Friend ruining her kid's credit

Parents Forum
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<p>A very good friend of 10+ years has serious financial problems, but is determined to send her kid to a $40,000/yr school. To that end, she has applied for loans in her child's name (she cannot get approved herself), and has asked a friend to cosign. That friend refused. She knows not to ask me because I have refused her in the past. </p>

<p>Her daughter is aware that her mom is trying to take out loans in her name, but being 18, does not realize the gravity of being indebted to this level. Her mom talks a good game about how she will help her pay them in the future, and they will be spread over 25 years (!), so won't be so bad. </p>

<p>So far, they have been unable to get a loan bc they can't find a cosigner. I truly hope it stays that way bc the child would be better off working, saving, going to the excellent cc near home. But what if my friend is able to get a signer? I feel like her daughter is entitled to the truth about what this will mean for her future. No one in their right mind with all the facts would take on this debt. I want to warn her, but my friend would be extremely upset if I interfered. </p>

<p>To complicate matters further, my friend has taken out credit cards in her kid's name and is charging them up without her knowledge. I highly doubt she can pay these, as she is already maxed out on hers, and has medical bills on top of those, and collection agencies calling her. I want to warn the child that this is happening, but even if she knows, what can she do? This all makes me sick to my stomach as I watch it unfold. </p>

<p>As her friend, I had gently suggested (months ago) having her daughter apply to less expensive state schools and consider commuting. These ideas were dismissed bc of lack of prestige. The child in question is an average student, probably around 3.2 weighted. The expensive school she has chosen is not actually prestigious, but is historical and fairly well-known. She would be well-served to attend cc for a year or two, and save up. </p>

<p>So folks, do I say anything to the 18 yr old, or let them figure it out themselves? I thought about talking to them together, but my friend will not tell the truth about her finances to anyone, even her kid. She is very into keeping up appearances (drives leased car that costs $770/mo, buys designer everything, makes good money, but spends it all). The only reason I know anything about it is because she has asked me for money several times in the past. And she asked my advice on getting college loans.</p>

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<p>Just curious, why are you good friends with this woman? I’d suggest finding a new friend.</p>

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<p>Wow, I have a friend like that who is just horrible with money. She couldn’t give a dime to her kids for college, but made it very hard for them to get financial aid. They are ‘independent’ without any support from their Mom and deadbeat Dads (yes, two different Dads involved) that are not contributing. But they have to use her income on the FAFSA so they do not qualify for any help. One of the girls incurred massive student debt to go to a private school which she is still paying off. The other one is took it very slowly in CC (while working 2 jobs) and is now in a small public nursing school trying to make ends meet. She refuses to take loans. It’s just sad.</p>

<p>In your case above - what a mess!!! The whole situation is just a train wreck waiting to happen.</p>

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<p>I knew someone would ask that! Sometimes I ask myself. But she is a very caring person who is always willing to go the extra mile for her friends, she has a very fun personality, we have a long history together, and she is a single mom. She and her daughter are almost like family to us. People are complicated. Just because they do bad things doesnt mean they are all bad. So I hope that answers the question.</p>

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<p>Coralbrook - thanks for the sympathy!</p>

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<p>When you say “the expensive school she has chosen”, do you mean that the mother chose the school, or the daughter (student) chose the school?</p>

<p>In any case, it looks like the daughter is going along with it, even though the daughter could refuse to attend the expensive school and put an end to it.</p>

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<p>It does, Nova. You’re in a tough spot. I wish I had some worthwhile advice for you. Best of luck.</p>

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<p>At this point, personally, I wouldn’t say anything.</p>

<p>From a similar situation, the only way the dependent could get rid of the debilitating debt is basically turn his father in for credit card fraud. However, he had no knowledge of the cards at all. </p>

<p>The good news: considering this girl is 18 and about to go to college, I’m a little skeptical that there’s really a lot of debt being attached to her actual profile- the CARD act requires cosigners until you’re 21 now I believe. I’m sure she can ding her, but I doubt there’s really an overwhelming debt.</p>

<p>In all likelihood, unless a family member steps up, this situation will just resolve itself as no one in their right mind would ever cosign this.</p>

<p>Its incredibly sad when adults take advantage of children but there really isn’t much you can proactively do.</p>

<p>I am kind of surprised you associate with someone like this though, I’d have been gone a long time ago after voicing my opinion on her lifestyle. If she’s too blind to see it and takes umbrage at that, it’s not someone you need around anyway. The kid has it bad, but there are kids out there with way worse parents than delusional ones.</p>

