Student loan | Parents Stuck With $200K In <b>Student Loan</b> Debt After Daughter Dies <b>...</b> |
- Parents Stuck With $200K In <b>Student Loan</b> Debt After Daughter Dies <b>...</b>
- Parents face $200k in <b>student loans</b> after daughter's death | WGN-TV
- Beware of <b>Student Loan</b> Debt Relief Offers and Credit Repair “Deals <b>...</b>
Parents Stuck With $200K In <b>Student Loan</b> Debt After Daughter Dies <b>...</b> Posted: 29 Jul 2014 01:42 PM PDT Consumerist is currently testing a new user experience. If you received an invitation to participate in the beta test, please sign-in below. Interested in participating? Learn more here. {* #userInformationForm *} {* traditionalSignIn_displayName *} {* traditionalSignIn_password *}{* traditionalSignIn_signInButton *} {* /userInformationForm *} {* #forgotPasswordForm *} {* traditionalSignIn_emailAddress *} {* /forgotPasswordForm *} If you are part of the beta test group, you will receive a link that will allow you to create a new password. If you are not part of the test group, you can learn more here. |
Parents face $200k in <b>student loans</b> after daughter's death | WGN-TV Posted: 29 Jul 2014 11:19 AM PDT New York — When his 27-year old daughter Lisa died suddenly of liver failure five years ago, Steve Mason was as devastated as any father would be. He and his wife Darnelle immediately took in Lisa's three children — ages 4, 7 and 9 at the time — even though they knew it would be a huge struggle to support them. Steve earns less than $75,000 per year as a pastor, while Darnelle earns even less as a director at the same church. Then the student loan bills started coming. Mason had co-signed on the $100,000 in private student loans that his daughter took out for nursing school, and the lenders wanted their money. Unable to keep up with the monthly payments on top of all of the other mounting expenses, the $100,000 balance ballooned into $200,000 as a result of late penalties and interest rates of as high as 12%. "It's just impossible on a pastor's salary raising three kids to pay $2,000 a month on loans," said Mason, who has been searching for a second job. If these had been federal student loans, Mason could have had the loans discharged or at least received some sort of financial assistance. But since they are private loans, he has little to no recourse. He called each lender to explain his situation and beg for help, and while they sympathized with him, they told him they weren't required to do anything. And they're right — private lenders aren't bound by any federal requirements to help borrowers — or co-signers — facing financial hardship, even when it's a parent whose child has passed away, says Deanne Loonin, an attorney at the National Consumer Law Center. Any loan forgiveness is up to the discretion of an individual lender. Navient Corp., which manages several of Mason's loans, said it has reduced the balance and lowered interest rates and payments for Mason in the past, and provides relief to customers on a case-by-case basis. "We extend our deepest sympathies to the Mason family on the loss of their daughter," the company said in a statement to CNNMoney. "We're reaching out to Mr. Mason to offer further assistance as appropriate." After being contacted by CNNMoney, Mason said Navient lowered his interest rate to 0% on three of four loans and reduced the total amount owed to $27,000 from nearly $35,000. American Education Services, which handles the bulk of Mason's other loans, said as a loan servicer it's in charge of collecting payments and doesn't make the rules about forgiveness. Mason would therefore need to contact the original lender, National Collegiate Trust, directly. He did this, and says the lender refused to provide him with any relief. NCT could not be reached for comment. Mason has considered declaring bankruptcy, but student loans are the only type of debt that generally can't be discharged through bankruptcy. "People with other debt from splurging — they can discharge that," he said. "Student loans should really be the one type of debt they do discharge because it's done to further an education and career. But somehow getting [my daughter] an education has encumbered me for the rest of my life." Similar financial nightmares are haunting other grieving families. Angela Smith, a mother from Chesapeake, Va., filed a petition on Change.org several years ago asking private loan provider First Marblehead Corp. to forgive the $40,000 in student loans that her husband had co-signed for their son Donte, who was shot to death in 2008. "Shortly after Donte died, that's when the collection calls started. It was like a punch in the gut — we didn't know what hit us," Smith wrote in the petition. "All of a sudden we not only had to deal with the police and attorneys investigating his murder, but we also had to deal with collectors constantly calling and reminding us of our son's death in the worst way." The petition received more than 150,000 signatures from sympathizers but no action from the lenders. First Marblehead didn't respond to a request for comment, and Smith says the loan was recently sold to another company. At least four other petitions from families in this situation have been started on Change.org. There's been one success story so far, where the brother of a deceased borrower petitioned a bank to stop going after his grieving father for payments, and the loan was forgiven. Legislation aiming to help people in these situations, including recent bills that would allow student loan debt to be discharged in bankruptcy, have been introduced over the years but have yet to pass in Congress. For now, the only option parents really have is to propose a payment plan with the lender or try to prove undue financial hardship to the courts in order to get the debts discharged in bankruptcy — which is rarely