<p><<<
“If you want to be able to discharge student loans in bankruptcy, be prepared for 20% interest rates.”</p>
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<p>I dont know about that, but I could imagine certain parameters popping up:</p>
<p>1) co-signers need to truly be able afford to pay back the loans.
2) insurance required in case of death or very serious disability.
3) big loans only for certain majors<br>
4) big loans only for junior and senior years.</p>
<p>you are forgetting that lenders may purposely make their loan contracts hard to read, or understandable, only to those who are well verse in law or the details of contract. They are partly to blame as they have the most to gain from this. The contract may use words that are very small, or have terminology that only someone who has a few years at law school can understand. I assume big, loans use contract pages words you cant even understand. then just a "200k must be paid back,by this amount time for the parents, they probably wont read a loan contract, because it may be too long or to difficult to understand. All they can see is the big line and words, saying “sign here and here”.
secondly the parents may think its like a credit card, its free money some people still have this assumption, and they are not going to worry about it now. The people who are less likely to read legal contracts are people without a college education, sorry if i sound condescending, but this may be what has happened. if i was offered a loan, even a small one, i wouldn’t even take it. i find it very concerning that people can make money of other peoples death. I dont know why she dint choose a much cheaper alternative school, that yields the same result or nursing. many people still believe that a prestigious private school is best for job searching. i think the parents may be banking that the daughter finishes school and get a nursing job to pay for the loans back, they wernt expecting themselves to be involved into repaying the loans, thats one of the reason why they signed it. i also want to point at banks can make up loans if they have a certain amount of assets equal to some percentage of the loan,example, if they 10% of 100k they can loan out that 100k, and expect to be payed back, its called fiat money.</p>
<p>^^^
Typically, these Big Loans are not ONE LOAN. They are multi-year loans, so lots of opportunities for the parents to hear about and look at their responsibilities.</p>
<p>The truth, more likely, is that parents just want to get the borrowing part over, sign anything in front of them, so that Junior or Sissy can go to college.</p>
<p>The focus has been on why these banks dont forgive. Hey, maybe her school should refund some of the tuition costs? (I know, that wouldn’t likely happen, but if we expect banks to lose out, why not the schools?)</p>
<p>The sad thing is that this girl with dependents (and no H??) may have qualified for full Pell and larger fed loans that could have made a HUGE dent if she had gotten her RN degree at a CC or local public. </p>
<p>No husband and apparently no involved father for any of the kids, since upon her death all three went to her parents. A precarious situation even if she hadn’t gotten sick. What a shame for them to lost their only parent. It doesn’t seem like planning is a strength in this family.</p>
<p>The young woman studied to become a nurse. Had she lived, though the loan repayment would have been difficult, it was possible. I don’t blame anyone here for most of what happened except for not looking at the terms of the loans VERY carefully. You simply do not sign for that kind of money without understanding the implications. It’s not all that easy to get these cosigned loans. PLUS, I agree, can have more info “in your face”. It’s absurdly quick and easy to be approved .</p>
<p>On the flip side of these school loans, a former neighbor, firend of ours who was much older than we were, died after taking out over $200K in PLUS, knowing full well he had terminal cancer as he did so, putting off repayment and whatever till he died. He did this deliberately and knew others who had done the same.</p>
<p>I just thought of something that had never occurred to me on co-signed student loans: do they not look at the ability of the co-signee to pay the loan back? If not, what’s the point of even doing it?</p>
<p>^^^
Yes, they do. You do have to QUALIFY to be a cosigner. The parents likely had excellent credit and a six figure income (dad earns 75k, mom earns less), so it wouldnt be a stretch to imagine that they would qualify.</p>
<p>Dad is a minister and may be living in church-provided housing (or get a housing stipend), so to a bank it may have seemed that they could afford to pay. frankly, they may have been able to pay IF they hadn’t suddenly found themselves parenting 3 young ones (daycare, clothing, food, medical, etc). From the current pic, the youngest was likely quite young when the mother died. The oldest seemed to have been about age 9.</p>
<p>It doesnt sound like the mom ever actually worked, otherwise wouldnt the children qualify for SS payments? </p>
<p>As @Hanna notes, since the parents immediately took custody of the kids, the dad(s) weren’t in the picture. Even so, they should still be hit up for child support…even if that money ends up going for loan payments. </p>
<p>I think there is more to this story then we are getting. </p>
<p>Banks can refuse to lend if they have no chance of getting paid back. It is sad but the family is not getting hit with anything they didn’t know about. Death is always a possibility and borrowers need to figure out if they can take on that risk.</p>
<p>This story is poignant because she died but it wouldn’t be all that much better in terms of repayment had she lived.</p>
<p>Wow - what a judgy thread!</p>
<p>Lots of updates on this story - the family is raising money on social media to pay the loans - media coverage has resulted in the lenders reducing rates and balances - and Elizabeth Warren is discussing the case.</p>
<p><a href=“Grieving parents drowning in $200,000 student loan debt receive relief”>http://money.cnn.com/2014/07/30/pf/parents-student-loans/index.html</a></p>
<p>I sympathize with the family, but wish they had made better decisions.</p>
<p>I just read an article yesterday that sad many of the private lenders are lending under retail installment lt aws, which makes sense because theses are large, unsecured loans that most banks do not make under federal charters or state charters. Their supervising agencies don’t allow too many to be made. </p>
