Now that spring is here, many high school seniors in New Jersey are busy deciding which college to attend in the fall. After that, most will have to make an even harder decision about how they will pay for their education.
There has been a lot of discussion in the news lately about the debt burdens faced by newly graduated college students. However, it is important to recognize that students aren’t the only ones on the hook. Most student loans require a co-signer, and that co-signer will be responsible for the loan if the student stops paying.
As one New Jersey family recently learned, co-signers retain their obligation to pay even if the person who took out the loan passes away.
The Star-Ledger recently profiled a New Jersey couple who co-signed on a loan for their son to go to college. He graduated, got a good job and started paying his loans on time.
Sadly, though, their son died almost a year ago at age 30. And while he may have been in good financial health, his parents are not.
While the young man’s mother works full time, his father had gotten laid off in 2009. He started his own business, but the income was more sporadic than when he was working for someone else. They were staying afloat, but just barely. Then, when their son died, the couple inherited more than $27,000 in student loans.
The couple tried to work with Sallie Mae, but the company would not do anything about the loans. The parents are now pursuing other options to help them manage their debts.
The issue serves as a very sad reminder of the importance of being very careful when co-signing for a loan. Even though you really want to help your loved one, it is important not to take on a bigger financial burden than you can handle
Source: The Star-Ledger, “Bamboozled: Painful college debt inherited by parents after death of son, and a warning to co-signers,” Karin Price Mueller, April 22, 2013
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