Many young adults opt to attend college within the first few years following
their graduation from high school. At such a young age, rarely do any
of these individuals have a strong enough credit score to be approved
for private student loans independently. In this scenario, students who
need to rely on private
student loan debt as opposed to public student loan debt alone generally need to seek out
the assistance of a co-signer.
When another adult co-signs a privately funded student loan, he or she
may be held responsible for paying back that loan should the student find
that he or she cannot (or will not) pay it off independently. However,
many students are unfortunately discovering that if a co-signer of a privately
funded student loan passes away before the loan has been paid in full
that they may be held responsible for the balance of the loan immediately
after the co-signer’s passing.
Although this practice has drawn criticism from lawmakers and consumer
advocates in recent months, it is not technically an illegal practice.
If a student cannot pay the balance in full after his or her co-signer’s
death, the loan company may choose to treat the student as if he or she
is in default. This action can significantly affect the student’s
credit score in a negative way.
If you are struggling with overwhelming student loan debt in the wake of
a co-signer’s death, please do not hesitate to reach out to an experienced
bankruptcy attorney. You may be able to avail yourself of certain debt
relief options in order to avoid default.
Source: New York Times, “
Troubling Student Loans,” April 28, 2014