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Cosigning Student Loans - Learn From My Mistakes - Please Read

New Member

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read

RE: Co-signing for student loans-   This just happened to my son, while he was going thru a divorce, he found out that his German born wife, who went to school the entire time she was in the US (7 yrs) was running up student loans.  When the divorce hit,  he then found out he was co-signer on the loan !   In the meantime,  old wifey had packed up and gone back to Germany with an education paid for by us Taxpayers.!     In doing some research, I found that he DID NOT cosign,  she had CO-SIGNED for him using an "ELECTRONIC SIGNATURE" that is on the bottom of the form.  This DOES NOT require a signature of any kind from the Co-signer.  In fact, my son was in IRAQ during the time she was taking out a few of these loans.   All we had to do was show his duty papers to Sallie Mae and they are investigating her for fraud and they have told my son that he is not responsible for the loans as he could not have signed the documents.  I am not sure if the Taxpayers will ever get their money back, but at least my son's credit was not ruined on this, she also left her new car loan with him, so now he has three car payments!  Plus, she was way underwater on the car and it doesn't even run!    Choose your wives and co-signees  and don't let them electronically sign for you! 

Message 41 of 92
Valued Member

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read

I'm 90% sure the main holder of a loan I'm a co-signer for is 30 days past due. So, how long before they contact me about taking care of it? Obviously I'm irritated, but I take responsibility for co-signing, I would just like to make sure nothing happens to my credit because of it.

Message 42 of 92
Moderator Emeritus

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read


halltj2 wrote:

I'm 90% sure the main holder of a loan I'm a co-signer for is 30 days past due. So, how long before they contact me about taking care of it? Obviously I'm irritated, but I take responsibility for co-signing, I would just like to make sure nothing happens to my credit because of it.

I woudn't wait to hear from them. You need to contact them as soon as possible. As a co-signer you have a right to all information about this account.


If the account is 30 days late your credit may already be affected.




From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

Message 43 of 92
Senior Contributor

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read

i agree.  you definitely should not wait around to see if they contact you.  & i do mean IF.

Latest scores: Walmart TU: 769. MyFICO TU: 769. DCU EQ: 755. MyFICO EQ: 780. PSECU EX: 756. MyFICO EX: 780.
Message 44 of 92
New Visitor

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read

My son just asked me to co-sign a student loan for him for $37,000. His mother and I divorced 17 years ago. I had to start rebuilding my life pretty much from scratch. The last new vehicle I had was a 1986 ford ranger that I had to own for 21 years! Now I have a nice house and a rental property, and a little money in the bank. 

I had loaned him $3000.00 for a used car two years ago. He promised to repay me. I had to remind him I didn't see one dime. . If he would have made small payments on the first loan, hell anything! His credit history, with me is zero. I have no recourse in recouping the first loan. I don't want bad blood with what little family I have left. I am not going to co-sign. Thank you for the information.

P.S. While married I planned for retirement and education for our two kids. I would like to tell him this, but that water is under the bridge and long gone.

GoodGuy wrote:

I have gone through a nightmare due to a student loan that I co-signed on, and I am creating this post in the hopes that you will learn from my mistakes. Please pass this post on to anyone who you think would benefit, and hopefully save them a lot of heartache and anxiety. My post is lengthy, but please be patient and read it, it could literally save your financial life.

Briefly here is my situation: I am the co-signer on a $60K Sallie Mae private student loan where the primary borrower has defaulted on me, meaning they have told me they cannot pay a dime, have no intention of changing their lifestyle to do so, and will not tell me when, if ever, they will make good on this. Meanwhile, as the guarantor of the loan, I have been subjected to the full force of SM collection agency practices, and forced to face the music while the primary person on this loan can blissfully ignore the situation as if it was not happening. After multiple weeks of heartache, anxiety and worry over my financial future, I found in the fine print that if I make 24 consecutive on-time payments, then I am off the hook. I verified this with SM and am now 6 months into paying this off. As long as nothing unexpected occurs, I am looking forward to being off the hook in 18 months, having learned an expensive but not life altering lesson, as I was originally facing. Now let me go into some lessons, please pass these on to anyone you think would benefit - let's make this post the most widely read one on FICO forums, this is so important. And now my hard lessons learned:

