<p>This sad tale illustrates the perils of student loans for the underinformed, of which there are far too many. I remember right before the housing bubble burst there were a lot of companies offering easy qualifying for student loans - if you could get 40K per year in a 15 minute online application how much serious counseling about negative possibilities could that include? </p>
<p>For students with families of modest means the federal limits are there for a very, very good reason. Borrowing huge amounts of money for an undergraduate education makes no sense to me, it’s just like a buying too much house and then never getting to enjoy living in it because you work too many hours paying for it - except in this case there is not a foreclosure, shortsale, bankruptcy safety net to resort to (with all the negative consequences) should things go wrong.</p>
<p>I got a 30 year term policy when I was 30, had a newborn and had left my previous job which had coverage. Doubled it a year later when I was 31 and four months pregnant. It was $250k and on the order of $16/mo. at the time. Also got the COL rider, which increased the benefit for the first 15 years of the policy. One of the best financial moves I ever made, because I became uninsurable at 41 – but there is money for college if something happens to me.</p>
<p>This is unfortunately a good reminder for people anticipating taking out private loans for their own education or their child’s.</p>
<p>I read this article when it first appeared the Philadelphia Inquirer. The thrust of the article was not about the parents not wanting to pay off the debt but rather that while their son was in a coma they kept getting calls and letters from collection agencies for the lending institutions. Since they did not have a power of attorney for their son, the lending institutions and collection agencies would not share any financial information with them (their son was over 21). So, during the most stressful of family times, they were being pursued by these institutions who kept asking to speak with the son. I think the article quoted his brother as saying “What part of the word “coma” don’t they understand?” The bill they wanted passed was about making sure lenders give the information about these types of situations up front. What is really important is having life insurance to cover these situations AND to have a durable power of attorney (medical as well as financial) for your adult children.</p>
<p>Cardinal Fang, private lenders STILL lend … the fact that it is no longer as lucrative has nothing to do with the move to DL … it happened before that. Yes, schools are supposed to use Direct Lending now (although 4 agencies, including SallieMae, WILL be servicing the DL loans!), but those loans were already capped & were forgiven if the student died … those aren’t the loans that cause the issues this article discusses.</p>
<p>Private lenders still lend, but they are no longer part of the federal student loan program. </p>
<p>Anyone can get a private loan and use it for college tuition, but that’s between the lender and the borrower. (Though I do agree that there needs to be some way to deal with the situation in the article, where the student was in a coma and the family was not able to handle his financial affairs. I thought a family member could go to court to get a power of attorney in such situations.)</p>
<p>i thought a family could get power of attorney also in this situation. a doctor would have to certify he wasnt able to handle his affairs… happens all the time with dementia patients that now cant handle affairs…family gets attorney, letter by doctors etc even if patient is unable to willingly give consent, and a judge decides</p>
<p>parent56 - you are correct but I can tell you that to do this is time consuming and can be expensive for families to do “after the fact”. Plus to do this when a family is already in a crisis situation is not a good idea and time may be of the essence - at least for making medical decisions. The end result of this for me is that now that my D is 18, I will prepare and have her sign a durable power of attorney (this means it only becomes effective upon disability) as well as a medical power of attorney. Not a fun thing to think about but certainly important. I would not want to have to go to a judge to get appointed guardian if my child was in a medical emergency - I’d be with my kid at the hospital. If you have an attorney who has prepared a will for you they likely can fairly inexpensively draft both of these documents for you. If your child will be out of state for college you should ask the attorney to make sure the document complies with the laws of both your home state and the college state.</p>
<p>It’s a very sad story what happened to this young man and his family.</p>
<p>This is a reason to get a child life policy. Your best bet is to get a whole/universal (permanent) policy. Nobody wants to think of life insurance on your child, but it makes sense especially when you are co-signing loans. You’ll have it to cover for all the things you co-signed for them on. Hopefully, you won’t need to collect on the policy and once all of those things are paid, you can hand ownership of the policy over to them, and they can either keep it as a policy with low rates (because you bought it when they were teenagers,) or they can cash it in and use whatever cash value has built for starting a family, to put towards down payment on first home etc. So by covering your child with a permanent life insurance policy, you’ve just protected yourself, and started building a “gift” that you can hand over down the road.</p>
<p>Tragic, but life insurance would have prevented the problem. Anyone with debt needs life insurance. At that age, it would have been just a couple dollars a month for a term policy.</p>
<p>Law or not, just like everything else, people need to keep in mind that what they want and what they can afford might be two very different animals. It goes back to personal responsibility, which is not politically correct, but lack of which costs nation the future of next generations. I am talking about everything, with college education being one on very long list, which includes mortgages, cars, amount of food that we consume, elementary education…very long list.</p>
<p>It should be noted that the only reason the family is on the hook is because the family cosigned for the loan.</p>
<p>People who have debt don’t necessarily need life insurance. If the estate can’t pay for repayment of debts, then the debts are wiped away. Family isn’t required to repay (but also don’t receive anything from the estate.)</p>
<p>This is the situation that would occur if anyone cosigns any loan. If your kid buys a car and you cosign and he wrecks it with insurance not covering the remaining payments, you had better believe that the lender will come after both you and the kid for the money. If you cosign a credit card or anything that is not unsecured, you are just as liable.</p>
<p>I had a situation where I cosigned a medical use credit card with zero interest if payments were made on time when MIL needed dentures. She could not get the card on her credit and the woman needed her teeth, so I signed. When she didn’t pay, they called me. If she dies before those teeth are paid for, they’ll come after me, and I don’t think sending back the dentures will satisfy the debt, though the thought titillates me.</p>