4 Ways Student Loan Debt Affects Parents

It is becoming more and more of a trend for parents and even grandparents to help their children or grandchildren through college by providing help with student loans.

For one, doing so helps graduates get ahead by having less debt to pay once they leave college, giving them more money to work with while they try to look for employment.

However, the problems that arise with being a co-signer on a student loan have become increasingly difficult for parents and grandparents to handle.

Below is a summary of the 4 most common ways that student loan debt affects parents. If you are considering having your parents help you than it is worth your while to learn how it may affect them.

#1 Co-Signers Are Still Responsible

Parents and grandparents are told by lenders that being a co-signer can bring some benefits to the loans being taken out. One such benefit is that if the co-signer has a good credit history, then the interest rates on payments will be much lower than if the student was signing the loan on his own.

Another benefit is that it helps the student develop his own credit history while he is in school, which sets him up in the future for when he wants to sign up for his own credit card or purchase a vehicle.

What some co-signers don’t understand is that even though the student is the primary borrower on the loan, if he goes into default, then the co-signer is liable to pay the rest of the debt. This can mean many hardships for those co-signers who are already retired and rely on Social Security or retirement funds as income for their household.

#2 Increased Difficulties on Older Debtors

As co-signers get older, there are increased medical problems that can affect how much money he or she has saved up for a rainy day.  The problems are doubly so if he or she is also a co-signer of a student loan. Some co-signers have even had to budget whether they should make the monthly payment to help with student loans or spend money on much needed medications or even vital surgeries.

#3 Little Reward For Hard Work

Parents and grandparents have been through their own problems of getting through college, paying off debts and finding employment. They worked hard throughout their lives to provide for their own children and grandchildren for when the time came for them to start their own college careers, and budget their earnings to still have enough for themselves to relax in retirement.

But all of that hard work, time and planning has been for nought, when many parents and grandparents are pushed to sell some of their own assets and even obtain second jobs just to help with student loans. Some parents have even had to move back in with their own parents to help pay for their graduates’ student loans.

#4 Student Loan Debts Are Not Forgiven (even with death)

Unlike other loans, student loan debts are not eliminated through bankruptcy. This can make it troublesome for both the student and his co-signing parents involved if they are having problems meeting the payments every month. Eventually, if the student defaults, responsibility falls onto the shoulders of the parents, and little can be done if they also start to fall into default.

Deciding whether to co-sign on a student loan is a difficult choice to make, as either choice seems detrimental for either the student or his parents, or both, in extreme circumstances.

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Jon Haver

Jon Haver

Jon took engineering at Purdue and graduated with $23.5k in student loans. He now writes about how to get out of student debt quickly. He enjoys helping students make sense of their student loans and how they can still live their life without only eating Ramen noodles.
Jon Haver

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