We Cosigned Our Unemployed Son’s Student Loans. Now We’re Screwed

Parents Forum
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<p>^According to your logic any debt is justified. Also, according to your logic the borrower decides what is a “decent paying job”, and that borrowing for college and discharging the loan is okay, while borrowing for other purposes and dischargind the loan is not okay.</p>

<p>I, on the contrary, believe that people should be responsible for their promises to pay. And if a student does not get “a decent paying job”, the student needs to take the “decent-minus-X” paying job and pay back the loan in 30/40 years. If you do not want to do this, than borrow small amounts (if at all). As I mentioned, other people should not suffer the burden of a students’ bad decisions.</p>

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<p>“According to your logic any debt is justified. Also, according to your logic the borrower decides what is a “decent paying job””</p>

<p>Not at all. Don’t put words in my mouth. If any debt was justified I wouldn’t have said only rich kids should go to law school. Please read the last paragraph of my previous post. And actually I’m sort of defining “decent paying job” myself lol. Basically a student shouldn’t take more debt than is possilbe to pay back given (s)he gets a decent job. That student should not assume he/she is in the .25% that will get a 90K paycheck for an entry level position. </p>

<p>“I, on the contrary, believe that people should be responsible for their promises to pay. And if a student does not get “a decent paying job”, the student needs to take the “decent-minus-X” paying job and pay back the loan in 30/40 years.”</p>

<p>I fully agree, although the problem we run into is that students end up with “decent-minus-x,y & z” paying jobs. </p>

<p>However, I, on the contrary :), think its funny that we hold students to a higher standard than homeowners. I don’t think any debt, mortgage or student included, should ever go away completely. But personally, I think student debt should be dischargable before homeowner debt is.</p>

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<p>Not only should students not assume they will be part of the .25% that gets a 90K paycheck, but they should not even assume that they will get the median salary being offered to current graduates. 50% of graduates are being offered less than that, and that only counts those who get a job!</p>

<p>Parents should only cosign loans they are comfortable paying off themselves. If they know they plan to retire after graduation, will they still be comfortable making the payments? If not, don’t cosign the loan. </p>

<p>I know each state is different, but in Connecticut, families with 0 EFC don’t face the problem of private loans - it’s a problem faced by “middle class” families. The state has many grant programs to ensure that lower income families don’t have to take private loans, and can attend the state flagship or any other state school. Yes, they will have loans and work study, to cover part of their aid, but college will be made affordable to them.</p>

<p>The middle class families are the ones hit by the problems of private loans, and $50,000 of indebtedness. Kkmama thinks that those of us who think these loans are irresponsible don’t understand because we can afford to send our children to college. But we do - and we have understood for the past 25-30 years as we have done what was necessary to make sure we could afford college. And even so, we too are faced with the question of whether to take out loans or not. Next April when we are comparing aid offers and making a final decision with our daughter, I guarantee we will be looking at net costs ranging from $5,000 to $35,000, and that doesn’t include the possible free ride she might get at one of her safety schools. We already knocked schools off her list where the Net Price Calculator came back more than $35,000 because they will require us to cosign loans. We can come up with her tuition because we will pay off our mortgage just before she starts - and we can only do that because we planned it that way, rather than pay the minimum on a 30 year mortgage like everyone else. D’s will not be applying to her top choice because it was in the high-price category. We cannot afford it, not with 2 younger sister to send to college when she is done.</p>

<p>I agree with Impersonal - don’t take out the loan, and then complain about the sacrifices you have to make in order to pay it back. Be prepared to make those sacrifices if you don’t get that dream job right out of college, but don’t ask me as a taxpayer to forgive your loans, unless there’s some other type of sacrifice you’re willing to make. Taking the loan is not the sacrifice - paying it off might be.</p>

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<p>A lot of us can’t afford to sacrifice enough to save up enough to pay $35000 out of pocket for four years of college per kid. </p>

