I am in the grips of a student loan nightmare. I know many are receiving good news on this
subject but we are not. My wife and I are retired on a meager SS and outside income. We had co-signed for our son -in-law's college loans. He did well in college and then got a good job with an IT company doing software engineering. Then: My wife and I were basically thrown out of our business in 2021. Not long after our sinl was terminated from his job. He had a meltdown. We didn't learn about it for some time. They tried door dashing and were doing pretty well but then we learned, last October, that they lost their house. They had only been in it for about a year. We had given them $20,000 so they could make the down payment. Since then they have been living with his grandmother and we are taking care of their cats. He is trying to find an IT job but the leads are not turning out to be good. My daughter fell and badly broke her leg last October right before they were both to start working at a local retail business. He started but had issues with a manager after having to miss work with covid (he had been fully vaccinated) and other issues with a bad back. Mgt. didn't believe his "excuses", etc.
So, my wife and I are now having to pay the PRIVATE loan outfit, Discover, over $800 dollars a month for nothing real. The interest is so high that a payment doesn't touch the principle. Our savings are slowly going down. Our sinl owes. $74,000 to Discover. He will not get a good enough job possibly for them to even help for some time. They are, in effect, homeless. Our daughter is just now able to walk well enough to do anything. They are bringing in around $100 a night in door dashing but they have car payments, insurance, phone, etc and are just making it.
I would hate to pay off the debt but we are co-signers and are stuck. My wife says she would rather die. She worked very hard, harder than I did honestly, for decades to help build up our "nest egg". Paying the debt would more than cut our savings in half.
I understand "woulda, coulda, shoulda" but what is done is done. I would really appreciate any advice. Could we escape this situation? I don't want our relationship with our daughter to be destroyed. If it was we would still be stuck with the debt. It is eating us alive and is our biggest challenge going forward. We aren't getting any younger.
And just now: My daughter texted that their car has been repossessed. A nightmare.
Thanks for any advice, etc.
(I am posting in multiple areas on good advice....)
= new reply since forum marked as read
25%……!!!!!!!! That’s an insane interest rate and the principal even at $800 a month will be your lifetime!
Theophilus - I am first of all very sorry and sad hearing these details and knowing the stressful situation that you find yourself in right now. I want you to know that everything I am sharing with you is heartfelt and well intentioned and there is no blaming, judgement or shaming and all advice being shared comes from only a desire to help you get out of this mess.
If we just deal with the situation and the facts - some of them are really shitty and there are not many good options and some of the decisions that need to be made will require some sacrifices by everyone and changes and real consequences if you are to resolve this and have a positive outcome. If you do not - I’m sure you realize that it can and will get much worse.
I am certain you did what you did in co-signing the student loans out of love and to help them get started. Sadly - you having just paid for his school at the time yourself or given a personal loan at low interest would have had better return - but that is past.
If the son in law had taken out a federal loan through the schools - the interest rate would have been between 4.5-7.5% fixed (depending on when it was taken out) and under the current SAVE program, anybody making below $45K annually would pretty much have $0 payments indefinitely until making more and then it gets readjusted. But that’s also not an option since this is a private loan. And had the loans been taken out before marriage, your daughter would have had no liability for that debt since it’s for his education and that would be the case upon his death or divorce and not being considered marital liability. But that’s also not the case and she does have that liability since it happened in marriage (although some states - like California have at times ruled that the individual who received the education and can take the future earning potential with them that the spouse does not have to be responsible for the student loan debt of the other).
I am not Suze Orman or a financial planner - but co-signing loans - especially without any secured asset to have a stake in - are to be avoided - especially not just because of the risk - and because if the primary borrower defaults - the co-signer is on the hook. But at least with most loans - they can be dismissed in bankruptcy - but NOT student loans. And where usually a student loan liability disappears with the death of a person - it doesn’t for the co-signer. But you probably now know all this.
I don’t know the ages of your daughter and son in law - and while grandkids can be the greatest joy - yea - thank goodness that this situation doesn’t involve them having children at this time.
The health insurance situation and being in a red state with no Medicaid is really scary. The top thing that can bankrupt anyone is if they have a medical health emergency - I think it’s criminal that red states do this to the least fortunate of their citizens. In California where I am from - Medi-Cal (the name of the Medicaid program) is truly top healthcare and everyone from kids to adults has it if they can’t afford or have healthcare. In San Francisco, anyone who works at least part time - they are provided healthcare by their employer by law - even if they are Doordash delivery workers part time.
Your daughter and son in law have now lost the means of earning any money and transportation with the car repossessed - so now they have no income? You stated that they are living with his grandmother - not sure if it’s rent free or that she has a car for their use to earn money - but I have concerns - I’m assuming because you co-signed - and not his parents and there is no mention of them - that they are not in the picture or option for assistance. But is being supported by an elderly grandmother a long term option? Does she own her home and have the means and plans to bequeath the house or assets to him? Could she pay off his loan and have you then be relieved of this burden? Could she then have a loan agreement with him and essentially be giving him his inheritance up front?
Your daughter is your child and always will be. She may have made mistakes while a kid or young. But she and your son in law are adults now. And you and your wife worked hard and saved your money for retirement and are on a fixed Social Security income. (Income which by the way can be garnished by Discover should they come after you for the liability of the $74,000 at 25% interest.). This is scary as hell because you are looking at endless monthly payments of $800 indefinitely through retirement and garnished Social Security payments if you can’t pay. And your wife would inherit this debt upon your death as a marital liability. This situation needs to be remedied immediately. And if you can’t take care of yourselves - who will - apparently not your daughter.
I would get some professional consultation - hopefully you can find some free advice consulting. Bankruptcy doesn’t seem to be an option - and even if your daughter and son in law declare bankruptcy - it doesn’t get rid of the debt for you - and you can’t declare bankruptcy - so only after your deaths and your estate might avoid it.
An option to consider - although you said your wife would rather die (I hope not - seriously - because you would not have her or her have you - and the surviving spouse still left with that debt) is to first see if you can refinance this student loan debt from a bank or home equity loan at a much lower rate to lower the payments. I would then have a loan agreement drawn up with your son in law and daughter and have them pay you back for the $74,000 at a low monthly payment that they can afford - maybe $300 a month. If you can’t get a bank loan or home equity loan - then if you had to take it out of your IRA savings investments - even if that reduced your nest egg - you at least won’t have an $800 a month payment indefinitely or have your social security payments garnished. And again - draw up a loan agreement that your son in law and daughter pays you back monthly over the next 25 years. You can always forgive the loan someday if you want - or there is less inheritance for your daughter - but you will be protecting yourself. And your credit won’t be tied to your son in law and daughter for perpetuity.
They need jobs and health insurance. If they can earn with doordash - but need a car - they need to figure out how to do this. I would not ever co-sign a loan for either of them ever again - and if you chose to give them access to your car and insure them - I would also require them to pay you for that use and pay you monthly along with the other loan payment from their earnings. Maybe it’s another $300 a month - for a total of $600 to you monthly - 6 nights of doordashing - one week. Maybe one of them can find a public service job or government job and have insurance provided to them that covers both. Or one door dashes while the other can work a job that gets them healthcare. Somehow they need to figure out how to care for themselves and their obligations and self-care. Unless you are able and willing to cover them in perpetuity. And if so - that’s your call and decision - no judgement.
But you and Mrs Theopilus need to be protected from becoming homeless and in financial debt and distress. And this $74,000 has the potential to do this to you and has to be removed and eliminated.
I really hope you can get this resolved and find peace.
All said with love and good intentions for all of you.
Xoxo
I will come back to give some input when I'm more awake.
I'm so, so sorry....