Is It Fair To Refuse To Co-sign For Additional Debt?

<p>This is a hypothetical situation (so far) that I was thinking about, and I was wondering what other parents think:</p>

<p>DS so far has two acceptances with five more decisions due in the next two weeks.</p>

<p>School 1 is a 2nd tier school which offered an aid package that meets full need with only Stafford loans in the package. We can afford the EFC (not really thrilled, but we can manage it).</p>

<p>School 2 is a 3rd tier school which offered a full ride scholarship. DS would have no loans and would not have to do work study unless he wanted to. It would be acceptable to us for him to choose either of these schools.</p>

<p>After reading a lot of posts on here in which people got substantial gaps between EFC and financial aid, I realize DS is in a pretty good position. However, what if one of his other schools offers a package with a big gap and the kid really wants to go there -- would it be reasonable for us to refuse to co-sign for an additional loan (above and beyond Stafford)?</p>

<p>I read about kids taking on mountains of debt and I am really opposed to it. One of my co-workers has a daughter who graduated from college recently and has $600/month loan payments. I think the $300/month that a student would pay from Stafford loans is already a lot to handle. I don't mean to offend anyone, but I think as parents we have a responsibility not to cooperate with our kids making bad choices. </p>

<p>Has anyone here refused to co-sign on excess loans? Does even thinking about this make me a "bad mommy"? If more parents stopped going along with the crazy inflation of college costs, wouldn't it create some pressure on colleges to hold the line on tuition increases?</p>

<p>Yes I think it is perfectly fair. I would never cosign for loans. For one thing I would actively discourage my kids from taking excessive loans. Second you have no control and your credit may be ruined before you even know a late payment has been made.</p>

<p>I agree that it is our job to help our kids make good financial decisions, with an eye to their long-term financial health. Whom are you helping by aiding your child in taking on excessive, crushing debt and co-signing (against your retirement and home to do it)? I’d say it’s NOT good for you or your child, especially when there are good options available that you can both be satisfied with. </p>

<p>When we have our kids “live beyond their means,” we are sending them poor messages and not serving as helpful role models.</p>

<p>I think that this is the type of situation to talk about before students apply, not after they have acceptances in hand. I think you should make it very clear how much you’re willing to provide for their college education including how much in loans you’re willing to cosign.</p>

<p>It is late in the process for you to bring this up, but better to discuss it now than to wait until she gets more acceptances.</p>

<p>I would never co-sign loans for my kids. </p>

<p>Another thing to think about…if you did agree to co-sign, it wouldn’t just be for one year…it would be for at least 4 years. What if in year 2 or 3 or 4, you couldn’t afford to co-sign due to some reason??? At that point, you sure would be wishing that your child had accepted some merit money.</p>

<p>Also, if you have more than one child, it wouldn’t be fair to co-sign for one and not co-sign for another. Most people can’t afford to co-sign for multiple kids.</p>

<p>Don’t cosign. If you really want to help your kid, consider borrowing yourself (with Plus or home equity loan). If you are unwilling to take on more debt yourself – then think of it this way: (1) why would you allow your child to take on debt that is more than YOU can handle; and (2) as a cosigner, you have to assume that you will be making the payments. Maybe you won’t, but cosigning is an obligation – and if you aren’t comfortable with taking on the full debt in your own name, then why would you cosign?</p>

<p>The problem with cosigning is that if your kid doesn’t keep up the payments, it will create a huge rift between you. You don’t want to set yourself up to be arguing with your kid over debt 6 years down the line. Keep in mind that a lot of unintended things can happen that make the debt harder to pay back than expected.</p>

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<p>I also would not co-sign for any loans, unless I was willing to pay for the loans in the first place as part of my college funding. </p>

<p>I know a parent whose kid came out of college with a liberal arts degree, and didn’t find a job that was sufficient to support both loan payments and the kid’s desired lifestyle. The parent ended up getting stressful collection calls, and having credit ruined while the parent and kid fought over this. Ultimately the parent ended up paying off the loans at a time when the parent had been trying to save for retirement. It obviously damaged their relationship.</p>

<p>We always think that could NEVER happen to us, and that our kids are so responsible. I’m sure that parent also thought it would never happen. Stuff happens.</p>

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<p>We would not co-sign. Secondly the decision to take out parent loans or not is our decision not our kids’ decision. These is a perfect opportunity for kids to learn that the cost of something is absolutely a variable in decision making. That said, the kids know what our “budget” is and that was clearly communicated before the “colllege picking” process even began and we were clear with several schools that regardless of an “acceptance” they could only go if the cost fell in line. The amount we intend to give them is fair and reasonable given our financial circumstances.</p>