<p>My gross salary is $35,000 per year. And yes, I have a moonlighting position that helps but not much.</p>

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<p>^^“But personally, I think student debt should be dischargable before homeowner debt is.”
This cannot be because student loans are unsecured debt, while a house morgage has collateral. What this means is that if you borrow to buy a house or car, the lender can always repocess the home or the car, which accomplish two things: a) gives some insurance to the lender and b) the borrower has an extra incentive to pay because if not, he/she loses the good he/she purchased.
On the other hand, if you borrow to pay for education and do not pay then: a) the lender cannot get any collateral back and b) you do not lose the good you purchased (you still get your education). This gives an extra incentive for the borrower to do a strategic default on the loan (you can search some previous posts on CC about Law/Medical students planning to default immediately after graduation, which b.t.w. is fraudulent behavior and is quite impossible to do this days).</p>

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<p>KKmama…I asked this question in an earlier post to Whatdidyou and never got a response. I empathize with your salary situation, but I’d like to ask the same question of you. Every parent (I hope :slight_smile: ) believes in their child and their abilities, and wants a great future for that child. It’s easy to say “I’m betting on my child’s ability to get a good/decent/sufficient paying job after graduation”, but there are so many forces out there beyond the parent and/or child’s control in ANY job market that it’s certainly nowhere near a sure thing. So if your child (Stafford loans) or you (private/Parent Plus loans) or both decide to borrow, what is your Plan B?</p>

<p>If a parent is not in a position to make payments on their own loans or to help out with the student’s payments if necessary, how can you think it’s a wise idea to borrow in the first place? There are other options, although the parent/student may not want to hear them. If there aren’t any colleges which offer enough merit/need-based aid/grants to make attendance possible, then perhaps the non-traditional route to a college education is the best plan. It may involve several years of working long hours at McDonald’s/WalMart/wherever they can find an opening…but if the end goal of a college degree is that critical then the sacrifice is worth making.</p>

<p>Faith in one’s child is something every parent should have, but closing one’s eyes to the realities of external factors beyond their control is blind faith. Are you really advocating that people risk their child’s and/or their own financial futures on the chance that NONE of the external factors in play will jump up and bite them in the butt?</p>

<p>Paying off the loans is not optional. In large part, the reason the bankruptcy laws were changed regarding student loan debt was because an alarmingly large (and increasing) number of students/parents were using bankruptcy as Plan B…and often as Plan A, simply never intending to pay back the loan. It would be great if there were some way to prevent the unscrupulous borrowers from affecting the good-intentioned borrowers, but there just isn’t. If there were…the laws wouldn’t have been changed in the first place.</p>

<p>I understand any parent’s desire to provide for their children, but I don’t think banking (sorry :slight_smile: ) on a “what if” and nothing else is ever a good choice. Do you?</p>

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<p>What year did Federal student loans no longer become dis-chargeable? The chart below is interesting as default rates are going back up again.</p>

<p>[Graph</a> of National Student Loan Default Rates](<a href=“http://www2.ed.gov/offices/OSFAP/defaultmanagement/defaultrates.html]Graph”>Graph of National Student Loan Default Rates)</p>

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<p>From a Time magazine article.</p>

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<p>^ I liked the first change in 1976 idea that required 5 years of payment and you need hardships to declare bankruptcy.</p>

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That’s not the point. With your low income, you will have 0 EFC. I know that does not translate to zero cost to you, but the net price for your children to attend the same schools as my daughter would be far lower. If any school came back with a net price of $35,000 for you, it should be knodked of your list, period. You have no ability to pay tha back, and the risk is too great that you child wouldn’t be able to either, even with a high-paying job after graduation. If a school came out with COA of $35,000 for your child, it would probably be closer to $50,000 for mine - and again, it would be crossed of the list.</p>