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<p>Ucbalumnus, they chose it together, but of course the daughter did not fully understand the financial aspect (and still does not). I think if she knew she would graduate with $120k of debt or more, and knew how that would cripple her financially, she would have chosen differently. </p>

<p>For months I have asked my friend, “How will you pay for this?” and her answer was “I’ll find a way…” I’m pretty sure she told her d not to be concerned.</p>

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<p>rexximus, I dont view my friends’ finances as any of my business unless they owe me money, and I dont loan to friends. So aside from her financial delusions, she is a good friend and tries hard to be a good mom. Thanks for your advice. I truly hope you are right about the credit cards.</p>

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<p>Humm…here’s a thought…sounds like you may be close enough to this family that you could meet with the student/young adult, and “help her” by showing her how to pull her credit-explaining that she needs to know how to do this to protect her credit. You could also show her how to open a bank account, and what you need to apply for a credit card at the same time.
She could then see there are credit cards in her name, and prompt a discussion that she initiates.
That way you are not passing judgement on your friend, and helping the young adult to know about finances/credit.
Holding good thoughts for you, and this family.
_APOL-a Mum</p>

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<p>Apol, thats exactly the type of thing I am considering. I know that my friend would consider that overstepping my bounds, and it feels wrong to contact her d on the sly. I might, though. I think I will wait and see if they find a signer. If they dont, everything will probably be ok, except fot the credit card situation, which I think I can find a way to tip the daughter off about. Thanks for the thoughtful response!</p>

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<p>Perhaps you can show her stories like this:
[I&lt;/a&gt; Chose the Expensive Private University ? And Got the Debt to Go With It | The Billfold](<a href=“http://thebillfold.com/2013/04/i-chose-the-expensive-private-university-and-got-the-debt-to-go-with-it/]I”>http://thebillfold.com/2013/04/i-chose-the-expensive-private-university-and-got-the-debt-to-go-with-it/)
[I’m&lt;/a&gt; Graduating From A College I Can’t Afford | NYU Livewire](<a href=“http://journalism.nyu.edu/publishing/archives/livewire/money_work/gen_debt/]I’m”>http://journalism.nyu.edu/publishing/archives/livewire/money_work/gen_debt/)</p>

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<p>“She and her daughter are almost like family to us.”</p>

<p>If you cared so much and you have a strong relationship with the daughter, you should discuss finances with her directly and probably get her to read some stories in news about the perils of student loans. It is not to make her mom look bad but to get her to look at the big picture.</p>

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<p>ucbalumnus and texaspg, I will fb message her those stories - thanks for the great idea!</p>

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<p>Nova, this sounds like a family issue on their side. I understand your concern, but if you’ve spoken your opinion you have done everything you could do. Personally, I would stay out of it after that. It is between your friend and her daughter.</p>

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<p>deleted double post</p>

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<p>Very sad situation - and I would sit down with this woman - if she was my friend and have one last attempt at a heart-to-heart. Is she aware that by opening credit cards in her daughter’s name she is committing fraud? Is she aware that if her daughter later in life - found that she was unable to rent an apartment, buy a house or get a job clearance due to the mess her mother made of her credit - she could take this matter to the police? Your friend could end up losing her relationship with her daughter and find herself in jail!</p>

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<p>That is sad. Is there any other relative, such as an aunt, who might be able to intervene?</p>

<p>This is serious enough that it does not justify “looking the other way” to try to maintain a friendship.</p>

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<p>The daughter must go to the police to file a report against her mother, who has committed identity theft against her own child in opening credit cards in her daughter’s name. <a href=“http://www.consumer.ftc.gov/articles/pdf-0009-taking-charge.pdf[/url]”>http://www.consumer.ftc.gov/articles/pdf-0009-taking-charge.pdf&lt;/a&gt;&lt;/p&gt;

<p>Your friend sounds dangerously unbalanced, if all that you say is true. In not saying or doing anything you would be abetting the destruction of the daughter’s future. [url=<a href=“http://onswipe.investopedia.com/investopedia/#!/entry/who-to-call-for-help,5103ef3fd7fc7b5670060b17/1]Onswipe[/url”>http://onswipe.investopedia.com/investopedia/#!/entry/who-to-call-for-help,5103ef3fd7fc7b5670060b17/1]Onswipe[/url</a>]</p>