Old Student Debt Can Cancel Retirement

[papadad111]

Lots of bad apples running around ... See it all the time after 25 years on the road. Expats on the run from one thing or another.

Have personally known several who would most likely be detained on arrival back in their home countries -- some specifically select country A or country B due to non-extradition. Typically a lower type of criminal case against them And almost always running away from Unpaid debts, child support and such judgments against them. Some real winners. Not.

Always amusing when after knowing them casually for a bit they sorta ask for money or a loan or to invest in their wife's latest (chick, pig, fish ) business that's gonna be a sure thing ....

Run Forrest run.

[M Paquette]

Quote:

Originally Posted by kramer ANYWAY, his American passport is up for renewal in a couple of years. The latest passport renewal form (I just filled it out for myself) requires a social security number, so he will have to provide that (there is actually a financial penalty if you send in the form without it). Will past due child support (California, I think) and unpaid federal student loans disallow him to renew his passport? This would force him to go back to the USA.

He's boned.

Child support Payments and Getting a U.S. Passport

And on the DS-82 renewal form, back side:

Quote:

Your Social Security number will be provided to the U.S. Department of Treasury, used in connection with debt collection and checked against lists of persons ineligible or potentially ineligible to receive a U.S. passport book and/or card, among other authorized uses.

[RunningBum]

Quote:

Originally Posted by rodi If you cosign your kids (or grandkids) student loans they can garnish your SS. I suspect that big increase in SS garnishment is due to parents and grandparents cosigning and their kids/grandkids not paying the loans back. It's a reason I will never cosign a student loan for my kids. Worst case I'd borrow entirely on my credit - probably using a HELOC - so I have control over how it gets paid back and control of the risk of default.

I would guess you are right about the co-signing being the big increase.

I'm curious on your reasoning for borrowing on your own credit instead of co-signing. I've started co-signing a student loan for my future daughter-in-law. It's a long story I won't get into, but basically if I hadn't done that she probably would have to drop out and throw away what schooling she's finished, and it felt good to help out someone who's had some rough breaks in life.

Anyway, I'm figuring she's inclined to pay back a loan with her name on it. If it was in my name only, she might view it as lower priority. Either way, I know I'm on the hook for it if she doesn't pay it off, but this way she has skin in it.

Am I missing something, other than perhaps being able to get a better interest rate? I suppose she could miss payments without me knowing until my credit is dinged as well, but I can monitor the account too.

[rodi]

My reasoning is that the payments and statements are usually sent to the primary borrower, not the cosigner. So if the cosigner gets in a pickle, but is too embarrassed, or has some other reason to not fess up - you could have your credit in default and never know it.

If I had the cash, and felt the child, DIL, whomever was a good credit risk - I would lend it to them directly. Same risk. Borrower has the same amount to pay back. But I know if the payments are being made.

Lets just say there's a situation in my extended family where a child didn't make payments on a cosigned student loan and failed to defer the payments... It was a very rude awakening for the parents who cosigned. I'd rather not be rudely awoken if I had the means to know if payments were actually being made.

But that's just me and my thinking.

[RunningBum]

Quote:

Originally Posted by rodi My reasoning is that the payments and statements are usually sent to the primary borrower, not the cosigner. So if the cosigner gets in a pickle, but is too embarrassed, or has some other reason to not fess up - you could have your credit in default and never know it. If I had the cash, and felt the child, DIL, whomever was a good credit risk - I would lend it to them directly. Same risk. Borrower has the same amount to pay back. But I know if the payments are being made. Lets just say there's a situation in my extended family where a child didn't make payments on a cosigned student loan and failed to defer the payments... It was a very rude awakening for the parents who cosigned. I'd rather not be rudely awoken if I had the means to know if payments were actually being made. But that's just me and my thinking.

Yeah, having to monitor the account to make sure it's not running late is going to be a pain if I don't trust her to keep it up but at least I know that I can see it. I also read that after graduation, if she makes 12 payments on time I can be released as a co-signer, but she'd also have to qualify to repay the rest of the loan on her own. Hopefully with hers and my son's income they will by then.

Thanks for replying to my question.

[CaliforniaMan]

From experience I would absolutely want to monitor the payments. Maybe you can setup online web access to the account that you both can use to view the status. That way you would get any bad surprises on your own credit rating. I think this is absolutely essential.

[RunningBum]

Quote:

Originally Posted by CaliforniaMan From experience I would absolutely want to monitor the payments. Maybe you can setup online web access to the account that you both can use to view the status. That way you would get any bad surprises on your own credit rating. I think this is absolutely essential.

As I said, I can monitor the account too. I just re-verified that and see that she is making the $25 monthly payment she signed up for to get a better rate, and at least keep up with interest, more or less.

[rodi]

That's good to know, RunningBum.

I'm hoping this is never an issue for me. I've funded 529's so that my sons (still middle schoolers) won't have to take loans.

[eta2020]

I don't feel sorry for people who take loans and "forget" about them. Their lack of planing is not our problem.

[kramer]

Quote:

Originally Posted by M Paquette He's boned. Child support Payments and Getting a U.S. Passport And on the DS-82 renewal form, back side:

Thanks for the info. I will let this man's wife know. I do wonder how this would affect the potential naturalization of their children (they may only have 2.5 years before his passport expires). I seem to remember that part of the process is the father promising to support the kids until they are 18. And it is hard to see how the federal government would accept that promise if one is in arrears on child support. But I hate to see his moral turpitude affecting his kids' lives so much.

[youbet]

Quote:

Originally Posted by imoldernu Why is not paying a student loan for $30,000 different from not paying a hospital bill for the same amount?