Lesson #1: DO NOT COSIGN A STUDENT LOAN: especially private student loans which carry higher interest rates. When you cosign a loan, you are the guarantor: you are putting your good credit profile on the line and telling the loan agency that you are responsible if anything ever happens with the primary borrower and they are unable to pay. All the obligations are on your shoulders, in fact, in many ways you are more responsible than the primary borrower, and this is how the loan and collection agencies will treat you. If you think: that's just the fine print, that will never happen, think again. It happens all the time, are you willing and able to take on this burden if you have to? Possibilities become reality, and this is a reality you do not want to be a part of, trust me on this. If you want to help someone, find other ways to do it outside of the system. Loan them the money as an individual, or pay their rent or expenses, that way, if problems arise, you don't have to get credit agencies, loan agencies, and collections agencies involved. If you are a parent and want to help your child, see Lesson #2.

Lesson #2: LOAN ONLY WHAT YOU CAN LOSE: Every rule has exceptions, so the exception to Lesson #1 is this: only cosign on a loan if you are absolutely willing and able to pay off the full loan obligation. When you cosign you are lending your good name and credit profile, and you are effectively loaning money that you will have to pay back if the primary borrower defaults. In other words, never loan more than you are willing to lose, and therefore never cosign for more than you are willing to lose. And be willing to accept that the fact that your relationship with the primary borrower may be permanently damaged if you are forced to step in and cover their obligations.

Lesson #3: LOANS GROW: I cannot emphasize this point enough, it really burned me: I did not co-sign a loan for 60K, I co-signed for 45K, and without my knowledge the primary borrower capitalized the interest during the first 18 months of the loan, which they were allowed to do, but it caused the loan to grow by 33%. So when it came time to guarantee the loan, I was on the hook for 60K, which I had never originally agreed to.

Lesson #4: SALLIE MAE DOES NOT CARE: And why should they? This is business. As co-signer, you are the guarantor of the loan, you have to make good on the obligation when the primary borrower defaults. In fact, as guarantor, the loan and collection agencies will go after you harder than the primary borrower. Do you have a good credit and collateral, such as a house? Well this binds your obligation even more tightly. When loan and collections agencies see that you have the wherewithal to pay, they will not let you off the hook. And they don't care if paying off their loan puts you on the street. This is business and you have to pay up. Understand this black and white reality before you co-sign a loan.

Lesson #5: DON’T DELAY PAYMENTS: Forbearance and deferments are often mentioned as options for helping out on loan obligations, but do not fall into this trap: they make a bad loan situation worse, they don't help. Deferment does not prevent interest from accumulating: you'll just have a bigger loan to pay when the deferment ends. Student loans typically give you a deferment grace period, usually 6 months, before you have to start paying back the loan. Most of us have to use this initial grace period, but please avoid it if you can, it just makes your loan grow larger. Forbearance is another method of delay, but it requires you to make the loan current before the loan agency can talk to you. In other words, you have to be paid up on what you currently owe before the loan agency will talk to you about forbearance. Think about this Catch-22: you can't pay your current loan obligations, so you ask the loan agency for help. The loan agency won't talk to you until you make the loan current. Never use deferment or forbearance, they make your bad situation worse.

Lesson #6: NO LEGAL RECOURSE: Student loan debt is not dischargeable in bankruptcy court proceedings, it is debt that you will carry for life until it is paid off, regardless of what happens to you. And don't assume that the loan agency will only take legal action against the primary borrower in a default situation: they will also take legal action against you. Remember, you are equally responsible, you will be held legally accountable. And don't think that you can sue the primary borrower. You can only sue them if you have a separate promissory note with them, signed and notarized, that they have defaulted on. And even if you do, it is expensive and time-consuming to sue someone, especially if they have moved out-of-state, and practically impossible if they have moved out-of-country. You could probably never come out ahead, unless the amount owed was so large as to make it worth it. Unless you are wealthy, or a big organization, do not rely on your option to take legal action in the future, it's often just not practical.

