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Mom co-signed, now stuck with student loan payments


To Her Credit
To Her Credit, Sally Herigstad
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, and also writes regularly for MSN Money, and, and has guested on Martha Stewart Radio and other programs. See her website for more personal finance tips and free budgeting worksheets.
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Question for the expert

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

Answer for the expert

Dear 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 with you.

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 Security checks.

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

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