all 101 comments

[–]CimmerianKat 114 points115 points  (9 children)

I stupidly co-signed on a student loan for my ex (and yes, I still hate the financial aid lady that advised this 10+ years later) and when he decided that paying them was too much of a hassle I ended up taking out a personal loan to pay it off. I was told because I was just the co-signer they wouldn't let me re-structure any of the payments or dispute his late fees, so taking out my own loan was best. This had the added bonus that he couldn't attempt to add any more to the loan- which he of course attempted to do.

Good luck.

[–]somewhat_pragmatic 39 points40 points  (8 children)

I stupidly co-signed on a student loan for my ex (and yes, I still hate the financial aid lady that advised this 10+ years later) and when he decided that paying them was too much of a hassle I ended up taking out a personal loan to pay it off.

Doesn't this give you grounds for a law suit against your ex? If he is making any money now you might be able to get a judgment against him.

[–]CimmerianKat 50 points51 points  (1 child)

The lawyer that I consulted at the time said no, as I had willingly signed as his co-signer and thus had agreed to pay if he defaulted.

I've learned my lesson- don't co-sign ANYTHING.

[–][deleted] 14 points15 points  (5 children)

A lawsuit on what grounds? A co-signer simply agrees to repay debt in the event that the primary borrower defaults. Nothing about the relationship, absent a supplemental agreement, suggests that the co-signer has a cause of action against the primary debtor.

[–]World_So_Code 2 points3 points  (4 children)

I have little knowledge about law outside of what I pick up from daytime judge shows but wouldn't him refusing to pay and subsequently trying to add to the loan be a start, at least?

[–]Hhhhhhggggggffffff 18 points19 points  (2 children)

Nope. When you co-sign you are taking out the loan in your own name, with or without the other person contributing at all.

[–]buge 1 point2 points  (1 child)

What if there was a verbal agreement that he would pay off the loan? That might count as a contract. You would still be liable to pay the bank, but he might then have to pay you. Or what if it was a written agreement between the two people?

[–][deleted] 4 points5 points  (0 children)

Good luck getting a verbal agreement enforced.

Don't co sign for people.

[–]__irresponsible 45 points46 points  (1 child)

This is the worst way to learn this, but co-signing by design is a joint responsibility. I am sorry you are caught in a situation that puts awkward financial pressure on your relationship with your daughter.

My advice to you, is to make every effort to reconcile. She needs to fully understand the financial burden it would put on you, as her parent, to take on HER student debt. Does she understand the impact it would have on your family, her siblings, and your financial future? Show her your monthly budget, and ask her if she thinks it's fair that you should pay the mortgage, the utilities, feed the family, etc etc, AND also take on her loan.

Also, try to understand her perspective. Does she believe it's not her problem? Help her realize that it hurts both of you if she neglects her financial commitment. It impacts her future lending credibility. She will probably want to buy a car at some point, does she know that a poor credit score can impact her ability to get a loan? Or maybe she thinks she can't afford it? Make a compromise; chip in for a year or two, as long as she's willing to contribute.

Very few students understand the basics of money management, much less what it means to handle a 120k loan. Without knowing the nature of your relationship issues, I can only hope that they aren't so serious that you can't have a frank conversation about the nature of debt before she digs you both a very expensive grave.

Edit - Fixed mobile formatting.

[–][deleted] 6 points7 points  (0 children)

Depends on who your dealing with.

She might read Student Loan Defaulters all day , she might understand her dad has too much time lose and will pay the debt.

She might work at Walmart and thus simply can't afford to pay the loans. You can't really assume anything about her state of mind .

I was evicted by my own uncle as a kid , family could mean less to a ton of people

[–]Navi_13 24 points25 points  (1 child)

Step 1: attempt to reconcile and see if she will take responsibility again. Only you can know if this is even a possibility.

Step 2: cut off ANY other financial assistance she receives from you. Health Insurance, cell phone bill, authorized user on CC, rent, etc. This is important both for your finances, and for her understanding of responsibility and consequences.

Step 3: make plans to pay off the debt yourself. Figure out how this fits into your budget. It's shitty, but cosigning means that it's your responsibility.

[–]BuiAce 8 points9 points  (0 children)

Out of al the comments this seems like the only real steps here.

I know step two might be hard for some parents, but then again the daughter is holding him by the balls at 120k

[–]mn52 18 points19 points  (3 children)

Does the loan have a co-signer release process? Of course, if it’s available, it would have to go through her to even start that process.

