<p>"When his 27-year old daughter Lisa died suddenly of liver failure five years ago, Steve Mason was as devastated as any father would be ... Then the student loan bills started coming." ...</p>
<p>Very sad on several levels.</p>
<p>A cautionary tale. It is imperative for students to have life insurance adequate to pay off their student loans with the co-signer as the beneficiary.</p>
<p>Unfortunate indeed, but what else would they expect if they consigned these loans? A complete discharge? Maybe I’m missing something…?</p>
<p>More evidence that taking large loans is a very bad idea.</p>
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Somehow? Seriously? Sure, it’s sad the guy’s daughter died – but who borrows $100K without knowing what he’s getting into?</p>
<p>Another reason the PLUS loan is “better” than the private loans. Built-in life insurance.</p>
<p>The only thing “sad” about this story (aside from the fact that their daughter died) is how dumb these parents are. Did they not read the loan contract they were co-signing? When you borrow someone else’s money, you agree to pay it back…with interest. The lender cut this family a big break by agreeing to waive the interest. What do they expect? Sheesh.</p>
<p>If the 27 year old daughter hadn’t died, how would she have paid $2000 a month on these loans, plus supported 3 children all in the child care age? I totally understand why the banks don’t forgive the debt. It’s a large debt and the banks/loan companies aren’t in the life insurance business. Would this guy expect the mortgage lender to just forgive the debt if the daughter had had a $200k loan? </p>
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<p>I think that too many co-signers think that the loan is truly the student’s loan and they are just kind of vouching for the person. I dont think they fully grasp that it is also THEIR loan.</p>
<p>where is the father of these kids? Why isnt he on the hook for child support? And if she was working, then wouldnt the kids get SS payments? </p>
<p>“”
When his 27-year old daughter Lisa died suddenly of liver failure five years ago, Steve Mason was as devastated as any father would be.
He and his wife Darnelle immediately took in Lisa’s three children – ages 4, 7 and 9 at the time – even though they knew it would be a huge struggle to support them. Steve earns less than $75,000 per year as a pastor, while Darnelle earns even less as a director at the same church.
“”</p>
<p>Sounds like she was 18 when child #1 was born. Wouldnt she have been independent and able to borrow about $10k per year with fed loans? Did she as well? </p>
<p>Anyway…borrowing that much for a nursing degree was insane.</p>
<p>So, they think their daughter would have had no problem making the payments. Really?</p>
<p>PLUS includes protection for this sort of situation. These cosigned loans should either do the same, or offer insurance to be added to the loans with a very clear waiver OUT of the insurance on part of both student and parent cosigner so that this scenario does not occur. It still will, but then it is clearer that the parent and student BOTH understand that they are equally on the hook for these loans.</p>
<p>It is the exact same scenario that occurs on any cosigned loan. You cosign for a car loan with someone, and the other person dies or takes off, you are responsible for the payment of the loan. It goes on your credit report. The difference is in the amount and that there is a car, something one can physically see (most of the time) securing the loan. The same goes with co signing a mortgage, anything. Or sharing a credit account or any joint account. It’s just that there is a sensationalism and poignancy with the student loans.</p>
<p>Credit life insurance is offered by some lenders, but it is expensive and most people won’t take it. It can be financed into the loan, but there may be a gap (truncated coverage), which people also don’t understand. For example, if the loan is for $25k, the credit life may only be on the first $10,000. Why? Because it is expensive and because the insurance cannot be sold directly from the bank but must be sold by an insurance company and the policy it offers may be limited to $10,000. Insurance companies are regulated by the state department of insurance, not the bank/lender’s chartering agency.</p>
<p>If the credit insurance is required, then the cost of it is included in the APR, and suddenly your 6.8% interest rate has an APR of 10% or more (all depends on the length of the loan). Now the borrower doesn’t want the loan or the insurance.</p>
<p>Term life insurance to cover the loan should have been relatively cheap and easy to get at her age.</p>
<p>I borrowed the down payment on a house from my parents in my early 30s, and I took out life insurance to cover it, just in case. It was a lot less than $200K.</p>
<p>The fact that it was a ridiculous amount of debt is another matter. </p>
<p>Wow… I’m pretty stunned by the lack of compassion on this thread. I’d like to see a federal law passed that make private student loans discharged upon bankruptcy or death, just as federal loans are.</p>
<p>It is a sad fact that the world is filled with people who aren’t able to function competently in the modern world. </p>
<p>I’ll give a slight pass for not thinking the chance of a daughters death was material , but, as stated above, the cost of protection would have been nominal. </p>
<p>@intparent I thought federal student loans were not dischargeable in bankruptcy.</p>
<p>Here is the scoop on federal student loans and bankruptcy (from US Dept of Education website):</p>
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<p>Again, I think too many people are in the CC “bubble” and assume everyone would think to get insurance to cover payoff of student loans. I doubt most people understand that private loans are not discharged if the student dies.</p>
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<p>I think everyone feels very bad that this woman died, especially leaving 3 young children. Unfortunately, that has become a side issue. </p>
<p>I dont think the feds can order banks to discharge student loans like that. Even if they could, the banks would just then require life insurance or charge higher rates or would never have lent that much money when the co-signer didn’t earn that much.</p>
<p>Even if the woman was still alive, it was unrealistic to cosign those big loans. She was a young mother (where is the dad??), too much was being borrowed, and even as a nurse she couldnt have paid all that back.</p>
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<p>That’s why as adults we need to READ everything that we sign. I am willing to bet a lot of money that the bank contract they signed for these private loans included a clause that if the student dies or becomes incapacitated that the loan is the co-signer’s to repay. That is what co-signing a loan means!</p>
<p>I am compassionate and have sympathy for them, but it’s not like this happened out of the blue. First of all, she borrowed $100K for a nursing degree, which was a poor decision to begin with. Nurses don’t make enough money to repay $100K of debt, especially with three small children. Banks aren’t charities. They lend money to make money.</p>
<p>If a federal law was passed that allowed private student loans to be discharged upon bankruptcy or death, it will suddenly become a whole lot harder to get bank loans. Which isn’t necessarily a bad thing, honestly, because then maybe people will stop doing this.</p>
<p>intparent, the reason private student loans are available is because they aren’t dischargeable. If they were, then the private banks would require security. Banks don’t make signature loans of that size anymore (if they ever did).</p>
<p>Now I think they just shouldn’t have these loans, but that would mean that poor (or at least poorer) people wouldn’t get to go to school, or at least very expensive schools. That would be fine with me, but I’m often accused of being too conservative.</p>
<p>She could have purchased a term life policy (not from the lender), but a $200k term policy can be pretty expensive.</p>
<p>Government loans are generally not dischargeable (some very special circumstances have resulted in discharge recently). Also, I don’t think they are ‘forgiven’ at death, but since they are unsecured, they just aren’t collected from any co-signer like these private loans are. They are just unsecured debt. It there is actually an estate, the government probably files a claim, but as an unsecured creditor it will be paid last.</p>