Parents of deceased borrowers shouldn’t have to pay student loans
Dealing with the death of a child is difficult enough. But the financial stress of having to repay the child’s student loans can make such a tragic event that much more difficult to bear.
This is a heartbreaking reality for the Mason family, and many others who face the terrible tragedy of losing a child with student loans, according to a recent CNN Money story.
Family forced to repay $200,000 student loan debt
When Steve and Darenlle Mason’s 27-year-old daughter Lisa passed away five years ago, they were forced to deal with the unexpected stress of repaying Lisa’s $100,000 private student loan.
Because Steve had co-signed on the loan and it was through a private lender, the bank that issued it determined he was responsible for repaying the balance, despite not being financially capable of doing so due to taking custody of Lisa’s children.
Unlike federal student loan lenders, private lenders aren’t bound by any federal requirements to help struggling borrowers or co-signers or forgive the loan, even if the student dies.
Since he was not able to repay the loan in full, Steve fell behind on payments, and the balance grew to $200,000 with an interest rate of 12%. He sought help from lenders and tried to make whatever payments he could, but lenders largely ignored his pleas for help.
No relief for grieving parents
And he’s not the only grieving parent forced to pay his deceased child’s student loans.
Others, such as Angela Smith, have started petitions on Change.Org attempting to pressure private lenders into forgiving the student loans of deceased children, but have had little success so far.
Unfortunately, there are few options for parents in this situation because student loans are the only type of debt that generally can’t be discharged through bankruptcy.
The best hope for parents in this situation, it seems, is working with the lender to get on a more manageable repayment plan.
Taking private student loan lenders to task
We can’t even imagine the horror families feel when they lose a child. And the last thing a family should have worry about when their child passes away is repaying their debt.
In the video below, Sen. Elizabeth Warren expresses her disgust at banks for putting families in this type of situation, and we couldn’t agree with her more.
We hope to bring more visibility to this issue and see more politicians doing the ame in the hope that it’s taken seriously and lenders are forced to provide relief for grieving families.