Are you in trouble with student loans? Here’s a quick test: did you have a co-signer? If the answer is yes, then you may be in more trouble than you realize.
Student loans are about as American as apple pie. Sadly, many students start their careers with the mindset that student loans will always be a part of their life, and think paying them off early is a waste of effort. I’ve heard many say that the only planning they do with student loans is to setup minimum payments and just let lenders take that money out of their account every month for eternity.
The federal government estimates that 90% of all student loans in America are co-signed, which means if you’re reading this, there’s a good chance you’re in this group. But you probably didn’t know just how exposed you really are. The Consumer Financial Protection Bureau explains why:
Borrowers complain of being blindsided when their student loans automatically default when co-signers — usually parents or grandparents — die or fall into bankruptcy. When this happens, lenders demand that the full amount be paid immediately.
This would mean financial disaster for many, and provides a very good reason to take your student loans seriously. Dealing with the death of a family member is difficult enough without the bank harassing you for their payday. I can’t imagine how stressful a situation like this must be, and I have sincere empathy for anyone unfortunate enough to have experienced this type of disaster.
You can take steps to tighten your budget and minimize your risk if a co-signer were to pass away. Are you focused on getting rid of your student loans, or have you been hoping that they’ll eventually just go away?
For more information on the subject, click here.
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