According to a 2012 research report called ‘Grading Student Loans’ from the Federal Reserve of New York, total student loan debt in the US now surpasses the total credit card balance and total auto loan balance. Even more troubling is data that shows almost 5% of the delinquent student loans are for people over 60.
Senior citizens still owing student loans could be those who went back to school later in life or they may have be loving parents or grandparents who co-signed a loan. Is co-signing a loan a good idea?
Before co-signing, think twice. Remember, if darling child or grandchild doesn’t pay the debt, you are stuck with the debt.
Be sure you can afford to pay the loan. Find out what the payment schedule would be for the loan if you end up paying. If the loan is not paid, you can be sued and your credit rating could be damaged.
Even if you’re not asked to repay the debt, your liability for the loan may keep you from getting other credit. Creditors consider the co-signed loan as one of your obligations.
Ask the lender to calculate the amount of money you might owe. They aren’t required to do this but many will. Or use an online debt repayment calculator. The Federal Reserve website has an easy to use credit calculator.
Student loans are a necessary tool for many to get postsecondary education. If you are asked to co-sign for a student loan or any loan, understand what potential effect it will have on your own pocketbook.