[–]reevee69[S] 9 points10 points  (2 children)

I will check the paper work to see if it has that clause.

[–][deleted] 18 points19 points  (0 children)

Your daughter would have to effectively get a credit check done and re apply .

Not going to happen if she doesn't want to pay the loans

[–]-Zhytomyr- 7 points8 points  (0 children)

not gonna happen. They will only release you if the payments were made on time for at least a year, and her credit is good, and her income is enough to pay for the loan. Going through this with an ex right now.

[–]teresajs 9 points10 points  (0 children)

You would need to contact the lender(s) to find out if you have any other options but, since you're the cosigner, you may not have many options beyond paying the loan (more or less, as-is).

You could just make the minimum payments. If you believe you're going to get stuck with the entire bill and have home equity, you might look into whether it would save money to refinance your house, pulling out the money to pay off the student loans.

Also, if you have a will that names your daughter a beneficiary of your estate and/or if she is a beneficiary on any of your investments, you may want to change those documents. Considering this $120k to be her inheritance may be a good way to deal with it mentally/emotionally.

To anyone else reading: This is why you shouldn't ever cosign on loans for others.

My eldest starts college in a couple years. One of my goals is to not sign my name to any loans.

[–]2of10_wouldnotupvote 8 points9 points  (0 children)

Just wanted to say I'm sorry about your situation. It's rough trying to look out for your daughter and have it backfire like this. With that said, you don't have a lot of options here. When you cosign for a loan it's no different than taking that loan out yourself so the same repercussions apply. With out knowing your personal financial position, my best advice would be to make the minimum payments for the foreseeable future while working on your relationship with your daughter, having the end goal of repairing your relationship and advising her on the perils of not repaying debts (especially those with *cough cosigners) in the hopes that she matures to the point of realizing this debt is her moral, ethical, and personal obligation. The optimist in me tells me she'll get her shit together and start paying it off, but if she doesn't you'll have to make the decision of whether you're willing to pay it off yourself or face wrecked credit and wage garnishments. There's also a difference between federal and private student loans, so do some google searches on your particular situation. Best of luck to you.

Edit to add that there are such things as student loan lawyers. A debt of this magnitude may be worth the consult. It may be a stretch, but it's also possible to refinance student loans, so definitely try to get her to refinance the loans in to her name only.

[–]Stedw 53 points54 points  (8 children)

Is your daughter out of school and working. This is going to sound cruel but you need to a little class in "welcome to Adulthood" because she has you over a barrel and she knows it. She thinks she has nothing to lose because she knows it will destroy you before her.

If she is an AU on one of your cards then call and get the CL dropped on to a lower level and max it out with normal charges each month. This will lower her credit score. Then you drop anything you cover for her that you pay like health insurance, car insurance and phone bills, FYI give her a heads up about the health insurance and hope she caves as that is hard to get back for her.

Next I would warn her a lawsuit is coming and be prepared to follow through. It may cost you some money but her not paying will cost you a lot more in the long run. She may want to throw tantrum and may not like some things, she does not even have to like you but she cannot hold you hostage with those loan.

I understand why you would co-sign, I have co-signed (actually mine were all co-borrowed) loans for my kids but never one I could not pay myself, just in case. However my kids knew there were consequences if they were to attempt to black mail me. I would not hesitate to make them trying so just as painful for them as me. That is not being cruel it teaching them that all things have consequences.

Give her a chance to cool down and realizes she has a responsibility to honor her commitments.

[–]stmfreak 23 points24 points  (1 child)

So it is war, then.

While I admire the bravado, kids do not generally think far enough ahead to react based on future consequences. Which is exactly why OP is in the current predicament.

[–]Stedw 9 points10 points  (0 children)

Yea but you protect his interest by having the ability to garnish her wages and seize assets to cover what he is paying out in Sl payments. IN some states he can essentially do this for life.

She then has a choice of stepping up and make the payments on her own or doing so via the judgement process. This is no different than if he had not been the co-signer on the loans and she chose not to pay.

[–]PostIronicTransHuman 10 points11 points  (5 children)

A lawsuit lmao. On what fucking grounds?

[–]Stedw -4 points-3 points  (4 children)

A co-sign is a contract and she is failing to live up to her portion of the contract and the father is being harmed by her failing to live up to her portion of the contract.