<p>It is irresponsible to take on debt which cannot be repaid - and it is irresponsible for the schools and banks to even suggest you should do so. Poor families who borrow within their means to send their children to college are not the problem. The biggest problem are middle class families who didn’t make sacrifices all along to save, and instead are taking large loans to pay the tuition bills based on their middle class incomes. They didn’t make sacrifices to save while their children are growing, they didn’t cut back when the kids entered college, and now they are complaining that they can’t afford the loans.</p>

<p>The original article from the first post speaks of a family whose son owes $26,000 in student loans which are in default. They are in default, because nobody was making the payments! If they couldn’t afford the payments, why did they take the loans? When they co-signed the loans, they agreed they would pay them if the son didn’t. People need to understand that, and not take it lightly, when they are asked to co-sign loans. Our kids don’t NEED to go to a particular college, that is a WANT. If it costs too much, it’s taken off the table. No college is worth the risk. And I’m saying this as we took 2 of D’s top choices off the table tonight because of cost. There are equally good options at much lower cost.</p>

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<p>“That’s not the point. With your low income, you will have 0 EFC. I know that does not translate to zero cost to you, but the net price for your children to attend the same schools as my daughter would be far lower.”</p>

<p>As it should be, unless we want to go back to a class soceity. </p>

<p>“Poor families who borrow within their means to send their children to college are not the problem.”</p>

<p>Isn’t this an oxymoron? How do poor families borrow money “within their means” to send their children to college? 1st of all poor families that borrow are not acting “within their means”. And secondly, poor families that borrow enough to send their kids to college are definitly borrowing WAY way outside of their means. </p>

<p>“The biggest problem are middle class families who didn’t make sacrifices all along to save, and instead are taking large loans to pay the tuition bills based on their middle class incomes. They didn’t make sacrifices to save while their children are growing, they didn’t cut back when the kids entered college, and now they are complaining that they can’t afford the loans.”</p>

<p>I agree wholeheartedly. It is one of the downsides to our necessary (IMO) need-based-aid system. However, I think that even if they did save, loans are often necessary on top of the savings. i,e: it’s not just irresponsible middle class families that have to take out large amounts of loans. </p>

<p>“If they couldn’t afford the payments, why did they take the loans?”</p>

<p>Because a college education is important in today’s environment. And often their children are good students who have excelled in school and have dreams of being an _____. They are betting that their students will get decent jobs. It’s a risk they are willing to take for their kids, and it often pays off (but far from always). </p>

<p>“If it costs too much, it’s taken off the table. No college is worth the risk.”</p>

<p>For many families, there would be no colleges left on the table at the end of this exercise. And many families would disagree (including me) with your 2nd statement. </p>

<p>It’s easy to try to blame the individuals in these situations. Some are worthy of our blame for sure. But for many, their situations are not so black and white. And most of us would’ve done the exact same thing if we were in their shoes.</p>

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<p>If a middle class family is making enough to require loans (particularly private loans), in most cases they are making enough to make payments on those loans (barring the situation where parents lose jobs, or have unusual expenses). These are families that often pay $2000 a year for cable TV, $3,000 a year for cell phones, drive cars no more than 5 years old… all areas that could be cut back to make those loan payments. I’m not saying they need to be able to pay those loan off immediately, but there’s not reason those loan should be in default.</p>

<p>The lower-income families do take loans, any many do borrow outside their ability to repay, but not all. They, like the middle class families, need to understand that the system is designed to allow their child to attend college, but not necessarily to attned their #1 choice. If they want that guarantee, the student needs qualify for both need-based and merit aid - needs to have colleges competing for them, not the other way around. That applies to anyone who cant afford the full price, whether low- or middle-income. </p>

<p>I agree a college degree is important in today’s environment, but it is not the only path to a well-paying job, and it isn’t only expensive schools that lead down that path. People need to start being more realistic when considering what they can afford. You don’t buy a Lexus or a Mercedes when you can only afford a Hyundai, even if they offer zero down financing. Why is it OK to do so with a college education?</p>

