Cosigning Student Loans - Learn From My Mistakes - Please Read

[Miscellamy]

This is an old, old thread, but I thought I'd add my anecdote in case anyone is still reading. 

I'm the primary borrower on a butt-ton of student loans. (And although I owe a small fortune, I was very mindful about getting into this kind of debt. So far it has paid off for me). The bulk of the loans are in my name only, but I have 2 small private loans for which I needed a cosigner. One is with Sallie Mae, the other is a bar-study loan with Citibank. 

I have made more than five years of payments on both loans. The Sallie Mae loan has never been late and I've often paid more than the minimum. The Citibank was once ten days late -- IIRC, my bank didn't send the autopay one month and it took me a week to catch the mistake. Never even reported to the CRAs since it wasn't a full 30 days late. Other than that, always on time, and I pay an extra $200 every month on that loan. I earn a good salary (in the six-figures) and have a secure job as a federal attorney, which I've held for five years. And my credit is finally in solid territory -- my FICO has ranged between 710 and 750 for the last six months. 

I recently requested that both of my cosigners be released. Sallie Mae had me send proof of graduation, proof of income, and a formal request. They've already spent nearly a month analyzing my request and still haven't made a determination. My cosigner, mind you, is my 86 year-old grandmother who suffers from dementia and lives on a fixed income. She's never paid a cent toward this (not that I ever intended her to). You'd think this would be a no-brainer. 

Citibank has told me that I'm ineligible to have my cosigner released because of the 10-day late. Their advice was to send a goodwill request to have the late removed from the account, and to try again if I was successful. In that case, the cosigner is my father who works part-time in retail and is in no position to pay toward my loan (again, not that I want or expect him to). 

So I guess I just want to reiterate that it's not that simple to have cosigners removed, even when the primary borrower has established a history of paying on-time and the ability to keep doing so. I'm beyond grateful that my family was willing to help me, but I'm afraid that I would be reluctant to do the same for most people. 

[jm0000]

Ok... Ever since my daughter decided to not pay on the Sallie Mae loans I co-signed for her, I have been paying before the due date every month.  June is the 24th month in a row with payments made on time.  Before that they had been deferred because she didn't have a job.  When this first happened, I called Sallie Mae and they looked at the particulars of the cosigned loans and said they would be eligible for releasing the cosigner.

Does anyone know what is invloved in getting released?  And....Can it be done without the other person being involved?  In other words, I just ask to be released?

[Anonymous]

Our daughter thinks we hate her and accuses us of "crushing her dreams" because we would not cosign her loan for a $25K beginning education loan (who knows what it would grow to over 4 years) to go to an out of state school to major in archaeology.  i love the field of archaeology but I know it is not a high paying carreer. 

Here is my question to you:  since you cosigned, is there anyway you can take the other party to court to force them to pay for the loan or at least a portion of it?  i would think that since the other party is "primary" that the cosigner could legally compel the primary to pay by getting the court to but a payroll garnishment on their pay, especially if the person is making a living and (according to your post) is living quite well.  lastly, any lawyers out there --- would it be legal to sign a contract with the "primary" (one's child) that says they would be responsible to pay for the loan eventhough the parent is cosigning the loan.  This way, when child finishes college and decides, "I don't want to pay back my student loan.  I'll let dad pay it since he has been so mean to me about the loan." The father could take the rebellious child to court and the court can force them to pay the student loan back. 

I really wish I was rich and could pay for my child's education but I am not rich and it pains me to hear her say, "Ok then, if you won't cosign, I'll go to bartending school." 

Great forum and an EXCELLENT post! 

[Anonymous]

Were you able to be removed after two years? 9 years ago I co signed on a $22,000 ACS/ Loan Science  student loan consolidation and its now at $32,000! The student is now a doctor and keeps this loan in deferment, foreberance and reduced payments since inception. 

She has no intentention of paying this debt.  She is married now living in a three story townhouse, drives a Cadillac, goes on great vacations every year and just spent $1000 on a crib, but says she can  only afford $88 a month! Meanwhile this keeps growing and I'd like to retire without this debt over my head.

I've contacted her to ask for pay off intententions and she refuses to pay full payments and tells me to just deal with it. I've asked ACS if I can be removed and they tell me she must make 2 years of on time full payments and then is eligible to "apply" to have me removed but there is no guarantee they will approve it.

So I'm very curious if after you paid two years if you were successfully removed as cosigner.

PS. Just because a person is a blood relative does not guarantee they won't leave you holding the bag. Unless you are willing to write off double the original loan amount DONOT ever cosign on a student loan....even if its your child.  It will just create bad blood between you. I wish this post was available in 2006 

[bradlin]

Wow really tough situation and I can see it from both sides.

[Anonymous]

I agree.. though Salle Mae now Navient said they would only release me if I could get my borrower to fill out the form, yet I have no way to get a hold of him and I am the ONLY one that has paid on this loan for the past 3 years and I still have yet to get below the orginal borrowed amount even though I have paid in over half the loan. They will not even discuss lowering the interest rate unless the BORROWER intiates the call. I was like "umm if I could get ahold of him that would be great but what is the recourse for those who cannot" she had nothing to say.  Looks like my only choice is taking out a personal loan or credit card to pay this off, which would be cheaper then the current interest rate.. Anyone do either of those options or have another option available???

