Advice to Parents
A Second Look at Student Loans
We've already told graduates to closely review their student loans. This is also wise advice for parents, guardians, or grandparents who are involved financially -- particularly if you already co-signed on loans. If your child defaults on a loan you co-signed, what will happen?
- You will be legally liable for repaying the loan.
- You will be able to repay the loan over an extended period of time.
- The lender will allow you to refinance the loan.
"A" is correct. As a co-signer, you not only vouched for your child's ability to repay the debt, you also agreed to make payment if he/she fails to do so. If you don't, it may ruin your credit rating. For each loan, find out the balance, how much payments will run, and when they are due. Discuss these details with your child.