<p>"If you retain one piece of information from reading this site, let it be this one: never co-sign anyone's student loans. Not your spouse's student loans. Not your best friend's student loans. Not your nephew's student loans. Not even your own child's student loans. It is the worst possible kind of debt to assume on behalf of someone else. The balances can be huge, the debt can't be discharged in bankruptcy, and there's nothing to repossess. That's what anonymous parents M and D have learned, the very hard way." ...</p>
<p>Sounds like this kid has been dancing around his student loans for YEARS and Sallie Mae decided that they had had enough and decided to go after the co-signers. Good advice not to sign up to co-sign any of your kid’s loans unless you can pay them off.</p>
<p>There are many who will be facing this problem. Not only the ones who cosigned, but the many who signed Plus loans with “promises” from their kids that the new grads would pay back the loans. Since Plus loans are MUCH easier to get, people without adequate income or debt ratios are allowed to sign them…and bankruptcy won’t remove them.</p>
<p>Recently there was a post from a student whose single mom had signed Plus loans for $30k each year. This year, the rising senior’s mom was denied…just weeks before school starts. Now the student won’t have the funds to attend senior year and graduate, yet they have nearly $100k in loans at this point. It’s rather obvious that the mom expects the D to pay back most/all of these loans when she “graduates and gets a good job.” Now, without a degree, who knows how much she can earn. Of course, even with a degree, it’s unlikely that she could afford to pay back well over a hundred thousand in debt…but no one seemed to have ever done the math.</p>
<p>When loans are so easy to get, all except for the lenders are in trouble. Think 2008. It was like someone were handing out BMW keys on the street and telling you that you could handle the loan and to worry about it later. Who won’t take it? I bet only a small fraction of us resist. Some odd people moved into my neighborhood only to move out their homes months later.</p>
<p>I absolutely DO blame the consumers! Not that the banks don’t share the blame, but it is every person’s responsibility to understand what they are signing when they accept a loan and to be very certain that they have the ability to repay it. There are no free lunches.</p>
<p>Bottom line, anyone who cosigns a loan should expect to be responsible for it. Its like loaning money to friends or relatives. Don’t expect to see it again.</p>
<p>Patsmom, You beat me to it, almost verbatim. Like the people who kept trading up houses every two years and now feel ‘victimized’ because the market plunged versus those who bought and stayed in their houses for 15-20 years. The value (of the buy and hold) went up over what they paid by 150% or so in my area and then declined greatly, though not as bad as Vegas, Phoenix or Miami). They are still ahead of what they paid (even in adjusted for inflation) versus those who kept ‘flipping up’ every two years to get the bigger and bigger house and took out bigger and bigger mortgages, only to find themselves under water now. Sorry, they knew the score and gambled and lost, so I can’t give them a pass.</p>
<p>In this case, it’s worse than loaning money to friends and relatives - because you’re also responsible for the stuff that can get tacked onto the loan that you cosigned.</p>
<p>I do blame the consumer to some degree - unfortunately there are so many that are financially illiterate or don’t have access to good advice on financial matters. It’s normal not to know about various financial matters but many have access to those with experience - through co-workers, parents, neighbors or forums.</p>
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<p>There are annual taxes, insurance and maintenance costs that go along with a car. I wouldn’t take it but then again I owned German cars for many years and much prefer Japanese cars.</p>
<p>These aren’t student loans, but my dad didn’t blink an eye about co-signing for my first apartment and my first credit card. Then again, he knew I was taught well enough not to stupid things.</p>
<p>The unique thing about student loans is that theynare not dischargeable in bankruptcy. So, you can over-leverage a business, or take out crazy mortgages, and then walk away if it doesn’t work out. But if you get cancer and have to go bankrupt because of medical expenses, your student loans remain until you die. The student is uniquely “responsible” under current law and should never, ever get into ruinous student loan debt.</p>
<p>With all these bubbles fueled by loans that were too easy to get there is fault all around.</p>
<p>For the many, many people who don’t watch Suze Orman, or don’t read the financial section of the newspaper, I think there is an expectation that a bank wouldn’t give a loan if payback wasn’t reasonably possible. I do believe that it is ridiculous that people are never counseled about just how much the loan repayments are going to cost. </p>
<p>As always, there is a huge disconnect between what people objectively <em>should</em> do, and what they actually do in real life. People should read contracts and fine print, but rarely do. Lenders should be more careful about lending standards, but if the loan holds no risk for them, why would they care if its an overly risky loan? </p>
<p>Absolutely, consumers are responsible for loans they take out, but I do believe that lenders need to show more responsibility in lending standards.</p>
<p>In 1947 my dad, a physician newly released from the army and new in town, was turned down for a mortgage by a small town local bank, because his income wasn’t sufficient and he was an unknown entity. He walked across the street to the only other bank in town, which gave him the mortgage, and won his loyalty for the 50 plus years that he banked in that town, including a construction loan to build a four physician clinic, and later another loan to more than double the size of the clinic. </p>
<p>No hard feelings about being turned down for that first loan, but times were certainly different, when loan officers personally knew who they were loaning the money to, and relationships lasted a lifetime.</p>
<p>I think the Parent Plus loan qualifying needs to change. I know it’s not the subject of the thread, but those loans are often pseudo-co-signed loans where the student has crossed-his-heart and promised to pay most/all of the costs…especially when lowish income parents are taking out those loans. </p>
<p>Plus loans don’t look at income (crazy), they don’t consider if you have assets (crazy), they don’t look at debt ratio (crazy)…it’s all a recipe for disaster.</p>
<p>It should not be possible for a family with a $35k income, no assets, with “good credit” to be able to take out $50k-200k in Plus loans!</p>
<p>Blaming the consumers is like blaming the victims. We cannot blame home buyers for the housing bubble bursting, nor can we blame some students having big loans (^^).</p>
<p>IMO, students to should go to a college that they (and their parents) can afford to pay with minimal loans. If that is CC, so be it. Many people have been successful with just a CC or state school degree. There is never any guarantee that student will find that “great job” after graduation, or won’t change their mind that they want to be a physical theatre artist (my kid). Having enormous amounts of debt hanging over you limits your freedom in choosing a path in life.</p>