Sallie Mae Default

[tiredturkey]

Does anyone know what exactly happens to the co-signer if an individual defaults on their Sallie Mae loan and Sallie Mae goes after the co-signer? My friend's mother unwisely co-signed on her grandson's loan and she is getting calls daily and letters weekly. Do they eventually obtain a judgment or sue her or what? Can they go after her meager Social Security or even smaller pension? Will this debt accrue to her estate upon her death like credit cards and other loans?

Let's not discuss her lack of judgment in co-signing; you wouldn't and I wouldn't but she did and now we have a 90+ year old woman owing a lot of money.

[❤ mollymouser ❤]

This was from the Sallie Mae website:

Default is defined by your Promissory Note as the failure to pay back your student loan. For a Stafford loan, if you miss nine months of payments, you have defaulted.

Loan default can have long-lasting or permanent consequences. If you default on your FFELP loans:

Your wages can be garnished.
Your tax refunds can be seized by the U.S. Department of Education.
You can be sued for the balance of your loan.
You can lose loan benefits, such as lower interest rate incentives.
You can lose your eligibility for future financial aid.
You can lose deferment and forbearance options.
You can lose many payment options, such as income-sensitive or graduated repayment.
The cost of your loan can increase with the addition of late fees and collection costs.
Your default can be reported to the national credit agencies and could impact financing of any future purchase, such as a home or car.

[cronewitch]

Student loans can garnish her SS check if she doesn't pay.

Many cosigners don't consider it their debt so would say it is the grandson who owes the money. She signed the loan she owes the money it isn't just saying the boy was a good boy it was a loan she took out.

She needs to pay this now before it grows with late fees. When two parties cosign a loan the lender will get it from the one easiest to collect from even if they didn't benefit from the loan.

[Deleted]

Is it possible for HER to start negotiating terms for this? I mean, could she go to them and ask for an income based payment plan, and/or put it into forebearance/deferment... she likely wouldn't live to pay off much of it anyway, under those terms... ?? I'm not sure how that works.

[Deleted]

I believe that they can seize 15% of each monthly benefit, but when it's the only income, 15% can be a lotta lettuce!

Sounds like it's time for her grandson to man up and pay his bills.

[Elderkind]

I have a co-worker that hasn't paid his Sallie Mae loans (over $125K) in the last 18 months and they are garnishing now. I don't know how much but it has to be quite a lot since his loan amount is high... I would recommend that your friends mother call Sallie Mae and let them know about the situation, her age, low income etc... It might not do any good but it's worth a try.... I would also encourage the friend to pay a visit to said grandson and have a "Come to Jesus" with him about his lack of responsibility, etc... A few family threats wouldn't hurt...

[The J]

Sallie Mae can take any action against a cosigner that they can against the recipient of the loan.

[tiredturkey]

Thanks to all for your responses. It's a very sad situation; grandson and his parents are basically sponges with human DNA somewhere inside. As a college grad, the young man declines to work at jobs for which he considers himself overqualified (a.k.a. I'm on food stamps now because I'm too good to flip burgers). Intelligent members of the family are attempting to apply pressure but he holds the trump card: the only great-grandchild to whom he will refuse access. Having seen his parental units milk the system for 30 years, no one is surprised that he has the moral qualities of a slug.

[Jake 48]

TT,
I don't have any answers but I do believe in"what goes around comes around", grandson is a bully and a s#*@bag. The grandson will get his and there will be justice.

[DVM gone riding]

I thought SS was exempt from garnishment except by the IRS?? You should look into this before you freak her out. I also don't think they can garnish IRA distributions. THEY will most likely seek a lien on the estate (but doesn't sound like anything there so who cares!) Most likely if she has a pension they can garnish part of that. They will patiently wait and wait for the grandson to go to work and then take large chunks of his money. Why would the grandson need grandma to sign most federal student loans are strictly the students responsibility?

[cronewitch]

SS is exempt except IRS and student loans. Sorry to hear scum of the earth grandson has a child.

[moneywhisperer]

It depends on whether they are federally guaranteed loans or not.
If it's a federal loan through sallie mae, then they could garnish the granny's SS or pension income.
If it's a private loan, then I don't think they can get at protected income (SS, 401K, pension).

Granny should probably do a quick consult with an attorney to get the straight scoop. She should not write any letters to the debt holder or make any payments until she has done this.

If the grandson is a sponge with no ethics it is likely that he has not done ANY of the things he could to get an income based repayment scheme (because that would allow him to actually pay off and own his own debt).