[kevinbahnz]

I got this in my email today asking me to sign the petition. Parents co-signs a student loan for his daughter and she passes away leaving them with a $200k debt. Should the banks show some compassion and forgive the debt?
https://www.change.org/p/please-forg...Gtn2EHevsII%3D

[P1]

Not sure if I'm following. I just read this:

Death Discharge

If you, the borrower, die, then your federal student loans will be discharged. If you are a parent PLUS loan borrower, then the loan may be discharged if you die, or if the student on whose behalf you obtained the loan dies.

The loan will be discharged if a family member or other representative provides a certified copy of the death certificate to the school (for a Federal Perkins Loan) or to the loan servicer (for a Direct Loan or FFEL Program loan). For more information, contact your loan servicer.

[Nkc]

Didn't know you needed to co sign student loan. What kind of snake oil are you guys selling in the states?

[jwzimm]

The only issue here is private student loans. Federal loans already have this protection.

You should look at this from the lenders perspective as well. They provide a loan with agreed to terms. Just like any other type of loan they need to be made whole by the borrowers. When you co-sign for a loan you agree to take on the burden of the debt in the event the primary borrower cannot. While there should be some compassion shown on the part of the lender, they should not be required to simply take the hit and do without repayment.

This is one of the reasons it is important to have life insurance that is sufficient to cover all debt held by a person. It prevents loved ones from having to deal with the aftermath.

[P1]

Originally Posted by jwzimm

The only issue here is private student loans. Federal loans already have this protection.

You should look at this from the lenders perspective as well. They provide a loan with agreed to terms. Just like any other type of loan they need to be made whole by the borrowers. When you co-sign for a loan you agree to take on the burden of the debt in the event the primary borrower cannot. While there should be some compassion shown on the part of the lender, they should not be required to simply take the hit and do without repayment.

This is one of the reasons it is important to have life insurance that is sufficient to cover all debt held by a person. It prevents loved ones from having to deal with the aftermath.

Well said, and agree...

[kevinbahnz]

it's sad but this guy did take full responsibilty when he co-signed the private student loan.

[128Convertibleguy]

One good reason why it's good they removed a previous requirement that all student loans pass through private banks. Over the objection of the banks, of course. The main reason they did it, of course is that it's cheaper for everyone but the banks, who lost a sweet deal that practically guaranteed they would make lots of money on the loans. BTW, death is only one reason for loan forgiveness, there are others.

You still can get a student loan from a private bank if that's what floats your boat, but there's no reason to. And this thread shows there's a huge downside.

More here:

http://www.nytimes.com/2009/07/11/ed...educ.html?_r=0

https://studentaid.ed.gov/repay-loan...s-cancellation

Elizabeth Warren would like to go further, by letting students refinance student loans when interest rates drop. The plan is widely considered to have no chance, because it would reduce the profit the government makes on student loans.