Couple struggling after being forced to pay dead daughter's student loans....

[lakemom]

Anyone else read this article on Fox News?

http://www.foxnews.com/us/2014/08/06/california-couple-struggling-after-being-forced-to-pay-deceased-daughters/

"Lisa Mason had taken out close to $100,000 in student loans in order to pay for nursing school, and was making payments on the debt when she died. Steve Mason said he and his wife, who had co-signed the loans, were contacted immediately after his daughter’s death and were told they must start making payments.

“We knew if she didn’t pay her debt we would be responsible by co-signing, but we didn’t know that if she died the debt would fall to us,” he said."

OK, so as I read the headline I was thinking...well did they cosign on them?  Yep, they sure did and now claim ignorace about what cosign means.  We didn't cosign any of our kid's student loans (mainly because our credit was shot back then and we couldn't qualify as cosigners and with the current student we are just helping out with paying what he doesn't earn himself) BUT when #2 asked #1 to cosign on some of his we made sure he bought a term life policy with his sister as the beneficiary (he was in the guard so got SIGLI super cheap).  Two years after graduation and he's gotten the loan with his sister as cosigner paid off and has paid down a huge chunk of the other one.  Why would a 27 year old with 3 kids and a crushing debt load NOT have an insurance policy to pay off these loans?

[GuitarStv]

Yep, it wasn't their daughter's debt.  By cosigning, it became their debt.  It does suck that their daughter died though.

[Phil_Moore]

Whatever you do, don't scroll down to the comments section. That way madness lies.

I feel a great deal of sympathy with them and I'm sure enough people have pointed out their mistake so no need to pile on.

[Khan]

They did cosign...

I'm more saddened by the immediacy of the loan immediately switching to them. I understand the business and legal reasons, but if it did happen immediately, kinda callous, no?

Edit: Like... some grieving loophole, debt reduction. I mean, fucking PR, how does it work?

[Cpa Cat]

This is a perfect example of when term life insurance is needed.

If the regulation surrounding the student loan industry wasn't so F-ed up, lenders would probably require it - just like they do for most loans that aren't collateralized.

[giggles]

One of the reasons for stories like these is to "shame" the loan companies into forgiving the loans, even if they are rightfully owed.  Bet an "all is forgiven" follow up is imminent.

[MrFancypants]

Man, what a terrible situation.  All these people wanted to do was help their loved one go further in life.

I understand the harsh reality of cosigning for things like student loans, and it was a mistake without insisting upon a certain level of life insurance....  but I still feel bad for them.

[Bateaux]

The possibility of death has to be considered anytime you take on debt.  No doubt this grieving family has enough of their minds, but insurance should have been taken out just in case.  I've never held debt that couldn't be paid in the event of my death.  Now I no longer use debt.  Debt is almost always bad like a cancer that eats at your well being.

[Angie55]

As someone who graduated with 50k in private student loan debt, cosigned by my parents, this hits home to me. While I've had a job I've had a piddly policy for 1 years worth of salary paid for by my work. But I have slacked in picking up life insurance for the 2+ years I was out of work. Being the bearer of the loans at least I cogniscent of it though. Not sure that my parents even thought twice about it... For my first job, I went so far as to have the beneficiary my parents instead of my husband. Now that the balance is lower that has switched. But I believe he would still use the money to pay them first.

[lizzzi]

Very sad situation, but as others have said, they did not think it through and plan ahead for worst case scenarios. As the old chestnut says, "Hope for the best, but plan for the worst."

[EarlyRetirementGuy]

This is exactly why I got life insurance when taking on a joint mortgage with my partner. I know MMM has strong (negative) views on insurance but I know my partner would be unable to afford the mortgage on her own and I wouldn't want her to ever be burdened with it alongside the grief. We will cancel the insurance once half the mortgage is paid off and so would be manageable by a single person.

So sad they've lost their daughter though.

[chicagomeg]

This is exactly why I got life insurance when taking on a joint mortgage with my partner. I know MMM has strong (negative) views on insurance but I know my partner would be unable to afford the mortgage on her own and I wouldn't want her to ever be burdened with it alongside the grief. We will cancel the insurance once half the mortgage is paid off and so would be manageable by a single person.

That doesn't make sense. The payments don't change when half of it is paid off, unless you pay to recast the loan.

[EarlyRetirementGuy]

This is exactly why I got life insurance when taking on a joint mortgage with my partner. I know MMM has strong (negative) views on insurance but I know my partner would be unable to afford the mortgage on her own and I wouldn't want her to ever be burdened with it alongside the grief. We will cancel the insurance once half the mortgage is paid off and so would be manageable by a single person.

