Here is another gut wrenching story. Not only to lose a child, but then be harassed by a creditor…
If these had been federal student loans, Mason could have had the loans discharged or at least received some sort of financial assistance. But since they are private loans, he has little to no recourse.
He called each lender to explain his situation and beg for help, and while they sympathized with him, they told him they weren’t required to do anything.
And they’re right: private lenders aren’t bound by any federal requirements to help borrowers — or co-signers — facing financial hardship, even when it’s a parent whose child has passed away, says Deanne Loonin, an attorney at the National Consumer Law Center. Any loan forgiveness is up to the discretion of an individual lender.
This is certainly not the first story, and it certainly won’t be the last, with the same facts.
But I saw something interesting the other day, and I won’t take one bit of credit…
A smart parent who agreed to co-sign the student loan, but required an life insurance policy on the child. If the child were to die, the insurance policy would pay enough to satisfy the student loans.
While this doesn’t protect the co-signer if the student isn’t able to pay in the future due to lack of income, it is a great idea. We certainly think of life insurance on ourselves, if we were to pass early, for the benefit of our children…
Not enough people think about what were to happen if a child were to pass before the parent. Unfortunately, because people don’t want to think about something so awful, it doesn’t get addressed as often as it should.
Barring health issues, a life insurance policy on a college age person for $100,000, or even $200,000, is so minimal that this should be a must for anyone agreeing to be a co-signer.