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<p>There was a reason I went back to work despite against medical advice. Every penny I made was a dollar we didn’t have to borrow. Now that I really am out of the workforce (second serious medical condition), we will need to borrow that portion of COA for the last two years, though it will be against our equity. We did get through six years of college expenses without doing so.</p>

<p>Fortunately we foresaw big college expenses long ago, knew we would be at/close to full pay, and never tapped into our equity. We have never paid $2000/yr for cable, $3000 for cell phones and we drive our cars til they die. Both kids will have $20-22,000 in Stafford loans after graduation. Both work, and S1 had scholarships that totaled a full year’s COA. And it is still hard to come up with that kind of cash every year.</p>

<p>While S1 has landed on his feet quite nicely, S2’s chosen field has more challenging job prospects and he has a healthy concern about how he will repay his loans. He will have to find some way to make ends meet.</p>

<p>We told our kids we would not co-sign loans on their behalf. We did take out PLUS loans when DH went to grad school. We considered it a mortgage on his brain. It has paid off nicely, but we were 37, had been married 14 years and had two kids in elem school before we bought our first starter house (where we still live) because we were paying student loans and day care simultaneously.</p>

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<p>The bottom line is that most parents can’t/won’t co-sign loans so most kids are choosing other options.</p>

<p>I’ve never met an adult who said that s/he didn’t go to college because the parents wouldn’t co-sign loans. If a person wants to go to college and doesn’t have a co-signer, he chooses options that don’t require one.</p>

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<p>We live in a society that demands a college degree even from even the least college for even the least entry level position. Yet those colleges charge a top dollar, along with easy and UNFORGIVABLE financing available. Just sign here. </p>

<p>It’s a money making scam for the people on the receiving end of the principle and interests payments thingy. </p>

<p>(Wink) Except for the teachers and admins. who are educational professionals and who would NEVER, EVER do such a thing! No matter how much it causes long term harm to students while offering ONLY a benefit to themselves and the afore mentioned financiers! (/WINK.)</p>

<p>Yes, that’s the way it works.</p>

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<p>m2c, I checked the tuition for a Cal State is about $5000+ and the maximum pell grant is about $5500. Back in my days, people commuted and worked full time and attending local Cal State so they can have a college degree. That is one option without loans. Not a fancy and prestige college but nevertheless one will get a college degree. It’s still true today.</p>

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<p>“The lower-income families do take loans, any many do borrow outside their ability to repay, but not all. They, like the middle class families, need to understand that the system is designed to allow their child to attend college, but not necessarily to attned their #1 choice.”</p>

<p>Even if they attend their least favorite college, it usually requires loans, and therefore spending/borrowing beyond one’s means. </p>

<p>“it isn’t only expensive schools that lead down that path. People need to start being more realistic when considering what they can afford. You don’t buy a Lexus or a Mercedes when you can only afford a Hyundai, even if they offer zero down financing. Why is it OK to do so with a college education?” </p>

<p>Alot of families cannot even afford your hypothetical “hyundai.” Yet, we, society, and them, parents, still want to give these students the opportunity to benefit from a college education. There are millions of students who graduate college with substantial amount of loans, and are able to pay them off. If we took away that option for them, they’d be much worse off. </p>

<p>"If a middle class family is making enough to require loans (particularly private loans), in most cases they are making enough to make payments on those loans :</p>

<p>I’m not so sure about this. A family doesnt need to make THAT much money for their children to require loans, as many people here can probably attest to.</p>

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<p>Is the concept of working part-time while in college outdated?</p>

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<p>Is the concept of going to CC and then transfer to 4-year college an outdated concept?</p>

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<p>Is the fact that there are many students who are working part-time while in college AND went to CC and then transfered to 4-year college AND had to take out loans going to prevent you from making snide remarks that imply that students who take out student loans are the ones at fault?</p>