Thinking of co-signing a loan for your son or daughter to go to college? I have a single word of advice: don’t.
The Huffington Post notes numerous horror stories related to co-signing student loans. Please consider Sallie Mae Torments Faithful Student Borrowers After Co-Signers Die
Seven borrowers who had been paying their Sallie Mae student loans on time for years were unexpectedly threatened with asset seizures after a Sallie Mae contractor demanded they immediately repay tens of thousands of dollars simply because a family member had died.
Regina Kibler, a retiree who lives off payments from her late husband’s life insurance policy, spent days agonizing over how to help her son, Christopher, pay back nearly $22,000 neither had. Samantha Flora hired a lawyer to fight attempts to recoup some $20,000 from her dead grandmother’s estate that have turned members of her family against one another.
Tony Muzzatti, a 31-year-old Washington, D.C., resident who works in television and who owed Sallie Mae about $60,000, was asked to make a $10,000 down payment in January following the 2012 death of his grandmother, despite six years of on-time payments to Sallie Mae.
HuffPo has numerous other horror stories, all involving co-signing loans. What it did not have was the degrees the borrowers have and where they are working now. These cases all involved people generally paying debts on time.
What about those with no job? What about those with low-pay jobs who cannot possibly pay the loan back before the co-signer dies?
The former will be an immediate headache, the latter a delayed headache.
Education is way overpriced and student loans are part of the reason. Co-signing compounds the problem, while making the student and the co-signer indefinite debt slaves.
The moral of the story is simple: don’t co-sign.
Mike “Mish” Shedlock