Bullet points of Mom, 85, slapped with cash-strapped daughter’s $31K student debt because she co-signed a loan 20 years ago

Bullet points of Mom, 85, slapped with cash-strapped daughter’s $31K student debt because she co-signed a loan 20 years ago
- Co-signing a student loan can lead to serious financial consequences, as seen in the case of Rebecca and Sabrina Finch, where the mother is now on the hook for her daughter's loan payments at the age of 85.
- Co-signing a loan means taking on the financial responsibility of repaying it, and if the primary borrower stops paying, the lender can turn to the co-signer for repayment.
- Private student loans have less flexibility in repayment options compared to federal student loans, and defaulting on a private loan can lead to serious consequences, including the possibility of a lien being placed on a home.
- Social Security benefits are generally protected from garnishment if you default on private student loans, but not federal student loans.
- It may be difficult to get a private student loan discharged, but in cases where the loan is truly not payable, there is a chance that a lender might write off the debt.
- Before co-signing a student loan, it's essential to weigh the potential risks and consider the consequences of defaulting on the loan.
- Lenders can take a co-signer's house if they default on the loan, but the process is costly and complicated, and a more likely scenario is for the lender to wait for the house to be sold and then get repaid from the proceeds.
- Rebecca's best bet is to apply to have her daughter's student loans discharged on the basis of her not being able to make payments, but this is a long and uncertain process.