My father co-signed a student loan for his grandson in 2006 there has been several deferments since. He recently received a letter from a student loan server saying the payments are now due. My father has severe dementia, and lives on SS. How can I help him get out from under such a debt?
"Federal student loans
The IRS can garnish up to 15% of your Social Security benefits to pay for defaulted federal student loans."
18 years, this loan could have been paid off or almost paid off. Grandson should be ashamed of himself expecting his grandfather to pay his debt.
I would let the parents know that their kid is trying to leave grandpa out to the wolves and they need to intervene and get him to take responsibility for his debt.
No one can change that or make the grandson do anything.
This is a lesson for grandparents everywhere. Until the grandkids are 26 they don't even have much of a frontal lobe. Don't cosign for them.
The real point here is that Granddad is bullet proof for collections. No one can touch him or what he has because he doesn't have much of anything.
Student loans are an industry and a VERY lucrative one. This time they lose. However, if a FEDERAL student loan grandson will be hounded even for HIS SS. funds until the day he dies. If he doesn't want to pay his loans he will have to continue to be a deadbeat all his life.
There you are. Let them threaten all they like. Tell them Dad has no funds but his SS. If Dad has a home they can file a lien, but cannot collect until his death. Be sure YOU don't pay anything on this loan. It can look like "assuming the loan" and they will try to make YOU responsible.
Someone has told me that they are getting a percentage taken out of his SS for his past due student loan, he never paid.
I hope this is not true, for a co-signer.
Then, their attorney sent a letter to mom to pay with the threat of going to court. End result to not mess up her credit she paid it off (including attorney's costs) with the attorney sending confirmation the debt was paid and closed.
She had the money to pay from an insurance settlement when her car was declared totaled after the garage roof collapsed on it after a heavy wet snow storm in Nov around Thanksgiving.
https://www.investopedia.com/defaulting-student-loan-reduce-social-security-benefits-7371580
"Companies that offer private student loans are not allowed to garnish Social Security checks of co-signers if the borrower doesn’t repay the loan. But the lender can still pursue you and even take you to court to try to collect the amount due on the loan."
Moreover, Government student loans do not have cosigners (generally) because the government doesn't require it.
Therefore, to my knowledge, government student loans are the only ones that can attach social security benefits and ONLY ON THE PERSON who took out the loan, not on any cosigner.
That's my understanding. If I am wrong I would love to learn: do you have any guidance where there is discussion of attaching the SS of a "cosigner"?
Student loan debt cannot be defaulted on anymore.Usually student loans don't have co-signers like car loans or mortgages. If this guy has been able to defer payment for the last 18 years, he knows what he's doing.
If your father owns property when he passes the student loan company will put in a claim to his estate to get paid. They get their money. There's no more defaulting on student loans anymore. This is probably what the grandson is counting on. Then he gets his loans paid for free.
You say your father has severe dementia. Is he in a memory care facility? If he goes into care and he has assets that aren't protected, they get sold or cashed out and the proceeds go towards paying for his care bills. If this happens, no one pays the student loans and they get burned on it.
Seniors taking student loans in their names for gandkids and spending their assets helping out grandkids has become a trend now. They see their friends and relatives getting 'placed' by their adult kids so they figure leave them nothing to spend.
I think your father did a nice thing for his grandson and his thinking was probably that he lived his life but wanted to give his grandson a good start in life without debts.
Governmental student loans don't have cosigners because they don't need them. They will eventually get the money because they will hound you to death and beyond. As you said, anything the old guy says is open to be taken with a judgement.
So our OP needs to see what kind of loan this is. If it is private, his SS won't be touched, but yes, any assets will be taken in a judgement with liens if there is any asset at all.