Dear Penny: Does My Kid Have to Pay a $10K Loan She Co-Signed Due to a Lie?

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Dear Penny,

My son and his girlfriend convinced my hard-working twins, a boy and a girl, to co-sign their student loans by telling them it was only for a year. Well, my boy twin signed for his brother. After I reamed him for tricking them, all is well. My son has a job and is working on his second master’s. 

Now for the problem: The girlfriend recently broke up with my son, and my girl twin is going to be on the hook for $10,000 in the ex-girlfriend’s student loans! 

The ex is in Hawaii with her family and isn’t working. She’s just helping out her mom, who had a very bad stroke and is on disability. It's looking like the ex may never work, but who knows? 

My daughter was tricked. Is there anything that she can do to get out of this?


Dear W.,

I’m not clear on how your son and his ex “tricked” the twins into co-signing their loans. Did they have them sign loan documents that misrepresented the terms of the loan? Or did your twins fail to read what they were signing?

Some student loans do, in fact, allow borrowers to apply for what’s known as a co-signer release in as little as 12 months after graduation. Actually getting the release can be complicated, though. The borrower has to be current on all payments and needs to show that they can repay the loan without the co-signer.

Dear Penny

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Clearly this won’t be an option since your son’s ex can’t afford the payments. But I bring this up because I wonder if there was some truth to the claim that the twins could get out of these loans after a year.

If your daughter signed a fraudulent loan document, she should file a police report and contact the loan servicer. But I’m afraid she doesn’t have many options if she simply didn’t read the loan’s fine print.

It may be worthwhile for your daughter to contact an attorney about whether she has any options. But ultimately, when you co-sign a loan, you’re just as liable for the debt as the borrower. So unless your son’s ex resumes payments — which seems highly unlikely at this point — chances are that your daughter will be on the hook for payments. If she fails to make them, she’ll destroy her credit and could get sued by the lender.

I’m assuming these are private student loans since federal loans rarely require a co-signer. Unfortunately, your options for dealing with private student loans are limited. Still, if your daughter is struggling to make payments, she should contact the lender and see if they have any options. It’s often in their interest to work with borrowers so they can avoid defaulting.

This will likely turn out to be a very expensive lesson for your daughter. Co-signing is a financial minefield that can destroy credit and relationships. It’s especially dicey when you co-sign for someone who isn’t family and has less incentive to preserve the relationship. And whenever you sign an agreement, it’s essential that you actually read it.

Your daughter needs to be the one to take action here. If you’re tempted to intervene, try to resist the urge. Owning your mistakes is part of being an adult.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].