The Consumer Financial Protection Bureau reports that borrowers in their later years have increased by 20% over the last five years. Older Americans are either taking out student loans for adult children or grandchildren and dealing with this debt is now an obstacle many seniors face as they head into retirement.
Many of these seniors co-sign the student loan for the child or grandchild without fully understanding their obligations. This makes the seniors personally liable for repaying the loan if the student defaults. As a co-signor you should ask the lender to send you copies of all statements.
Also keep in mind that defaulting on a student loan may impact your Social Security benefits. The government can garnish your Social Security check up to 15 percent to repay any federal loans in default. There is no statute of limitations on student loan debt so this garnishment may continue for many years.
Some types of student loans may be discharged upon your passing away, but other types will not. This will affect your estate administration and the liability may be passed on to your heirs. For more information on how student loans for your children and grandchildren impact your estate plan, please contact Stouffer Legal in the Greater Baltimore area at 443-470-3599.