Boston Student Loan Lawyer

Law Office of Adam S. Minsky

4 Reasons to Think Twice About Cosigning a Student Loan

| Articles Cosigners Default Private Student Loans Student Loans 101

Private student loans and federal student loans don’t have a lot in common, and one of the key differences is the role of cosigners. The vast majority of federal student loans don’t have a cosigner (the exception to that rule are spousal consolidation loans – which haven’t been issued in over a decade – and certain federal PLUS loans in rare circumstances). For private loans, however, cosigners are ubiquitous, and often required.

A lot of my clients over the years have been cosigners, and some of them didn’t fully understand what they were getting into when they agreed to cosign a student loan for their friend or family member. If they had, they could have avoided years of stress and financial trouble. If you’re thinking about cosigning for someone else’s student loan, make sure you understand the potential consequences – before you sign your name on that contract. Read More

5 Reasons Not to Refinance Your Federal Student Loans

| Articles Cosigners Default Income-Based Repayment Income-Driven Repayment Loan Forgiveness Pay-As-You-Earn Private Student Loans

Student loan refinancing has been a hot topic during the past several years. Trendy new companies – like SoFi, Earnest, LendKey, and CommonBond – have been offering slick refinancing products to entice borrowers. Major banks and credit unions have also jumped in, sometimes offering tantalizingly low interest rates. The best loan products are generally marketed to doctors, lawyers, and other high-income professionals who tend to have large amounts of federal student loan debt, but great earning potential and excellent credit.

A lower interest rate is often the central reason to explore refinancing; after all, a lower interest rate will save you money in the long run, and could lower your monthly payments, as well. But that’s not the only thing borrowers should be considering. Turning federal student loans into private student loans through refinancing can have major, irreversible consequences, and it’s important to know what you might be giving up in exchange for that lower rate.Read More

Predatory Student Loan Relief Company is Sued

| Articles Cosigners Current Events Default Site & Practice News

Amy and Josh were just getting started, but they were already struggling. Amy had just completed nursing school, while Josh had just graduated from the police academy. They had two young children, and were struggling to keep up with massive private Navient student loan payments that they could barely afford.

That’s when they got a call from a company called “Consumer Protection Counsel” (CPC). CPC promised that if Amy and Josh simply stopped paying their private student loans – and started paying CPC instead – CPC’s team of experts and attorneys would protect them from Navient, and their private student loans would either be canceled or deemed uncollectible. Their credit histories would be protected and even repaired. All they had to do was sign a contract and pay a monthly fee. The deal seemed too good to be true, but Amy and Josh felt trapped by their student debt, and they didn’t know what else to do. After a series of high-pressure phone calls from CPC, they signed on the dotted line and began sending monthly payments to CPC – and stopped paying Navient.Read More

The Pros and Cons of Student Loan Refinancing

| Articles Cosigners Private Student Loans

There’s about $1.3 trillion in outstanding student loan debt in the United States. Most of that consists of federal student loans, but there are several hundred billion dollars in private student loans, as well.

Both federal student loan lenders and private student loan lenders charge interest – a percentage of the loan principal balance that acts as the cost of borrowing and a way of reducing risk to the lender. But borrowers have no real control over their interest rate and are largely stuck with it – federal student loan interest rates are set by Congress, and private student loan interest rates are set by the terms of the underlying loan contract. Given these limitations, the only option available to borrowers to lower their rates is to refinance their loans through a private lender (there is no federal student loan refinancing program that results in a lower interest rate). This is a major undertaking, and borrowers who are considering student loan refinancing should be aware of the potential risks and rewards.Read More

Announcing a “Student Loan Intensive” Workshop for Financial Planners

| Articles Cosigners Site & Practice News

Adam and Heather Nationally recognized student loan attorneys Heather Jarvis and Adam S. Minsky have joined forces to provide a comprehensive student loan training for financial planners. The intensive Student Loan Workshop is designed to provide financial planners with the business know-how and the subject matter expertise to advise student loan borrowers with confidence.

Here are the details:

  • When: Sunday, Sept. 18, 2016, 8:45 am – 4:45pm (right before the XYPN conference and FinCon2016)
  • Where: Sheraton San Diego Hotel and Marina
  • Credits: Financial planners can get up to 8 Continuing Education credits.

The workshop will focus on the following topics:

  • Issue-spotting
  • Service offerings and fees
  • How to get started
  • Where to find support
  • How to interview your clients
  • Student loan interest rates
  • The pros and cons of consolidation
  • Repayment and forgiveness
  • The private refinancing market
  • Impacts on retirement strategy
  • Student loans and mortgages
  • Proposed reforms

Interested? Spots are limited, so register now!

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The End of the Worst Student Loan Clause?

| Articles Cosigners Current Events Default Policy & Reform Private Student Loans

 

Many private student loan contracts have a tiny little clause, hidden away in the obscure depths of the fine print. It’s written in formal and somewhat vague language, but it basically says that if the cosigner or the borrower dies or declares bankruptcy, the entire balance of the private student loan is due immediately. This can be true even where the borrower (or cosigner) has been making regular, on-time monthly installment payments and can continue to do so.

I call this the “death and bankruptcy clause.” It’s essentially an automatic default: if you can’t pay the entire loan balance right then, the “accelerated” loan will go into default and collections. Sometimes, borrowers are not even notified of the situation until the loan has been placed with a third-party debt collector and has been reported to national credit bureaus as charged-off or defaulted.

