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News & Politics News & Politics

Grieving parents hit with $200,000 in student loans

Posted by on Jul. 29, 2014 at 3:32 AM
  • 9 Replies

mason family
Steve Mason and his wife Darnelle not only took in their daughter's three children when she passed away, they also inherited her $100,000 student loan bill.

NEW YORK (CNNMoney)

When his 27-year old daughter Lisa died suddenly of liver failure five years ago, Steve Mason was as devastated as any father would be.

He and his wife Darnelle immediately took in Lisa's three children -- ages 4, 7 and 9 at the time -- even though they knew it would be a huge struggle to support them. Steve earns less than $75,000 per year as a pastor, while Darnelle earns even less as a director at the same church.


Then the student loan bills started coming.

Mason had co-signed on the $100,000 in private student loans that his daughter took out for nursing school, and the lenders wanted their money.

Unable to keep up with the monthly payments on top of all of the other mounting expenses, the $100,000 balance ballooned into $200,000 as a result of late penalties and interest rates of as high as 12%.

"It's just impossible on a pastor's salary raising three kids to pay $2,000 a month on loans," said Mason, who has been searching for a second job.


If these had been federal student loans, Mason could have had the loans discharged or at least received some sort of financial assistance. But since they are private loans, he has little to no recourse.

He called each lender to explain his situation and beg for help, and while they sympathized with him, they told him they weren't required to do anything.

And they're right: private lenders aren't bound by any federal requirements to help borrowers -- or co-signers -- facing financial hardship, even when it's a parent whose child has passed away, says Deanne Loonin, an attorney at the National Consumer Law Center. Any loan forgiveness is up to the discretion of an individual lender.

Navient Corp., which manages several of Mason's loans, said it has reduced the balance and lowered interest rates and payments for Mason in the past, and provides relief to customers on a case-by-case basis.

student loan mason
Lisa Mason, left, with her mother, Darnelle, in 2007.

"We extend our deepest sympathies to the Mason family on the loss of their daughter," the company said in a statement to CNNMoney. "We're reaching out to Mr. Mason to offer further assistance as appropriate."

After being contacted by CNNMoney, Mason said Navient lowered his interest rate to 0% on three of four loans and reduced the total amount owed to $27,000 from nearly $35,000.

American Education Services, which handles the bulk of Mason's other loans, said as a loan servicer it's in charge of collecting payments and doesn't make the rules about forgiveness. Mason would therefore need to contact the original lender, National Collegiate Trust, directly. He did this, and says the lender refused to provide him with any relief. NCT could not be reached for comment.

Mason has considered declaring bankruptcy, but student loans are the only type of debt that generally can't be discharged through bankruptcy.

"People with other debt from splurging -- they can discharge that," he said. "Student loans should really be the one type of debt they do discharge because it's done to further an education and career. But somehow getting [my daughter] an education has encumbered me for the rest of my life."


Similar financial nightmares are haunting other grieving families.

Angela Smith, a mother from Chesapeake, Va., filed a petition on Change.org several years ago asking private loan provider First Marblehead Corp. to forgive the $40,000 in student loans that her husband had co-signed for their son Donte, who was shot to death in 2008.

"Shortly after Donte died, that's when the collection calls started. It was like a punch in the gut -- we didn't know what hit us," Smith wrote in the petition. "All of a sudden we not only had to deal with the police and attorneys investigating his murder, but we also had to deal with collectors constantly calling and reminding us of our son's death in the worst way."

The petition received more than 150,000 signatures from sympathizers but no action from the lenders. First Marblehead didn't respond to a request for comment, and Smith says the loan was recently sold to another company.

Related: Hungry, tired and stressed out

At least four other petitions from families in this situation have been started on Change.org. There's been one success story so far, where the brother of a deceased borrower petitioned a bank to stop going after his grieving father for payments, and the loan was forgiven.

Legislation aiming to help people in these situations, including recent bills that would allow student loan debt to be discharged in bankruptcy, have been introduced over the years but have yet to pass in Congress.

Three ways to keep student debt down

For now, the only option parents really have is to propose a payment plan with the lender or try to prove undue financial hardship to the courts in order to get the debts discharged in bankruptcy -- which is rarely approved, said Loonin. And for anyone not already in this terrible situation, be very wary of taking out private loans -- always try to get as much federal aid as possible first.

As he approaches 60, Mason's dreams of retirement have been shattered. He's done the math, and he will have dependent children living under his roof until he is almost 70 years old. He hasn't taken a vacation with his wife since his daughter died, and doesn't realistically see that happening for many years to come.

"We've pretty much gone through our retirement [funds] already -- we didn't have a lot saved to begin with and now any extra money goes to the kids, as it should, and then whatever we can pay on the loans, we do," said Mason. "At my stage of life, I should have a very different lifestyle than I do." 

by on Jul. 29, 2014 at 3:32 AM
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Replies (1-9):
-Celestial-
by Platinum Member on Jul. 29, 2014 at 12:38 PM
Mason has considered declaring bankruptcy, but student loans are the only type of debt that generally can't be discharged through bankruptcy.