approved, said Loonin. And for anyone not already in this terrible situation, be very wary of taking out private loans — always try to get as much federal aid as possible first. As he approaches 60, Mason's dreams of retirement have been shattered. He's done the math, and he will have dependent children living under his roof until he is almost 70 years old. He hasn't taken a vacation with his wife since his daughter died, and doesn't realistically see that happening for many years to come. "We've pretty much gone through our retirement [funds] already — we didn't have a lot saved to begin with and now any extra money goes to the kids, as it should, and then whatever we can pay on the loans, we do," said Mason. "At my stage of life, I should have a very different lifestyle than I do." Trademark and Copyright 2014 Cable News Network, Inc., a Time Warner Company. All rights reserved. |
Beware of <b>Student Loan</b> Debt Relief Offers and Credit Repair “Deals <b>...</b> Posted: 30 Jul 2014 12:15 PM PDT If you're among the millions of current or former students with debt, you've probably been tempted to click on an ad that says, "Obama Wants to Forgive Your Student Loans!" or "Erase Default Statuses in 4 – 6 Weeks!" or some equally enticing student loan debt relief offer … available only if you click or call NOW! Many the companies behind these offers have sophisticated marketing tactics to target unsuspecting students, borrowers, parents, military service members, and their families. As the Student Loan Ombudsman for the Office of Federal Student Aid at the U.S. Department of Education, I hear about these pitches a lot. My strong advice: Before you pay somebody to help you with your student loans, do your homework. It's tempting to just say: Don't do it. Walk away. Call your loan servicer instead. But there's more you should know. In my office we help student loan customers with problems they may face in managing and repaying their student loans. One of the topics that has been trending recently is about companies that promise student loan cancellation, forgiveness, credit repair, or dramatically lowered payments. Based on the experience of the Ombudsman Group and the Student Loan Ombudsman Caucus, here are some specific things you should know before signing up with any student loan debt relief company. Student loan debt relief companies charge fees for services that you can get for free. You can apply for loan consolidation through www.studentloans.gov. The application is free, and there are no extra fees. Before applying, do your research on www.studentaid.gov. On that site, you'll find information on loan consolidation, requirements for loan forgiveness, repayment estimators to help you pick the right repayment plan to fit your income, loan servicer contacts, and other important information to help you manage your loan repayment. All for free! Recent research by a member of the Student Loan Ombudsman Caucus found some of these debt relief companies charging upfront consolidation fees as high as $999 or 1 percent of the loan balance (whichever is higher); "enrollment" or "subscription" fees up to $600; or monthly account "maintenance" fees as high as $50 per month. You already pay for these services through the monthly interest on your loans; why double-pay? Keep your PIN to yourself Student loan debt relief or credit repair companies may offer to manage your loan account, and to do so, they ask you to provide them with your federal student aid Personal Identification Number (PIN), or sign a Power of Attorney. Think about it: your PIN is the equivalent of your signature on any documents related to your student loan. If you give your PIN away, you give others the power to perform actions on your student loan on your behalf. Plus, regardless of who authorizes changes to your account, it's your name on the promissory note. If that company fails to provide the appropriate updates to your loan servicer, you have to deal with the consequences. Is Your Loan in Default? If it is, you know that being in default on a student loan is bad news. Know this as well: you are a prime target for the marketing tactics of debt relief and credit repair companies. By being in default, you've already incurred added interest and you're subject to collection costs. Don't add on the additional fees charged by one of these companies to get your loan out of default. Even if your loan is in default, loan consolidation is free. Getting on a loan rehabilitation plan is free. Find out how to get out of default. Think you've been scammed? If you've already signed a contract, seek advice to learn your options. Many state governments have an Office of Consumer Affairs or Consumer Protection either within or affiliated with, the Office of the State's Attorney General. At the federal level, the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have the authority to act against companies that engage in deceptive or unfair practices. Click on the links to file your complaint with either of those agencies. Contact your Loan Servicer If you want to talk to someone, call your loan servicer or use your online account access to get more information. They are your first source to get help with managing your loan repayment. The Department's loan servicers are as concerned as I am at ensuring that you do not spend your hard-earned money to pay for something you can get for free. If you don't know your servicer's contact information, grab your PIN and log in to StudentAid.gov. Joyce DeMoss is the Student Loan Ombudsman at Federal Student Aid. If you've tried to resolve your student loan issues without success, contact the Ombudsman. The Student Loan Ombudsman Caucus includes members at Direct Loan and FFELP program participating lenders, servicers, and guaranty agencies. |
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