenario: You’ve been out of college for several years, have a good job and you have no problems making your student loan payments in full and on time. Then tragedy hits; your parent dies or declares bankruptcy. If this loved one was a co-signer on your student loan, this change can trigger an often-overlooked clause that allows the lender to claim you are in default on your loan, potentially wreaking longterm havoc on your credit and finances.
With tuition rates outpacing inflation, a growing number of students have had to turn to student loans. Borrowers also increasingly took out private loans to make up difference that federal loans won’t cover. In order to obtain these loans or to minimize the interest rates, many private loans are co-signed by parents or other family members.
According to the Consumer Financial Protection Bureau, whose April 2014 report listed auto-defaults as a significant source of complaints from borrowers, nearly 90% of private student loans were co-signed in 2011.
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This can be fixed by taking out a term life insurance policy for the expected payback period of the loan. It would be like having PMI on a mortgage.
ReplyDeleteIf ones parent or parents were stupid enough to co sign on a college loan,their offspring would more than likely be mentally challenged as well.Never ever buy into a time share and never ever co sign a college loan.
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