<p>I would not allow my child to start off his post college years with a large debt. Or probably even a small one. Starting your adult life in the hole just doesn’t sound right to me.</p>

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<p>It is more responsible for a parent to decide not to cosign unreasonable amount of student loans for his/her child, than parents who give permission to his/her child to take out 50,000/yr loan for UG education. </p>

<p>As NSM said it is important to have that upfront discussion before applying to schools. There are a lot of parents who never like to discuss finance with their children, mean while those childrent are led to believe they could go to any school they want. It is not until July or Aug when the first bill comes that they realize there is not enough money in the bank and they don’t have good enough credit to take out a loan.</p>

<p>Just a note - when you co-sign for a loan it comes out of amount of credit you have. If based on your credit you could afford 500,000 credit, by co-signing for 100,000 loan, you would then only be eligible for 400,000 credit in the future. I would do it for my children if they really need my help, but it’s probably something I wouldn’t do for other people.</p>

<p>I join the “don’t co-sign” chorus. Don’t feel guilty, either. Your son already has a couple of reasonable options. Look up a thread started by gravenewworld; I think it was called the “education at any cost myth”. Good luck.</p>

<p>I would never place my daughter’s and my relationship in hot water by co-signing a loan. If she didn’t make the payments it would be because she couldn’t. It’s too risky.
I don’t believe in the dream school concept any more than I believe I deserve a dream car or house or anything else I can’t afford. And student debt is bondage, not unlike 19th century and earlier indentured servitude because so many indebted students end up taking jobs they would not otherwise have taken in locations they are stuck in.
And get this, romance is event influenced, I just read a mag. article about a matchmaking website for college grads with good credit and low college loan totals!</p>

<p>And student debt is bondage</p>

<p>Very true if it’s in highish amounts. I don’t like to see kids graduating with a total debt of more than half of their possible future earnings from their first jobs.</p>

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<p>Of course it is fair. If you choose to co-sign, assume, the debt is yours.</p>

<p>I agree with Calmom: if you can and want to help, take out the loan yourself. It’s a clearer and cleaner relationship.</p>

<p>Wow I’m really glad I wasn’t the daughter of any of these parents, refusing to co-sign on a loan so your kid can go to college? My parents did everything they could so I could go, including taking out loans, having other relatives co-sign, etc. I think the whole mentality of “once they’re 18 they’re on their own” just doesn’t apply anymore, things are too expensive for a kid to be able to afford on their own. I can understand not wanting to take on more debt than you could handle, but refusing to co-sign a loan seems so cold to me.</p>

<p>Echoing many others: Do NOT co-sign. If money really isn’t an issue for your family and you are comfortable taking on that much debt, then you can consider taking out the extra loan yourself, but co-signing carries too much risk of permanently harming your parent-child relationship in the future (especially in this economy, when so many college graduates can’t find jobs).</p>

<p>On the other hand, if money is an issue for your family (as it is for most families), then you need to let your DS know that and tell him bluntly just how much you can contribute to his college education. If his other schools accept him but leave large unfunded gaps, then he needs to focus on the schools that have already offered him grants and scholarships because those are the ones HE can afford.</p>

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<p>No co-signing for my 5 kiddos.</p>

<p>Kat
aka “Mean Mommy”!</p>

<p>socnerd, I don’t see the refusal to co-sign loans as being “cold” at all. The OP has already said she is willing to pay the full EFC (re: School 1), so she clearly is not of the “once they’re 18, they’re on their own” mentality. In this situation, taking on more debt – when the student already has good choices that do not require taking on such debt – is just being practical. Every family has a budget and needs to live within it.</p>

<p>I am of the “do everything possible” camp. And yet - I still wouldn’t co-sign. I’d take out the loans in my own name if I needed to do so. The fastest way to destroy a relationship is to give or co-sign for a loan. (Don’t believe me? Record a week’s worth of “Judge Judy” and you’ll see what I mean.)</p>

<p>Do not co-sign a loan for more than you are willing to pay back; you must assume that the initial signer will default on the loan and you’ll be stuck. And by the way, this is true for any loan - car loan, mortgage, putting someone else on your cell phone contract, or any other type of loan. It also includes giving loans yourself - assume that the person won’t pay you back. If they do, you’re golden; if they don’t, you won’t have ruined a relationship.</p>

<p>Whether you can afford to take on additional loans is up to you, and a responsible kid will want to pay you back for that loan anyway.</p>