Mom co-signed, now stuck with student loan payments
To Her Credit
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com
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Dear To Her Credit,
Back in the 1990s, I co-signed for my daughter's student
loans. She hasn't spoken to me in 10 years, and she doesn't make payments on
the loans. The Department of Education says I'm responsible for the debt. I've
set up a plan of $15 per month.
She makes lots of money. I depend on Social Security. Is
there a way to make her pay it back instead of me? Thanks! -- Lisa
Lenders are, above all, practical. If they can't get money
from your daughter, they'll get it from you. That's the deal you signed up for
when you co-signed your daughter's loans.
You can't force the lenders to go after her income instead
of yours. They've no doubt already tried that, and they're having better luck
This isn't what you envisioned when you sent your daughter
off to college. We send kids off with new linens and a dorm fridge. We expect
them to graduate in four or five years, get good jobs and pay off their own
student loans. Signing with them seems like only a formality. Few parents
actually think they'll be making the payments -- especially with their Social
For too many parents, the child doesn't finish school, or
finishes and can't find a job in a chosen field. Sometimes a child becomes
disabled or even dies. All too often, as in your case, the child just seems to not
see the need to pay her own bills.
You did the right thing by setting up a payment plan of $15
per month. Had you not done that, you could lose a lot more to garnishment. Your
Social Security benefits are protected from the claims of most creditors.
However, student loans can be an exception. Without a payment plan, the
government may take as much as 15 percent of your disposable income. They won't
garnish a check under $750.
If you want to pay off this debt faster, you might consider
going back to work. It seems harsh, but not everyone who retires is able to
stay retired. In the eyes of the law, this is your debt, too. When you're on
Social Security benefits, even part-time work can help. You could make the payments
on this debt and improve your total finances as well. If you have reached full
retirement age, the amount you earn won't affect your benefits.
It sounds like your daughter needs a reality check. Children
tend to think their parents have unlimited financial resources. Finances may
not be the first topic on the list when you haven't talked to your child in a decade,
but you need to tell her that you can't afford to finance her education, from
which she is benefitting, with your Social Security checks. Maybe she isn't
making as much money as you think. Your best bet is to contact her and work out
a way for one or both of you to put this debt behind you.
See related: Mom's on the hook for co-signed student loans, Student loan co-signer liable for delinquency
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Published: October 25, 2013