Lesson #7: WOULD I DO BUSINESS WITH THIS PERSON?: When you co-sign for a family member, there is a certain level of built in trust in the relationship, but when you co-sign for a friend, or girlfriend, or boyfriend, you are putting your faith in the future: faith that they will be around in the future and that they will always have your best interests at heart. Please wake up. People take advantage of other people all the time. Especially when it comes to money, people get scared and choose to hide under a rock, disappear, ignore the problem as if it does not exist. If you are the co-signer, you are the guarantor. If the primary borrower understands this, then they can choose to disappear and leave you holding the bag. Do not assume that the person who cares for you now will always care what happens to you. Business is business, personal is personal. When you are asked to co-sign for a loved one, ask yourself first: do I want to go into business with this person? How do they resolve conflict? If they get into trouble one day will they work with me? Or will they disappear on me? Do they have a conscience, and will they care how this affects me? Or will they see an opportunity to be off the hook? Ask yourself these hard questions. And don’t assume that they will think as responsibly as you. Don’t assume that they care what happens to their credit score, or what this means for the future. Treat the primary borrower as a person you are doing business with, and therefore someone who you need to rely on when times get tough. Chances are, you are the more responsible person here, so ask yourself, can I really afford to go into business with this person?

Lesson #8: PROTECT YOURSELF: If your credit score gets damaged over a bad loan, your total financial life will be affected for a long time. It doesn't matter how good your intentions are, it doesn't matter why you got into a financial bind, it doesn't matter that your family member was sick, or that you were going through a hard time, or that you are low on money because you gave it all to charity. The current system of credit scoring requires you to keep your total financial profile in a healthy state at all times. If you are delinquent on payments, or worse, default on loan obligations, then your credit will suffer and you will be affected for a long time. You will be unable to qualify for loans, you will be unable to get good interest loans. Think about the effect this will have on your family in the future: not being able to afford a house for them because you can't get a loan, because you made a good faith error several years before. That's the reality you have to avoid, so protect yourself at all times.

Lesson #9: AND FINALLY: Some people reading this will feel that I am missing the point: that of course loans carry obligations, and of course there are consequences if loan payments are missed. For the record, I relied on Sallie Mae loans to get me through college and grad school. I made all my payments on time, I paid my loans off, I even used the available 6 month deferment. But this only worked because I was responsible, because I had a plan, because I understood my monthly and total financial obligations at all times, and never made a life decision that would compromise my ability to pay. Cold reality: many people in this world are not responsible, they don't think through the consequences of their decisions, they are unable or unwilling to look at the hard facts. When you co-sign with one of these individuals, as I did, you are tethering your good name and your financial future to them. If they fail in their responsibility, they will take you down with them. Do not let this happen, protect yourself, you have worked too hard in your life to let an irresponsible person take you down. I hope you have found this posting useful. Please pass it on so that everyone can learn from my mistakes and hard-earned lessons.


Message 45 of 92
New Member

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read

Hi GoodGuy,

If you are still around I would like to know if you were able to remove yourself from the loan you co-signed. I stumbled upon this website and forum today and saw your post. I wish I had someone to tell me everything that you had posted so I could have avoided the predicament that I'm currently in. I have been trying to work with Sallie Mae for months to re-negotiate the terms of the student loan I co-signed and depending on whom I talk to I get different information. So after reading your post I am curious to know if you were able to release yourself from the loan you co-signed? As for me I doubt that Sallie Mae would ever release me as the primary has skipped out on me. He left no current address, phone number or email information with Sallie Mae. Essentially 'disappeared' on me. For anyone else reading this, have you had any success with Sallie Mae in being released from your loan(s) after paying 24 months consecutively? I was told that if I paid 80% of the loan balance they would release me and remove all negative credit. Now I'm not so sure that they would honor this after reading all the comments made about Sallie Mae. Thanks in advance...

Message 46 of 92
New Visitor

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read

I just received a letter from the court house delivered by a "processor", meaning I was served with the court notice. Basically I am being sued by a prvate student loan provider, for a loan I cosigned and which is in default now.
I have a couple of issues, the collection agency has not contacted me before about this loan so I was under the i,pression that payments were being made. Second, and most importantly, I am still in school my self. So can they take me to court while I am still going to school??
I would appreciate any advice please


Message 47 of 92
Valued Contributor

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read

momo0270, I don't think the collection agency has to contact you prior to filing a lawsuit because you are not the primary borrower.  Any initial late payment and default notices would go to them, although you should pull your credit report, because this loan is likely reporting there, and it will allow you to see the full history (IE what payments have been made, when it went into default, how much is owed and who owns the loan).


Since you are the co-signer, your in-school status doesn't matter.  If the primary borrower has left school, or exhausted his in-school deferment, then payments needed to be made on the loan, and once it is in default (as defined in the promissory note that you signed with the primary borrower), they can ask for a judgment to help them collect the amount due.