[Anonymous]

You guys have GOT to be kidding. I read the entire post, and although you were burned this is not good advice.

You have to take into account things like .. that persons moral integrity. How long you've known the person. What field they are going into.. How much of their tuition is scholorships and grants? Where are they going to school? What are their grades like. WILL THEY BE WORKING PART TIME THROUGH COLLEGE AND PAYING OFF SOME OF THE LOANS.

It's impossible to get a student loan (outside of financial aide) if you have new credit. Not everyone has family to cosign for them. My friend for example lost both parents and had a friend cosign. It's something that should be discussed definitley, but I don't think the OP story is the norm. I mean I'm 21, I'm in college (mostly on grants) but if I had a friend who wanted me to cosign their loan I would look into their grades. I may say if you graduate a community college FIRST then apply to a four year, we can talk. I'm not gonna just shut them out because of the risk. 

Idk. I come from a poor family. I think everyone should have the same chance at a great education. Ovbiously someone I'm not close with I won't put my credit on the line. But people work part time and go to college all the time. Maybe each year evaluate their finances and if that person is abuses it make sure it's understood the cosigner agreement will be over.

[SCF]

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@Anonymous wrote:

You guys have GOT to be kidding. I read the entire post, and although you were burned this is not good advice.

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No, no one is kidding.  The US is not having a student debt crisis because of a lack of moral fortitude - there are systemic issues that can make it very difficult for young people to repay their debts.  And those young people who borrow private loans and need a co-signer are often at the most risk for having an unmanageable debt burden.  It's a very noble thing to want to give a friend or family member a hand up, but co-signing on loans can feel like a "free and easy" way to do so when in reality it comes with serious risks and the potential of very real costs.

The decision to co-sign should not be made lightly, because in most cases, the co-signer does not have the resources to: 1) evaluate the liklihood of the borrower repaying the loans with greater accuracy than the lender 2) monitor the borrower and the status of the loans carefully for the next 5-20 years to avoid negative impact to their credit and 3) repay the loans in full as agreed if the borrower is unable to do so.  If the co-signer can't do all 3, they are making a gamble.  Sometimes, gamblers win, but in this situation, when they lose they usually lose big, and they may not even have fully processed what they wagered.

[Anonymous]

I'm sorry, but I believe in some cases you can tell if your cosigning for a responsible person. Yes, things happen .. but their are some young people who are responsible in every aspect of their life so this needs to be monitored case by case bases not someone trying to discourage everyone from being a cosigner.

Like I said, students can work part time sometimes full time and pay the loans gradually. If you aren't in the situation then it's hard to understand. Not everyone has parents who can gift them a college education. You can work your ass off but if you attend a "drop out factory" high school even great grades won't get you a scholorship. You can have grants and federal loans in your own name but sometimes there is an amount left over a gap ..

Their can be conditions. You can expect a certain amount to be repaid. You can offer to cosign JUST for tuition (for example TCU is almost 60k a year, but only 30 of that would be tuition) and make alternate arrangements for the rest. Yes things happen, you could get sick at any time but many colleges offer a tuition reimbursement insurance you can purchase. I don't care how responsible an 18 year old is, without many years of credit history it's almost impossible to get a private loan. I know so many people in circumstances beyond their control .. parents do not help at all but financial aide expects your parents income every year until your 24 to decide how much you get. This post just seems like one person or a few people had bad experiences and they aren't saying be careful they are saying under no circumstances do you cosign a loan. 

It just depends on the nature of the relationship. Parents and child .. I mean really, if you have a healthy relationship with your kid they would never burn you that way. They would get a second and third job just to make sure they pay the payments on time. 

[GoldSorata]

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@Anonymous wrote:

I'm sorry, but I believe in some cases you can tell if your cosigning for a responsible person. Yes, things happen .. but their are some young people who are responsible in every aspect of their life so this needs to be monitored case by case bases not someone trying to discourage everyone from being a cosigner.

Like I said, students can work part time sometimes full time and pay the loans gradually. If you aren't in the situation then it's hard to understand. Not everyone has parents who can gift them a college education. You can work your ass off but if you attend a "drop out factory" high school even great grades won't get you a scholorship. You can have grants and federal loans in your own name but sometimes there is an amount left over a gap ..

Their can be conditions. You can expect a certain amount to be repaid. You can offer to cosign JUST for tuition (for example TCU is almost 60k a year, but only 30 of that would be tuition) and make alternate arrangements for the rest. Yes things happen, you could get sick at any time but many colleges offer a tuition reimbursement insurance you can purchase. I don't care how responsible an 18 year old is, without many years of credit history it's almost impossible to get a private loan. I know so many people in circumstances beyond their control .. parents do not help at all but financial aide expects your parents income every year until your 24 to decide how much you get. This post just seems like one person or a few people had bad experiences and they aren't saying be careful they are saying under no circumstances do you cosign a loan. 

It just depends on the nature of the relationship. Parents and child .. I mean really, if you have a healthy relationship with your kid they would never burn you that way. They would get a second and third job just to make sure they pay the payments on time. 

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This is a great thread because it lists the very serious risks that one must understand and be comfortable with regardless of how responsible the person needing the loan is.