<p>If credit insurance is REQUIRED, then it is included in the APR and the APR skyrockets. As I said upstream, credit life is often truncate (covering less than the amount borrowed or for a shorter term). It IS expensive, and the premium gets paid up front (usually rolled into the loan) and so the interest is also on the one-time premium. The good thing about credit life is that there are few qualifications (‘are you alive? are you under 65?) you qualify’). It does pay the creditor only. A regular term life policy might only cost $20-30/month, but it pays whoever you name, and if you miss a payment, you can be cancelled. It is not paid through the creditor.</p>
<p>I’ve written many retail installment contracts. They are not legal gobbledegook because they are so regulated. In big bold letters the terms are listed. The definitions are there. The big blocks with the interest rate, number of payments, amount of payments, total of payments are all there, mandated by the truth-in-lending act. Type size is regulated (10 point type for all notices, and yes, I had a little printer’s measurer that I pulled out to check like I was checking the carats in a diamond). It could say right on the contract ‘Hey, idiot, this is a bad bad deal! Don’t sign this contract’ and it would make NO difference --the signer wants his snowmobile or carpet or, in this case, nursing school tuition. The borrowers only care about the amount of the payment. Not the total amount, not the interest and charges, what is it going to cost me per month and how quick can I have the money.</p>
<p>Did you sign your mortgage without reading all the small print? Of course. But the terms are right on the front page: You Will Pay XXX per month for 10 years.</p>
<p>Would I ever buy credit life? No. It’s expensive. It’s like paying $15 for the buyer’s warranty on a $50 toaster. Not worth it. Unless the toaster breaks.</p>
<p>“It could say right on the contract ‘Hey, idiot, this is a bad bad deal! Don’t sign this contract’ and it would make NO difference --the signer wants his snowmobile or carpet or, in this case, nursing school tuition.”</p>
<p>Agreed. If you think it’s bad for society to wow people to dig themselves into that kind of mess, you have to stop it at the lender level – a lot of people will take all the money you lend them, no matter what the terms.</p>
<p>I think a lot of students take the maximum amount offered whether they think they need it or not. Afterwards, some regret taking more than they really needed. A physical therapist I went to told me that the loan money allowed her to afford a very nice apartment by her college by herself but later wished she would have gotten a much more affordable apartment with a roommate… One of our kids wanted us to cosign for a loan even though she was living in our house for free, we were paying her tuition, she was working part time and attended a college 5 miles away. I think she wanted money to have her nails done and some new clothes and vacations. I refused to cosign and got in fight with the spouse. College students should live on Kraft Macaroni and Cheese and have roommates and small apartments.</p>
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<p>H had his tuition, room and board fully funded with scholarships, but he still took out student loans for “fun money” (dates, etc). H doesn’t have parents who give wise advise. Ugh…he sure regretted that decision when it came time to pay those back - not to mention I wasn’t too pleased about our money going towards paying old loans for dates with some other chicks. :-L </p>
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<p>Yup…I used to love Ramen (drained) mixed with salsa. lol</p>
<p>Well @mom2collegekids that sounds a bit… odd <urp> </urp></p>
<p>I took out a loan in college as a junior on top of scholarship because I was literally at zero funds. The amount was equal to one months pay at my first job, so not a huge amount. Still nervewracking. I pinched every single penny I borrowed.</p>
<p>lol…no, it isn’t! I loved it! When I get nostalgic, I make it. I know it sounds funny, but with the right salsa it is really tasty! It is like a Mexican Spaghetti! </p>
<p>@ErinsDad
@"Erin’s Dad" (does one of these work?)</p>
<p>Ha! found this!
<a href=“http://www.mattfischer.com/ramen/?p=139”>http://www.mattfischer.com/ramen/?p=139</a></p>
<p>But I used to use Pace Picante, back in the day.</p>
<p>Getting back to the point of this posting, the unfortunate 27 year old woman in this article went to college after she started having children. Since it is hard to go to college, raise children and work at the same time, I’m guessing she worked little or not at all. It also sounds like the children’s father was not a source of financial support. So my guess is some of the $100K she borrowed on a private student loan was to pay her rent, feed her children and buy the kids’ clothing. We think she should have been able to go to nursing school for less than $100K but we’re not considering the costs of running a household with 3 children who probably complain if you serve them top ramen with pace picante sauce (yuck) 3 times a day. The situation she was in was a very difficult one and she wanted to better herself. You have to admire her for that. And her parents wanted to help her and that’s what parents are for though I don’t know if I would have had the guts to cosign that loan. However, the grandparents are not going to live forever and hopefully already own a home and cars and don’t need credit. You can tell creditors to leave you alone also and just take your credit hit also. They can’t force you to pay this loan I think, they can just ruin your credit.</p>
<p>@CMUmechEalumna </p>
<p>I doubt it. </p>
<p>These were student loans. You can only borrow up to cost of attendance. You cant borrow to pay for bigger housing for a family, clothes for kids, etc. The room and board estimate is based on an amount for one person, likely in some kind of shared housing situation (shared dorm, shared apt). The estimate doesnt include a multi-bedroom home to provide rooms for kids. </p>
<p>It is likely that she attended a private school and that is what drove up the borrowing. </p>
<p>Again, I think we arent hearing the whole story. She (and her kids) may have been living at home the entire time. You are right that she probably wasnt working or working much. Her kids may have qualified for food stamps, etc. </p>
<p>I think it is a bit weird that a “pastor’s daughter” had 3 kids seemingly outside of marriage and it seems from different fathers who never stepped up once the mother died. This is one reason why I don’t think we are hearing the whole story. </p>