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My son and his girlfriend persuaded my hardworking twins, a boy and a girl, to co-sign their student loans by telling them they only have one year left. Well, my boy twin autographs for his brother. After I racked my brains for him cheating on them, all was well. My son has a job and is working on his second master’s degree.
Now here comes the question: Girlfriend recently broke up with my son, and my twin girls will be dragged down by ex-girlfriend’s $10,000 in student loans!
The ex and family are in Hawaii and have no job. She was just helping her mom, who had a bad stroke and was disabled. It looks like the ex might never work, but who knows?
My daughter was scammed. Is there anything she can do to get out of this mess?
-W.
dear W,
I don’t know how your son and his ex “tricked” the twins into co-signing the loan. Did they make them sign loan documents that misrepresented the terms of the loan? Or did your twins not read what they signed?
In fact, some student loans do allow borrowers to apply for so-called co-signer releases in as little as 12 months after graduation. However, actually getting a release can be complicated. Borrowers must be up-to-date on all payments and need to prove they can repay the loan without a co-signer.
Obviously, this is not an option because your son’s ex can’t afford the payment. But I bring this up because I want to know if there is any truth to the claim that the twins can get out of these loans after a year.
If your daughter signs fraudulent loan documents, she should file a police report and contact the loan servicer. But if she hadn’t read the loan fine print at all, I’m afraid she wouldn’t have much choice.
Your daughter may be worth contacting a lawyer to see if she has any options. But ultimately, when you co-sign a loan, you are just as responsible for the debt as the borrower. So unless your son’s ex resumes payments (which seems unlikely at the moment), your daughter will most likely be paid. If she fails to do so, she will destroy her credit and could be sued by the lender.
I’m assuming these are private student loans, since federal loans rarely require a co-signer. Unfortunately, your options for dealing with private student loans are limited. However, if your daughter is struggling to make payments, she should contact the lender to see if they have any options. It is often in their interest to work with borrowers so they can avoid default.
This can be a very expensive class for your daughter. Co-signatures are a financial minefield that can destroy trust and relationships. This is especially dangerous when you are co-signing someone who is not a family member and has no incentive to maintain the relationship. Whenever you sign an agreement, you must actually read it.
Your daughter needs to take action here. If you want to intervene, try to resist the urge. Admitting your mistakes is part of being an adult.
Robin Hartill is a certified financial planner and senior writer for The Penny Hoarder.Send your tough money questions to [email protected].
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