If you are a parent and your child is going off to college, you will want to help your student through these formative years. However, resist the urge to co-sign on you child’s student loans. Here is the reason- 5 or 10 years from now, when you child is between jobs and cannot make the monthly payments, the loan will go into default and the bills collectors will be coming after you for payment.
There are countless stories on the internet of people in their late 50’s and 60’s, on social security or pensions that are forced to pay their childrens’ student loans. And, if these are not Federal Loans, but private or State Loans, the parent or grandparent will not have the benefit of an Income Based Repayment Program. There is even terrible story of a student debtor who died whose parents are being sued for the balance owed. Resist the urge to commit yourself to the contract. If you want to voluntarily make payments, that is fine, but don’t sign your name on a contract because that makes you equally responsible.
A similar situation is the parents and grandparents who co-sign for a young driver buying his first car. I often think of this story. I represented a loving grandmother who agreed to co-sign on the car loan because irresponsible grandson could not get credit for a car. After the grandson made about 5 of the 60 monthly payments, he was out late one night partying. He ended up crashing his car into a church, totaling the car and causing damage to the church itself. When grandson walked away from the car, he stopped making payments and did not pay for the damage to the church. Then both the church and the car loan company tried to collect from poor grandma, I had to file bankruptcy for her.
Fortunately, she was eligible for bankruptcy, but that does not apply to everyone & especially not to student loan debt, except in very limited circumstances.
If you have any further questions, please contact me.