As you can imagine, this leads to terrible situations. Imagine a borrower who has a good job and is making regular payments, when the cosigner (perhaps a well-meaning family member who got into trouble, or an ex-spouse who the borrower hasn’t heard from in years) declares bankruptcy. Suddenly, the student loan is in default. Or how about the situation where the borrower’s mother dies – mom is a cosigner on the borrower’s private student loan, and hasn’t really had much to do with the loan since she originally signed for it. But now, the borrower is going to have to deal with default and a collections agency, on top of the grief of losing a parent.

Absurd, isn’t it?

Well, this little clause from hell might be getting extinguished.Read More

Introducing “The Student Loan Guide for Parents and Cosigners”

| Cosigners Private Student Loans Site & Practice News

Ebook Cover Small

I am thrilled to announce the publication of my next book, “The Student Loan Guide for Parents and Cosigners,” now available in paperback and Kindle formats.

As many of you might know, student loan debt doesn’t just impact students. Each year, parents take out millions of dollars in Parent PLUS loans to finance their child’s college education. And millions of relatives, spouses, friends, and acquaintances of students cosign private student loans. Federal Parent PLUS loans and cosigned private student loans are very different from other types of student loan debt, and parents and cosigners often do not fully understand their rights or their options, especially when things go wrong. And there are minimal resources out there to help them.

That’s why I wrote this book.

When I first started my student loan law practice, I thought that all of my clients would be recent graduates in their 20’s or 30’s, trying to understand and navigate their student loan repayment. But at this point, I estimate that over one third of my clients at any given time are parents and cosigners. To me, this says a lot about the student debt crisis.

I hope this book will be helpful to some people, and I hope some of you will take the time to read it.

Co-Signer Release: Why You Should Consider It

| Cosigners Default Private Student Loans

Many private student loans allow for, or even require, a co-signer. Most of the time, the co-signer is not the person actually enrolling in school. The cosigner is the student’s parent, spouse, boyfriend, girlfriend, cousin, or friend. The cosigner believes, genuinely, that she is helping the student go to school to get an education. All the cosigner is doing (says the conventional wisdom) is enabling the student to get that loan that will pay for tuition, so that the one they love can get ahead in life. And that loved one will, of course, get employed upon graduation and promises (promises!) to pay that loan back.

What many people do not realize, however is this: The cosigner is just as legally responsible for the loan as the borrower.

What does this mean? If the borrower can’t or doesn’t pay, the co-signer is still on the hook. Even more disturbing, many private student loan contracts have what I call a “death and bankruptcy clause” that can be quite dangerous. Under this clause, if the co-signer or the borrower dies or declares bankruptcy, the entire balance of the loan will become due immediately, and if not paid in full, the loan goes into default. This means that if either the borrower or the co-signer experience some sort of catastrophic health or financial breakdown during the life of the loan, the loan can be in danger of defaulting, putting the other party in grave danger. This is particularly worrisome where a borrower has a private student loan cosigned by an elderly grandparent, or a parent is the co-signer on a private student loan where the child has become unable to pay.

Luckily, there may be a way out. Many private lenders allow for something called a “co-signer release,” where the lender will agree to release the co-signer from all legal responsibility on the loan under certain conditions. These conditions vary from lender to lender, and the specifics may be outlined in the loan’s original promissory note. In my experience, these conditions are often either a “buyout” (a lump-sum payment by the co-signer), or an installment arrangement (a series of on-time monthly payments over the course of time, ranging from 12 to 48 months). If the condition is met, the co-signer is released from all legal responsibility on the loan.

If you are a co-signer or borrower and you are concerned about the long-term financial stability or health of the other signer on the loan, a co-signer release may be a good pre-emptive measure to protect yourself from an unnecessary (and, arguably, unfair) default. If you want to learn more, review your loan promissory note and contact your private loan lender to get some more information about the process and requirements.

The “Death and Bankruptcy Clause” In Private Student Loan Contracts

| Cosigners Private Student Loans

If you’re a follower of this blog, then you already know that I’m not a big fan of private student loans. They just stink. They tend to have higher interest rates and stricter repayment terms compared to their federal counterparts, and federal programs such as consolidation and Income-Based Repayment are not available. Private student loans often require a co-signer, something I’m also not a huge fan of because many people don’t realize that the co-signer is just as legally responsible for the loan as the borrower. Like federal student loans, private student loans typically cannot be discharged in bankruptcy (although it is not impossible).

Want to know my absolute least favorite thing about private student loans?

Read More

The Exploding Parent Loan Crisis

| Cosigners

The impact of burdensome student loan debt is not just felt by students. As I’ve written about recently, it is also felt by co-signers who are often relatives, spouses, or close friends of student borrowers. Perhaps the most burdened people, aside from students themselves, are parents.

Parent PLUS loans are federal student loans that are available to parents to pay for their child’s education. The parent, not the student, is the borrower, and the parent is solely responsible for the loan’s repayment. These loans are fairly easy to obtain, but we’re now seeing some negative consequences of these loans, largely for three reasons. First, these loans often have significantly higher interest rates than non-Parent federal loans. Second, Parent PLUS loans are completely ineligible for arguably the most favorable federal loan repayment plan, Income-Based Repayment. Third, parents often experience declining income as they near or enter retirement, making it even more difficult to repay these loans.

Last year, over $10.6 billion in Parent PLUS loans were lent to almost a million families. The numbers are just staggering. What this means is that we’re seeing an explosion of crippling student loan debt that is actually impacting parents of students, not just the students themselves. Suddenly retirement may no longer be a viable option for baby boomers who were just hoping to lend a helping hand to their children so they could get ahead in life. And of course, just like with any federal loan, if the parent ever defaults on this loan they are subject to theextraordinary collection powers of the federal government. This includes, frighteningly, the potential offset of critical social security income.

To read more about the growing Parent PLUS loan crisis, click here.