We all have to make choices about if and where to borrow money and what terms to accept.

Borrow money from "Big Sal" the gangster, and he won't be able to put a brick on your SS check to collect, but he will be able to break your knees with a baseball bat.

Borrow from your bank and fail to repay per terms and you find yourself with a ding to your credit rating because that's the tool banks have.

Fail to make car payments to the loan company and your car gets repossessed. That's the tool they have.

Borrow from Uncle Sam for "educational" purposes and he puts a brick on your SS if you don't pay him back by then.

Most eveyone that loans money uses the tools at their disposal to collect if you decide to go deadbeat on them.

[youbet]

Quote:

Originally Posted by rodi I've funded 529's so that my sons (still middle schoolers) won't have to take loans.

I didn't fund 529's for my son's education, but fortunately those were good years at the salt mine and my bonuses pretty much covered his university costs.

But I'm funding 529b's for the grandkids! I was not optimistic about using the state gov't sponsored plan because I live in Illinois, land of well documented gov't corruption and incompetence. But I was pleasantly surprised to find out that after the huge Illinois 529b scandal of a decade or so ago, they've turned things over to a private firm and improved transparency.

I was able to choose from low ER index funds and the first $20k I contribute each year is deductible from my Illinois income tax. The money comes out tax free, similar to a Roth, when withdrawn to pay their future tuition and certain other post secondary education costs.

And hopefully this will keep the grandkids form borrowing money for education!

[imoldernu]

An old thread bump to update some interesting information about a change in policy.

http://www.nytimes.com/2015/06/09/ed...-students.html

In this case, forgiveness of many billions of student loans based on charges that For Profit Corinthian College defrauded students. Forgiveness from the government pocketbook is the way I read this.

Current Student Loans total $1.2 trillion.

What next? A bellwether for possible forgiveness or no pay for 30 years? A change in policy? Something to watch, and for some, possible relief for early debt problems.

[nwsteve]

Here is a link to recent opinion piece in NY Times from someone who is "justifying" why he did not pay his student loans. Basically a "rant" about the injustice of the "system" No accepting responsibility for choosing a high price private and a major with limited income potential. Oh well, it is the "other guy's fault.
Also recommend looking through comments, at least the the NY "recommended". It includes a posting from a retiree who is having her SS "tapped" to pay a co-signed student loan for a grandchild.
http://www.nytimes.com/2015/06/07/op...RecEngine&_r=0

[REWahoo]

Quote:

Originally Posted by nwsteve Here is a link to recent opinion piece in NY Times from someone who is "justifying" why he did not pay his student loans. Basically a "rant" about the injustice of the "system" No accepting responsibility for choosing a high price private and a major with limited income potential. Oh well, it is the "other guy's fault. http://www.nytimes.com/2015/06/07/op...RecEngine&_r=0

Here's an opposing view:

Quote:

“I think you almost couldn’t design a worst representative of the student debt forgiveness movement,”

Defaulting on student loans is still a bad idea

[Sarah in SC]

I have had some recent experience with helping a friend with his student loan in default/collections. It is eye opening to say the least.
The income based repayment plans are a pretty decent option, and once we did the rehab, it is being handled pretty well by Navient. Of course, interest still accrues, but the rate on these older loans isn't terrible.

However, my millennial friends have it far far worse. Their rates are more like 8 or 9% and up, which is startling, and the loan amounts are frankly staggering. It is a whole different world for these folks than what we remember about the more modest loans and APRs of the past few decades.

I would never advocate someone defaulting, because of the damage mentioned in REWs article, but I can understand the frustration that arises from making what can turn out to be a terrible financial decision when one isn't even old enough to order a beer.

[samclem]

Quote:

Originally Posted by Sarah in SC I would never advocate someone defaulting, because of the damage mentioned in REWs article, but I can understand the frustration that arises from making what can turn out to be a terrible financial decision when one isn't even old enough to order a beer.

The whole thing is clearly a mess. These govt student loan programs, started with the best of intentions, have become a giant source of easy cash that goes directly to schools and has had a big role in causing the spiraling increased costs of college. A large number of the students don't graduate, and many that do graduate have degrees and other credentials that just don't translate into good jobs.

Let the schools write the loans. You can bet that they'll cry and moan, but it will cut the cost of college. More importantly, they'll likely be a lot more liberal with dough for engineering degrees than for sociology degrees. That will be a very real sign to incoming students about the value of various schools and the degrees they offer. We need poets and philosophers, but I don't see how it is the mission of the federal government. And, getting back to the OP, if the loans are private, they won't affect Social Security.

[daylatedollarshort]

Quote:

Originally Posted by Sarah in SC I would never advocate someone defaulting, because of the damage mentioned in REWs article, but I can understand the frustration that arises from making what can turn out to be a terrible financial decision when one isn't even old enough to order a beer.

+1. Students, and parents, too, are up against big college marketing departments, big marketing budgets and easy loans. If it was a small percent of students, I'd say it was a personal responsibility issue. But student debt is now $1.2 trillion dollars and crippling the economy -

How The $1.2 Trillion College Debt Crisis Is Crippling Students, Parents And The Economy - Forbes

I think that is something that is best addressed at a societal level, not trying to change human nature to master delayed gratification and avoid easy money loans when offered. Long term the issue is going to have to bring the cost of college down and not even giving students and parents the option of taking on crippling amounts of debt.

[bingybear]

some talk about cosigning loans... there are parent loans... the parents take the loans directly for the student .. not even cosigning. The child is not on the loan paper as a borrower.

There are ways to get forgiveness... especially when doing income based repayment. The problem is many are just ignoring them or putting them on forbearance or deferment. Often they just rack up the interest.