Even if not formally in writing, it is a verbal and at the least an implied contract, rather it can be argued in court that it is. Whether or not you do have a contract is for a judge to decide but still grounds for a suit.

Considering this is not a small claims issue you are going into big person pants court and lawyers are required unless a party is represented Pro Se and since the dad likely has larger resources and 120K plus interest ( do not forget credit score) at risk he is going to get an attorney. She is going to be forced to higher an attorney or go Pro Se and that rarely ends well.

[–]PostIronicTransHuman 15 points16 points  (3 children)

A co-signing agreement is not a contract between co-signing parties, it is an agreement with the lending institution that should the primary borrower fail to repay their obligation, YOU have agreed to bear the debt instead. There are no grounds for a lawsuit against the daughter here when the loan was willingly cosigned by someone who I assume is competent to understand what co-signing means.

[–]Stedw 0 points1 point  (2 children)

A co-signing agreement is not a contract between co-signing parties, it is an agreement with the lending institution

That is a formal contractual relationship between the bank and the signing parties. However the father is signing because the daughter says "I will pay this no worries". The father has no interest other than his daughters ability to get a loan so she can get an education. That is the one of the very definition of an implied contract, fairness, and the facts imply a contract. Source

An implied contract is created when two or more parties have no written contract, but the law creates an obligation in the interest of fairness based on the parties’ conduct or circumstances.

If the parties’ conduct or the circumstances suggests they had an agreement or understanding that created an obligation, then the law will find that they had an implied in-fact contract.

Jut for the record, the father should have had a written contract between him and the daughter. Every time I have co-signed/co-borrowed for my children I have a formal contract, I am weird in that way, that spells out each persons responsibility in regards to loan. It has taught my kids to read everything they sign and that loans parents sign for them are not trivial matters.

They also know that I do not not play and will not have any issues enforcing the contract formally if I need to. Not that I will not help my children if they have a real issue making payments. They are not however going to shirk their responsibility, so they can get me back, because I do not want to damage my credit. When this post first popped up I read it to my daughter and her comment was " if that was one of use we had better be looking for an Attorney. I trust my wife, she handles things more precious to me than my money, everyone else signs a contract.

[–]rockandrock44 1 point2 points  (1 child)

Absent a formal written agreement, it’s one person’s word versus the other’s. It’s very unlikely a court would enforce a verbal or implied contract of this nature. However, you can sue for nearly anything, so perhaps it could scare her back to the negotiating table.

[–]Stedw -1 points0 points  (0 children)

I did some searching about discussions on this topic on Attorney discussion sites to make sure I was not blowing smoke.

The legal theory behind suing is a Indemnification and/or Contribution. Indemnification is more difficult to use unless you paid unwillingly, you lost a court case, it is near impossible. So the parent would have to wait until he was sued. That is something I would not be willing to do.

Equitable contribution is the one that kicks in with an instance like this. Equitable contribution assumes that an implied relationship (contract) exist when each has a common contract(in this case a loan) with a third party but none between themselves.

These theories spill out of insurance law and are applied in LLC environments where multiple people guarantee a loan. Source.

The subject of student loans and co-signers is a popular topic on law discussion boards. If you are interested here is a link to some

My Business Law professor, all those decades ago, was a sitting judge and we has discussed these theories involving a business loan lawsuit.

I will stop blathering now.

[–]kuningas51 14 points15 points  (0 children)

What are my options? Can I refinance? Re-structure the payments?

Nope, you're fully liable for the debt. The bank knew the risk of loaning only to your daughter was high, so that's why they asked you to cosign.

In some cases the cosigner can be released, but that's if the borrower has been dutiful in making payments.

[–]Fuzilumpkinz 7 points8 points  (2 children)

Remind her this won't just go away. If she stops paying. Completely ignoring fees with the account with a 4 percent interest rate she is looking for another 25k in the next 5 years on top of that. she needs to be reminded that spite won't make this go away. If she does default they will just start garnishing her wages so she might as well handle the situation now before it gets worse.

One of the first things to learn about adulting. Ignoring things just makes them worse.

[–]lost18k 2 points3 points  (1 child)

how are they going to garnish wages of an unemployed person?

[–]Fuzilumpkinz 2 points3 points  (0 children)

When some one says they aren't paying out of spite they probably can pay but dont want too.

