Private student loan - am I responsible?

[Anonymous]

I enrolled in college at a private US university in 2002. My parents took out a fairly large private loan through the institution. Of course my name was on the promisory notes, but at the time I believe it was my parents' credit that allowed the loans to be taken out. I do not recall signing any of these documents, and it is unlikely that my credit at the time would have allowed for such large loans to be taken out in my name.

For complicated reasons that probably don't matter, my parents have stopped paying the loan. I only found out when the school's loan department contacted me after nearly 2 years of non-payment by my parents, asking if there was anything I could do to make the loan current. Confused and wanting to help, I agreed to "take over" a portion of the loan and have been making monthly payments ever since. It didn't occur to me that I might not be responsible, I only wanted to help. I never signed anything official, these were verbal agreements and conversations via email. The university did pull my credit once, but this was after I had started making payments and I don't think I've ever given them permission. The loan has never appeared on my credit reports.

After reconsidering, I'd rather not be paying this loan if I have a choice, as my parents were the original borrowers and I technically didn't give consent. They have stopped paying their share, according to the university (we do not have a close relationship). Does my verbal/casual agreement with the school to "take over" the portion that I have been paying on constitute anything legally binding? Would I need to obtain signed copies of the promisory notes from 2002 to confirm that I am in fact responsible? (Or confirm that I didn't sign them, and therefore am not responsible?) Do I have a viable option to stop paying this loan? It may be a cut and dry answer--ie, I am responsible--but I'm hoping there's some gray area here I can take advantage of because the unfairness of taking over a portion of a loan which the original borrowers aren't paying anymore has started to bother me. If I stop paying, I run the risk of the school reporting a default to the credit bureaus--which is not an option. But am I really bound to this loan?

I have learned so much in this forum--my personal credit situation is good to great and improving all the time--so I'm hoping someone can weigh in on this tricky situation.

[SCF]

You need to do some further research and get the original paperwork from the lender.  It is possible that your parents took out the loans entirely in their own name(s).  It is also possible that the loan was taken out in your name and your parents co-signed, or that your parents were the primary borrower with you as a co-signer.  If you are the primary borrower or the co-signer, then you are responsible for the debt.  If you are not named as a borrower or co-signer, then you were not responsible to repay the debt when the loan was made.  

As to what you are responsible for now, that really depends on what you agreed to with the company.  Did you agree that the debt was yours and make a promise to repay it?  Did you refinance some or all of the debt into your own name as part of this process?  You may need to ask the company you are paying for this clarification.

[sean23]

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@Anonymous wrote:

I enrolled in college at a private US university in 2002. My parents took out a fairly large private loan through the institution. Of course my name was on the promisory notes, but at the time I believe it was my parents' credit that allowed the loans to be taken out. I do not recall signing any of these documents, and it is unlikely that my credit at the time would have allowed for such large loans to be taken out in my name.

For complicated reasons that probably don't matter, my parents have stopped paying the loan. I only found out when the school's loan department contacted me after nearly 2 years of non-payment by my parents, asking if there was anything I could do to make the loan current. Confused and wanting to help, I agreed to "take over" a portion of the loan and have been making monthly payments ever since. It didn't occur to me that I might not be responsible, I only wanted to help. I never signed anything official, these were verbal agreements and conversations via email. The university did pull my credit once, but this was after I had started making payments and I don't think I've ever given them permission. The loan has never appeared on my credit reports.

After reconsidering, I'd rather not be paying this loan if I have a choice, as my parents were the original borrowers and I technically didn't give consent. They have stopped paying their share, according to the university (we do not have a close relationship). Does my verbal/casual agreement with the school to "take over" the portion that I have been paying on constitute anything legally binding? Would I need to obtain signed copies of the promisory notes from 2002 to confirm that I am in fact responsible? (Or confirm that I didn't sign them, and therefore am not responsible?) Do I have a viable option to stop paying this loan? It may be a cut and dry answer--ie, I am responsible--but I'm hoping there's some gray area here I can take advantage of because the unfairness of taking over a portion of a loan which the original borrowers aren't paying anymore has started to bother me. If I stop paying, I run the risk of the school reporting a default to the credit bureaus--which is not an option. But am I really bound to this loan?