Don't ignore this notice, if you don't show up to court, there is no possibility of a ruling in your favor.  Now would be a good time to contact the primary borrower, see what's going on, review all of the loan paperwork and possibly seek legal counsel.

Message 48 of 92
New Member

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read

Exactly what is the situation with on time payments for 24 months and then off the hook???

Message 49 of 92
New Visitor

Re: Cosigning Student Loans - Learn From My Mistakes - Please Read

I think, but I'm not sure, that I have decided I won't cosign on what I am currently being asked now. This message board is quite helpful.


My daughter graduated college almost 2 years ago. Her father and I began a divorce proceeding just before she graduated high school. I had always been the money person in the house. The long term plan for the kids education was to send them to the community college for two years then transfer to whatever school they could afford, preferably a state school. We did not save for college. He works at the community college and they would NOT have had to pay tuition for the time at the community college, so books would have been the primary cost for the first 2 years at least. Then they would have incurred loans of less then $25K finishing up at a nearby state school where they could commute.


She really wanted to go to an expensive liberal arts college, and she got a scholarship covering about half the tuition (her SAT verbal was a perfect 800). Her friends from high school were heading to Brown and Yale, and she just didn't want to hear anything about Community. I remember saying to she and her father that she would have to earn at least $45K/year to meet the payments if she went to the private school. They chose not to listen, at the time he viewed everything I said as not being trustworthy, and he said she should follow her dream. I told them I would not be able to help with tuition, or to cosign, or anything that major, but I would help her with books, and keeping a little cash in account she could access, as well as paying round trip airfare for her twice to Europe for 2 semester of abroad study. I also guaranteed her a free room at my house for as long she wanted while she paid down her loans. I currently buy her food, pay her phone bill, and give her a place to live (she is my daughter, I and I love her dearly). I also have been paying the interest on one of her loans that started charging her interest while she was still in school, so I've been paying that for years. Her father chose to cosign all the loans, except the one that his father cosigned for her, and he does not cover any of her current living expenses, nor could he afford to.


Now, 2 years after graduation, her debt has grown from the original $120K she graduated with, to $150K due to capitalized interest. She worked last year in an Americorps program that was supposed to help her begin to make these payments. She kept all her mail going to dad's house all of last year, and I had no idea what was going on with her loans. It turns out she had deferred the loans last year. She finished the Americorps program she was in, in June, spent the summer looking for another job, and finally got work at about $25K/year. Her earnings fall short of what she needs to make all of her payments by about $450/month. The bank holding the largest loans, Wells Fargo, refuses to work with her. The only option they are offering is to consolidate with an ARM which still needs a cosigner. Her father has been declined by the same bank that currently holds the loans for which he is already a cosigner, and they want me to cosign. I am terrified. The new loan would be about $100K of the debt because she has multiple loans. This is for the 4 loans from Wells Fargo. She really wants to pay, but has been unable to get a job that pays enough to cover this.


I feel between a rock and a hard place, I made the decision while she was in school not to cosign any thing, even if it meant she had to switch colleges, which almost happened at one point. Her father enabled her, against my better judgment, and now they want me to cosign $100K in loans. My income reasonably covers my lifestyle, as well as the support I already pay for her, and she is 24 years old. But I cannot afford these loans. She cries all the time, she now takes anti-anxiety medication, she is so stressed by this. She hates her curent job, and is resistant to getting a second job, and the need for the medications seem to increase. If I don't sign, it will take her many years to understand why I was 'mean' enough to not help her get the payments under control. She is relatively responsible (meaning she will pay, but hasn't looked a regular 2nd job), but there is no control as to whether or not she will stay employed. I paid for the things I promised when she chose this school, and I am keeping up my promise to support her while she pays down her debt. But I never promised while she was in school to help with the loans.


I am proud of her for graduating with honors and a dual degree (two majors), but she has a baccalaureate, and no hope of being able to go school to get her master's, and jobs are few and far between for a new grad without experience, at this critical time when she needs to establish payments to her loans.


What should I do? If she makes the payments on the new loan, would a cosigner be released after 24 months? being released is not guaranteed? What happens to the loan if the student dies? Does the cosigner owe the money because they weren't released? Do they take 2 cosigners, because I just don't feel it's fair to release my ex-husband when his doting on our daughter is what helped to create this situation, while I had more hard line on it while the debt was being incurred?


Any thoughts are appreciated.

Message 50 of 92