[–][deleted] 51 points52 points  (46 children)

Please never co-sign for anyone. Anyone.

[–]JustCallMeTomHanks 15 points16 points  (9 children)

Just curious, not an attack - do you have children? Because I would say in a vacuum that this might be "correct," as far as advice goes. But parent/child relationships are far more complicated than I think you're accounting for.

Its something where I think parents need to be open to a little bit of understood risk as a form of investment to their own future. If cosigning a student loan allows a child to go into school in pursuit of a lucrative career, or to make future payments more manageable (I'm assuming a better rate was obtained) you reduce the chances of having to directly subsidize your child's life later down the line when they can't find good work or manage to balance their loan repayments.

A coworker went through this about a year ago. 22 with no credit and her parents balked at cosioning a car loan. They finally agreed because they realized the difference in interest rates was $200 a month - and that rationally if their daughter couldn't afford the payments at the higher rate they would have stepped in to pay the actual loan themselves. Because the relationship is complicated.

Be far more leery of cosigning a junk degree at a random university with no prospects though. Communication is key too.

[–]michapman 9 points10 points  (2 children)

I think it's one thing to invest in your kids, but $120,000 for college isn't an investment, it's a luxury. No one has to spend that much to go to college. If your coworker was trying to lease a Maserati, I think the parents should have balked. I definitely agree with helping your kids but you have to apply the same standards that you would apply to your own spending; live within your means, don't bite off more than you can chew, etc. Six figures of student loan debt is obscene; it's far, far above the average amount of debt that US students graduate with and it's completely unnecessary.

[–]JustCallMeTomHanks 3 points4 points  (1 child)

I should have clarified that I wasn't applying that argument directly to this example/amount of money. I did point out there are times it won't make sense. But it still could - med or law school at a prestigious university for example.

Of course there's not enough info to say for sure, but I'm inferring from OP and the tone of the post, that money was not spent on med school at Hopkins. But this being a bad decision doesn't invalidate the entire train of thought.

[–]michapman 0 points1 point  (0 children)

Got it. Yeah i agree.

[–][deleted] 8 points9 points  (4 children)

I have a son. I would never co-sign debt for him. You're not doing your kids any favors inviting more debt for them. When the best possible outcome is debt and interest, I'm not doing that. Not to mention when a default happens.

A 2016 CreditCards.com survey of 2,003 U.S. adults revealed the negative results from co-signed loans gone wrong:

Lost money: 38 percent of co-signers had to pay some or all of the loan or credit card bill because the primary borrower did not.

Credit damage: 28 percent experienced a drop in their credit score because the person they co-signed for paid late or not at all.

Hurt relationships: 26 percent of respondents said the co-signing experience damaged the relationship with the person they co-signed for.

No thanks.

I'm teaching him the value of money, work, and saving. He's only 5 years old and obviously a very limited list of chores but he already has a good chunk of change in his "money bear". He had to make a tough choice to buy some Stick Bots at the store the other day. He had a great Christmas, and if he wanted a new toy already he had to use his own money. He settled on just buying one with his own money.

Now, don't get me wrong, I'll pay for college. I have a 529 going for him and at the investment rate and if the market averages 8% He will have $100k or so when college comes around. I also expect him to work and save himself. When/if he gets married and is looking at his first house, I'd love to gift him money to help with a down payment. We will see. I'm not saying don't be generous with your kids. Just my opinion that helping them into debt isn't a gift at all.

[–]Stedw 0 points1 point  (0 children)

I am a parent and I agree that it can be a tough thing not to co-sign for the reasons you listed and you are right. I posted about this elsewhere but want to reiterate for any parent out there.

You must stand back and make this what it is a contractual relationship. You should require your child to sign a contract so you formalize the relationship a parent assume will exist. People think I am cruel to make my children sign a contract but it is for them as well as me. My father used money to control me and my siblings and I would never allow that and I will not do it to my kids.

I have co-signed for loans for all of my kids loans, not student loans, and I have done a contract every time. It spells out theirs and my responsibilities and the conditions of receiving my signature. In the case of the car loan there could not have been a case of me threatening to take the car over me trying to punish them for something else. However I could take the car if they failed to pay.

This does not mean I threw them to the street either. I did add terms that if circumstances beyond their control resulted in them not being able to make payments I would cover until they were able to resume payment. This was never an issue because I required a separate account for loan payments. I could monitor this to see that payments were being made and required that account to have a buffer of funds.