I have learned so much in this forum--my personal credit situation is good to great and improving all the time--so I'm hoping someone can weigh in on this tricky situation.

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Let me get this straight, you enrolled in a private university in 2002? Your parents did not attend this University, correct?  They were paying for you to go to a  private University, is that right? For whatever reason they could no longer pay for you to go to University. Do I have all of that correct? Now, I think you gave consent when you attended the University. Your parents may have taken out the loan and defaulted, but you are definititely responsible for paying it one way or another. I think you need to change your way of thinking. It is definitely fair for you to pay for a college YOU attended. Your parents didnt attend the school but paid for it up until now, how is that fair to them? I dont really expect you to answer that question, just hope you really think about what you are typing, because you should probably change your mindset. 

[Anonymous]

My question was narrowly focused on the consequences of continuing to pay or choosing not to pay the loan that my parents took out. This is a credit and financial advice forum, not a family counseling resource. I have thought quite a bit about what I typed, and my mindset is occupied by trying to manage a problem I inherited, not one I chose for myself (I was encouraged to attend the school, and my future earning potential/personal finances at the time were not part of the school's decision to grant the loan). You have several facts wrong about my situation. This is an unhelpful post, and not really keeping with the spirit of a constructive community where people can come for information and advice that is supported by facts and past experience.

[sean23]

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@Anonymous wrote:

My question was narrowly focused on the consequences of continuing to pay or choosing not to pay the loan that my parents took out. This is a credit and financial advice forum, not a family counseling resource. I have thought quite a bit about what I typed, and my mindset is occupied by trying to manage a problem I inherited, not one I chose for myself (I was encouraged to attend the school, and my future earning potential/personal finances at the time were not part of the school's decision to grant the loan). You have several facts wrong about my situation. This is an unhelpful post, and not really keeping with the spirit of a constructive community where people can come for information and advice that is supported by facts and past experience.

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My apologies, but you did you veer off strictly keeping to the facts of the issue you face by mentioning the "unfairness" of the situation you find yourself in. My position still stands that you are responsible for this debt by the mere fact that you did "technically" give consent as you mentioned by enrolling and apparently attending this university (for whatever reason) and received all of the benefits that attending University comes with. At the very least I think you agreed that it was your debt to pay when you started making payments on it. I dont think reconsidering and deciding that you would rather not pay your school loans will be of much help in the way of getting out of paying the loans you used to fund your education. I have school loans that I would rather not pay as well, I still send in my check every month though. 

[SCF]

sean23, while your post certainly makes sense from a moral/ethical standpoint, there is a significant legal difference between a loan made to both the parent(s) and student (usually with the parents as co-signer) and a loan made to the parents on behalf of the student (as is the case with Parent PLUS loans).  I think its valid to mention to the OP that his obligation possibly should extend beyond the strict legalities of the situation, but it's important to keep things friendly and supportive.

OP needs to ge the original documents for this loan to sort this out strictly from a legal standpoint, and then make a decision from there.

[Anonymous]

I am going through a very similar situation.

When I applied for a mortgage loan I found out that I had a private student loan that is 5 months past due. To make a long story short, my mom did all of the applying, signed herself as consigner, and had me sign as primary. (I've always been terrified of my mom so I wouldn't have questioned what I was signing, especially at 18 years old.) She then had a friend notarized it without me being present. When the loan went into repayment the lender called her and sent her letters, not me. She never told me that they were trying to contact me.

I was not living with my mother at the time they loan was taken out so I could have easily qualified for financial aid as a independent. I have no idea why she took out this extra loan. The lender has no mercy on the situation and demands that pay the past due amount, which I will be doing next week to keep it to going to a judgement.