That doesn't make sense. The payments don't change when half of it is paid off, unless you pay to recast the loan.

When half the loan is paid off we can remortgage to reduce the payments and restart the term.

[usmarine1975]

I wonder why no one ever ask the College to gift the money back?  It's always the bank.

Sorry for their loss.

[MoneyCat]

If this happened to a young person who co-signed, I would be a lot more sympathetic.  In my younger, less financially knowledgeable days, I co-signed an auto loan for a friend and ended up getting my credit severely damaged as a consequence.  I simply didn't understand what it meant when I co-signed, because no one ever taught me anything about loans and the bank that gave the loan wasn't interested in educating me about it because it would cost them business.  The parents in this situation, however, are old enough and experienced enough to know exactly what they were getting themselves into.

[slugline]

Single parent with three kids and seemingly no life insurance. Ouch.

[sheepstache]

I wonder why no one ever ask the College to gift the money back?  It's always the bank.

Sorry for their loss.

As in, 'Could we return this education?  It's hardly been used.'?

[sleepyguy]

Sad for their loss, but 2 things jump out...

Co-signing and not knowing its THEIR debt... geeze

$200k loan for nursing... omg.

Banks play by the numbers and won't budge too much for emotional distress.  They will probably reduce the interest rate as this has been given some bad PR for them.

Sad situation but they'll have to pay up.

[sheepstache]

It says the loans were more like 100k but the woman died 4 years ago.  So I'm assuming there were missed payments and fees?  The article doesn't say.  It does say some of them were renegotiated and one was forgiven.

I get more annoyed about this sort of thing because people should be trusted to handle their affairs and lenders should get their money back.  When borrowers mess it up and use PR to get out of their obligations it makes it harder in the future for other people to get loans.

[GuitarStv]

I wonder about the 100k of debt turning into 200k of debt as well.  It sure doesn't sound like the daughter was on track to pay back the loan if it was gaining interest so quickly . . .

[usmarine1975]

As in, 'Could we return this education?  It's hardly been used.'?
[/quote]

As in why does the media and people always blame the bank who only made it possible for the individual to go to school? Meanwhile the School charged this amount and actually took the money.  Granted the interest and fee's are on the bank but the initial cost is from the school.

My own school near the end of my term took a huge loan instead of a few smaller ones.  I wasn't aware of it at the time but now I sit back and wonder why.  The rate wasn't favorable and they were dropping.  I trusted the school finance officer to have my best interest in mind.  (not the case)  But we never question that.  When I say huge it was a few thousand instead of a thousand.  Anyway it was just a pondering.  one that will no doubt go no where because it's easier to blame the banks who are much wealthier then any university oh wait.

[NumberCruncher]

This is a perfect example of when term life insurance is needed.

If the regulation surrounding the student loan industry wasn't so F-ed up, lenders would probably require it - just like they do for most loans that aren't collateralized.

+1

[Sofa King]

Sad story but stupid people.

[rocksinmyhead]

Whatever you do, don't scroll down to the comments section. That way madness lies.

I feel a great deal of sympathy with them and I'm sure enough people have pointed out their mistake so no need to pile on.

agreed. that is really sad.

my parents took out Parent PLUS loans for my undergrad degree (with the understanding that I would be the one actually paying them off), but then they had life insurance on me until the loans were gone.

we need WAY better financial education in this country.

[Sofa King]

She died of liver failure because of drug abuse. Sued Doctors who gave her the pills and got a big settlement.  Unwed with 3 kids from 3 different baby daddies.  Where is all the $$$$$ from suing the Doctors? Pay loan off with that?

[slugline]

She died of liver failure because of drug abuse. Sued Doctors who gave her the pills and got a big settlement.  Unwed with 3 kids from 3 different baby daddies.  Where is all the $$$$$ from suing the Doctors? Pay loan off with that?

Parked in the driveways of various lawyers, perhaps?

[Doomspark]

I read about this on CNN Money a couple weeks ago.  I feel for the parents - it's devastating to lose a child.  But they apparently made a string of bad choices.

I don't understand why they did nothing about the loans for so long that the outstanding balance doubled. And, as others have said, I don't understand how they could not have known what cosigning a loan entailed.

[Thegoblinchief]

Parents of my best friend from college are dealing with this after he died three years ago in a car accident. Don't know the amount, but it's enough on top of the grieving process.