Edit cleaned up 1st sentence in 3rd paragraph for clarity and readability.

[–]Wanna_taco_bout_it_ 15 points16 points  (0 children)

So parent/child relationships are fine for cosigning and some aren't. This isn't a one type fits all situation.

[–]cranp 2 points3 points  (0 children)

I wish people wouldn't state this advice so absolutely. If someone truly is willing to assume the payments then it can be a good tool.

[–]dr_t_123 2 points3 points  (0 children)

To add: Unless you can afford the loan payments yourself and go into it with full expectations that you will eventually do so (whether or not that happens).

Loans and co-signs to family should never be considered a "loan". They are gifts that they may or may not pay back as they have agreed.

[–]fullofzen 29 points30 points  (5 children)

Oh man. I would call the bank and tell them what is going on. Now I don't know what they will do if anything. But they could end up naming you in a lawsuit, and if you can give them some warning then perhaps that could delay serious legal action. Getting named in a civil suit could cause a lot of attention from your employer. In other words, talking to the bank can help keep this what it should be.....a private matter.

As far as your daughter goes....this is like all the other times that one of your kids screwed up. You have to talk to her and help her dig out of whatever bad situation she is in.

[–]tRacer4201 45 points46 points  (1 child)

I would call the bank and tell them what is going on.

When the father co-signed, he entered a legal agreement saying he will pay if his daughter cannot pay. Telling the bank that his relationship with the daughter has soured isn't going to do anything.

[–]PunkorTrendy 13 points14 points  (0 children)

Oh definitely not. OP they are going to squeeze you like an orange until that loan is repaid.

[–]amazonbrine 8 points9 points  (2 children)

Spot on aside from digging out (IANAL).

If they are to learn responsibility, you shouldn't willy-nilly save them from their actions. That is, of course, if you can get your name off the loan.

[–]michapman 44 points45 points  (1 child)

I’m not going to lie, there is basically no way that the bank will release the OP from the debt after finding out that her daughter won’t be making the payments any more.

The OP has to be prepared for this to be her debt since it is her debt; that’s what co-signing means and there’s no way to refinance it or transfer it over to the daughter, especially not without her consent.

[–]mrbiggbrain 7 points8 points  (0 children)

That is why co-signing makes any difference in loans, "If person A does not pay we can come after you right?"

[–]PM_ME_UR_BEST_PHOTO 15 points16 points  (0 children)

Exclude her from any inheritance and pay off the loans, and you're done with her for the rest of your life.

[–]reevee69[S] 4 points5 points  (3 children)

I realize that part. I was hoping I could get it restructured to a lower payment.

[–]terracottatilefish 2 points3 points  (2 children)

She may be eligible for IBR, or if you have really good credit you might be able to refinance it with a company like SoFi. I think it may be hard to do either of those things without her cooperation, though, although I suppose you could check into refinancing. Since you are a co-borrower you probably have standing to discuss this stuff with the lender, so I would start by just calling the lender and seeing what they can do for you.

[–]Contact40 5 points6 points  (0 children)

FYI IBR will never pay this loan off.

If the interest is 4-8% which is common, then the principle is growing $5-8,000 per year.

[–]michapman 0 points1 point  (0 children)

You can't enroll in IBR for a private student loan though. He can try to finance it though.

[–]bcgrappler 2 points3 points  (0 children)

I feel for you and can see how small steps over a few years could lead to this kind of situation. I think this is an important thing for people to see. I have co-signed a student loan for my ex's sister and the got divorced. This is not a good situation to be in at all and for anyone out there think very hard before co-signing especially a ln amount that would be life changing for you.

[–]sdp_thrwaway 4 points5 points  (0 children)

Not sure if there's anything you can do here but to try to work things out with your daughter.

[–]hopingtothrive 1 point2 points  (1 child)

There may be more to the story. What happened to the relationship and what happened to the education? Is she irresponsible? Is she overwhelmed with the debt? Is she employed? Can the relationship be improved so that you can at least talk about it? Unfortunately, you are fully responsible and agreed with the $120K -- which sounds like you approved of the very expensive college cost. If it's not a hardship you might as well keep paying on it so your credit isn't ruined and see what can be done to fix your relationship. The advice of "cutting her off" will just make your relationship even worse. Kids usually have some reason for becoming estranged from their parents.

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