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Can I sue my dropout daughter for the student loan I co-signed?

Can I sue my dropout daughter for the student loan I co-signed?
Written by Publishing Team

Dear Benny,

Like many parents, I co-signed a student loan for my 18-year-old daughter when she started college last August. In October, she found out that she had stopped going to class and was no longer working on any assignments. I moved out with a girlfriend.

Now she has $20,000 student loan debt and no job. Presumably she is looking for a retail job at the moment. When her loan turns into repayable status and she doesn’t make the payments, I suppose I’ll take responsibility.

I am disabled and live on Social Security disability. I can’t repay her loans. Should I bring her to court if it comes to her not paying the loan?

-a.

Robin Hartell
Robin Hartell [ The Penny Hoarder ]

Dear A.

Unfortunately, 18-year-olds don’t always make the wisest decisions. This is one of the reasons why student loans crash so quickly. When you’re barely an adult, it’s hard to appreciate the long-term consequences of your decisions not just on your own money, but often on someone else’s.

I’m afraid you’re right that you will be responsible for your daughter’s student loan. When you agreed to sign, you became responsible for this debt just like your daughter. It is also possible that the lender will go after you first. You may not have much income, but you still have more than your daughter.

Since I signed up, I assume these are private student loans. (Federal student loans usually do not require a co-signer.) This makes this situation more difficult, because your options are more limited with a private lender than with the federal government.

You will need to speak to an attorney who specializes in contract law to determine if suing your daughter would be an option. However, even if you could take her to court, I don’t think that’s the way to go. Suppose you win a sentence over your daughter. It’s pretty much meaningless if she doesn’t have any money to raise. Meanwhile, I’m still in trouble for payments with the lender.

I’d be mad at your daughter if I was in your situation. But realistically speaking, you’re probably not going anywhere with your daughter if you’re starting from a place of anger. Explain to her how dangerous her actions are to your money. Tell your daughter that her loan payments may make you unable to meet basic expenses and that her decisions may ruin your credit.

Try not to focus on any disappointment you feel about her decision to drop out of school here. The goal here is to get her to help with the payments. With the labor shortage we hear about every day, your daughter should be able to find an entry-level job if she’s really looking.

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You can offer to let her come back to live with you so she can start making an impact on her $20,000 loan balance. She may not like it at first. But I suspect that without work or income, she will tire of quickly welcoming her girlfriend.

In the meantime, you need to contact the lender and discuss your options. Be prepared to provide documentation showing that you have little income and that you have a disability. While a private lender is not required to provide accommodations, they may be willing to do so if you can prove that you are unable to pay. Getting something is usually better than nothing, especially if they can avoid the time and expense of taking you to court. The National Center for Consumer Law’s Student Borrower Assistance Program is a good resource for understanding your options.

If all else fails, I suggest contacting a lawyer about whether this debt can be forgiven. Student loan debt is rarely canceled, even in bankruptcy. But it is possible in some cases to prove undue difficulty, usually due to a disability.

You cannot undo this decision. But what you can do is learn from it. Unless you are able to afford the payments, you cannot under any circumstances afford to sign the loan.

• • •

Robin Hartell is a certified financial planner and senior writer for The Penny Hoarder. Send your tough financial questions to AskPenny@thepennyhoarder.com.

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