I co-signed for a family member on a $15k SL back in 2007. His payments became due in 2009 and his balance with accumulated interest was a little over $16k Right now his balance owed is 12K+ which is higher than it should be due to a few reasons. First he can't seem to pay more on the loan principle, he is constantly late 11 to 15 days paying his monthly payment and his variable APR is now 8.5% up from 5.7% (?) at the start of when his payments became due. His monthly payment has increased with the added interest and his rising APR. His only break is that for all these late payments, AES has yet to charge him a late fee. MHO he is extremely fortunate.
My question: Is it possible for him to refi this SL or will he have to start over? I'm not aware of his CS or his CL but I made sure there have never been any lates reported on his/my CH from this SL. I was hoping with a lower APR and possibly a shorter term and some financial discipline he may be able to save some on interest. Thanks for all replies. I appreciate all answers and opinions too.
Is this a federal or private loan?
I may be able to answer some or all of your questions.
I believe it is private. It was through Bank of America and AES now reports the owner as Towd Point LLC. The loan program is ALPLN. I filed CH7 in 2010. My lawyer told me he wouldn't include this debt as it is a SL and I was just a co-signer. He also said it wasn't dischargeable as it is a Federal Loan. Never questioned him on it.
I think he's extremely unfortunate then. Private student loans are the worst, unless you were lucky enough to only take out a loan of a few thousand dollars or you'd be going into area where you'd by making a substantial, steady paycheck. Most students will not. There are several great protections but only for federal loans. The best that you can do is to contact the servicer and see what programs there are but if he's paying what he can pay (very likely) then the bank will be happy to bleed him and take your along for the ride.
The good news is that I just saw a post about releases. 12-48 months of payments and they will let you apply to get off the loan. You'll want to contact them for the details. Hopefully this will help you get out of the situation.
Personally, the paying in time thing I didn't take seriously until I learned about credit scores and the importance of healthy financial decisions. I'd definitely look into a reconsolidation with a lower fixed APR. Or a reconsolidation with a bank that has programs than can help him with the debt.
Thanks for your replies Sabii. I believe I saw the same post you did a few months back about releasing a co-signer from an SL. I did ask AES about this program and they sent me an application. According to AES, there has to be 12 months or more without any late payments of no more than 15 days in any consecutive month. I sent the application to the signer with the hopes he would in turn send it to AES for processing. According to AES, the signer and not the co-signer is the only one that can apply to have the co-signer released on the loan. I believe he's almost 15 days late this month, so this unfortunately doesn't seem to be an option. If I'm forced to stay on this loan, I was hoping he would at least try to refi for a lower rate. As it is this loan is scheduled to end in 2029. 10 more years of worrying every month.
Appreciate your replies Sabii, I thought the increase in monthly payment amount on the SL was due to unpaid interest. With that and the increased apr, I can see now that the loan will still have a balance at the end. If so, do you know if will any remaining balance be due at that time? This is why I'm interested in the signer refinancing the loan and having the lender remove myself as the co-signer.
As far as my CS... I monitor the loan monthly online and from the calls I received from AES telling me the loan payment is way past due. I would make sure the payment is made at least 5 days before 30 days late.
I've had some hard financial times in the past.... mostly my fault and was appreciative of family helping me when I was in a bind. This is why I co-signed. However at one point I had to learn the hard way because of my financial mistakes. The signer on this SL needs to learn too. Thanks again for your advice. -Jim