<p>ABC News reported on Ella Edwards' online petition in which she demands that a private lender forgive the debt of her deceased son. Jermaine Edwards died at 24 and left an infant son. The feds extinguished the loans upon Jermaine's death but the private lender demands payment. Ms. Edwards co-signed the student loans.</p>
<p>I'm generally sympathetic about such tragic circumstances, and colleges and lenders notoriously provide poor financial counseling prior to issuing student loans. But...
I'd like to know more details about this unfortunate situation. If Ms. Edwards is sophisticated enough to start an online petition, it stands to reason that she understood what she was doing when she co-signed Jermaine's loans.</p>
<p>Ugh, there was a thread about a similar case awhile back. This will turn into an argument of, “How could that bank be so cruel?” vs. “Of course she owes the money - she cosigned the loan!” So can we skip 20 pages of posts?</p>
<p>I agree, life insurance would have solved all of this…or the mom shouldn’t have co-signed the loans in the first place. Read before signing people.</p>
<p>Unfortunately, some may think that co-signing is only to help another obtain a loan & fail to understand that they are also signing as a guarantor that the loan will be repaid.</p>
<p>This is sad but I would think automatically forgiving loans that have been co signed for would be a slippery slope. Where do you draw the line? Apparently, the loan is for $10,000. With all the publicity, I would not be surprised if someone doesn’t come forward and pay it off for her (if the bank doesn’t forgive it).</p>
<p>This is sad and tragic for the mother, but someone is accountable for the loans. I agree that financial counseling is important for families taking out loans to be certain they understand the responsibility.
This mom is justified in her grief and distress. It’s very tragic. The error here (IMHO) is that the bank is not doing anything wrong. It is simply enforcing the rules of the loan, and those rules are the same for everyone. If someone took out a loan- for school, car, home- anything and for any reason did not pay, the signers and co-signers are responsible for paying back the bank.
With this petition, the mother is asking for sympathetic people to put pressure on the bank.The bank is framed as the “bad guy” and those who sign the petition are feeling they are helping her by pressuring the bank as well. They could, instead, take their own actions to help her.
IMHO, if everyone who wanted to help her would donate a dollar to a fund at the bank, I think there woud be enough to pay back the loan.</p>
<p>I dont think starting an online petition is an indication of ones financial sophistication. Disclosure of the option for a credit life insurance should be a requirement when co-signing a loan. Is it? Idk since Ive never co-signed anything. That being said Im sorry but she is responsible for the loan and hopefully, a generous donor steps in to help her out along with a PR opportunity of getting and shopping around for the best rates for a credit life insurance.</p>
<p>Back in 2008 when I wrote in one of the forums here at CC that parents should consider what would happen if the student died and left them with a boat-load of debt, I was flamed for my negative attitude.</p>
<p>It does not surprise me at all that this woman was not formally encouraged to consider the potential long-term consequences of the loans she signed. My guess is that the lender just handed her a pen, and said, “Sign here.”</p>
<p>You should all know that major lenders like Sallie Mae and Wells Fargo absolve the debt in the case of death, just as the gov’t does. It is this particular lender that has chosen not to.</p>
<p>This is the Notice to Cosigner required by federal law for any consumer loan, including student loans.</p>
<p>NOTICE TO COSIGNER
You are being asked to guarantee this debt. Think carefully before
you do. If the borrower doesn’t pay the debt, you will have to. Be
sure you can afford to pay if you have to, and that you want to
accept this responsibility.</p>
<p>You may have to pay up to the full amount of the debt if the
borrower does not pay. You may also have to pay late fees or
collection costs, which increase this amount.</p>
<p>The lender can collect this debt from you without first trying to
collect from the borrower. The lender can use the same collection
methods against you that can be used against the borrower, such
as suing you, garnishing your wages, etc. If this debt is ever in
default, that fact may become a part of your credit record.
This notice is not the contract that makes you liable for the debt.</p>
<p>A handful of states have supplemental state required notices - that mainly identify the specific loan and amount.</p>
<p>While the situation is tragic and I certainly feel sorry for her, there is no way you can say you didn’t know you are on the hook for the loan. Also, credit life insurance is not offered on student loans - unlike with car purchases etc. </p>
<p>I guess you can argue whether or not private student loans should be required to disclose that, unlike government student loans, the co-signer will be required to pay in the event of the death of the student. Since very few people ever read the notices given to them by banks, I doubt very few people would notice it and even fewer would go out and buy a term life insurance policy.</p>
<p>Edit: I’m glad to see that Sallie Mae and Wells Fargo will discharge their private loans. I wonder if their loans are priced differently to reflect this or is it being “given away” to reduce adverse publicity?</p>
<p>Really, for life insurance generally. Term life insurance for a young person is inexpensive (because most of them don’t die). Compared to term life insurance, credit life insurance isn’t a very good value. It’s kind of expensive, particularly if one owes a lot, and the benefit it pays is limited to the amount of the decedant’s debt. Term life insurance, on the other hand, pays a benefit regardless of the decedant’s debts. Any death benefit left over after repaying Jermaine’s student loans could have been used to support his young son.</p>
<p>Co-signing without realizing what that meant was only one financial blunder in this very sad story. Another was that Jermaine, the father of a young child, didn’t have enough life insurance to discharge his own debts and provide for his son.</p>
<p>Why don’t these private student loan lenders just include a credit life/disability insurance policy with these co-signed loans? It would be a “wake up call” to the parents that they would be “on the hook” if their child dies or becomes disabled. </p>
<p>The parent could always sign a waiver, but at least it would be an informed decision.</p>