"People with other debt from splurging -- they can discharge that," he said. "Student loans should really be the one type of debt they do discharge because it's done to further an education and career. But somehow getting [my daughter] an education has encumbered me for the rest of my life."
grandmab125
by Platinum Member on Jul. 29, 2014 at 12:42 PM

 It's terribly sad that the young woman died.  It's also said that these loving parents/grandparents are going to be straddled with these loan payments for the next 20 years or so....But that is the law, and the father should have known that before signing his name on the dotted line.

Now....This is why you shouldn't co-sign large loans for you kids or anyone else.  Everyone knows that if you co-sign a note for someone else, should that someone else default on the payments, then you will be held liable to pay it off.

It would be the same in the end as if the daughter walked away from paying her loans.  People do this all of the time....it's called bankruptcy.

Hopefully, the bank will continue to work with the Pastor to make adjustments to the loan.

erika9009
by Silver Member on Jul. 29, 2014 at 1:29 PM

I still don't get how the parents are responsible.  Did they cosign for it.  Maybe I missed that part.

Clara78
by on Jul. 29, 2014 at 1:36 PM
He makes $75,000 the wife earns less?! My dh makes $89,000 and we have 5 kids. Admittedly, we live in a fairly low cost of living area but it's a big city. We pay all of our bills every month, own our own home, our kids get new clothing no hand me downs or used stores... Our fridge is always stocked and we receive no public assistance. We own a car, we have savings, we have iPhones and internet and tv cable. We have pets that see the vet, and have their shots... We do fun things, big birthday parties, even bigger Christmas...

I don't get how this can be such a struggle financially. And my dh is paying on student loans. He pays $120 a month.....

And I'm a sahm. So I get no money for what I do.....
mom2bahandcch
by on Jul. 29, 2014 at 1:51 PM
Well... la ti da. Did you miss the part where they wanted $2000 a month in payments for the loans? And theybare providing for 3 kids that weren't there,so they have new expenses. I also wonder if she had insurance, they may have had funeral expenses too.

Quoting Clara78: He makes $75,000 the wife earns less?! My dh makes $89,000 and we have 5 kids. Admittedly, we live in a fairly low cost of living area but it's a big city. We pay all of our bills every month, own our own home, our kids get new clothing no hand me downs or used stores... Our fridge is always stocked and we receive no public assistance. We own a car, we have savings, we have iPhones and internet and tv cable. We have pets that see the vet, and have their shots... We do fun things, big birthday parties, even bigger Christmas...

I don't get how this can be such a struggle financially. And my dh is paying on student loans. He pays $120 a month.....

And I'm a sahm. So I get no money for what I do.....
WildPowerMom
by Member on Jul. 29, 2014 at 2:01 PM

It is horribly sad when someone dies.  Especially so young and with so much potential.

With that said, it's no one's fault that these people died.  Including people who they borrowed from.  The teachers, the TA's, the schools, the book publishers, and anywhere else these debts may have been coming from.  It's horrible that the institutions can't or won't help further, but, in honesty, who pays for the debt?  No one wants to pay $35,000 because someone died, but there are people waiting to be paid for that money. 

This horribly sucks.  I'm glad most of the loans are down to 0% interest and hopefully the monthly payments can be lowered as well.  Outside of that, they co-signed and are held obligated. 

I know I'm suppose to be 100% on the side of the parents and be completely pissed at the evil bank, but a death doesn't make a $35,000 debt disappear. 

Ms.KitKat
by Gold Member on Jul. 29, 2014 at 2:29 PM

The article sites 'New York" To live in NY for a family of 5 on $75000 is quite tight. I am surprised he actually makes that much money as a pastor!

This is an all too common problem; in order for adult children to attend college, parents are forced to take out student loans. Because the children still do not have credit, the parents must co-sign those loans. Private colleegs cost $50,000 a year. 

It is a shame there is so little sympathy. 

Quoting Clara78: He makes $75,000 the wife earns less?! My dh makes $89,000 and we have 5 kids. Admittedly, we live in a fairly low cost of living area but it's a big city. We pay all of our bills every month, own our own home, our kids get new clothing no hand me downs or used stores... Our fridge is always stocked and we receive no public assistance. We own a car, we have savings, we have iPhones and internet and tv cable. We have pets that see the vet, and have their shots... We do fun things, big birthday parties, even bigger Christmas... I don't get how this can be such a struggle financially. And my dh is paying on student loans. He pays $120 a month..... And I'm a sahm. So I get no money for what I do.....


LadyBugMom09
by Member on Jul. 29, 2014 at 2:42 PM
Very sad. But it happens all the time to lots of people. When you co sign a loan you are responsible. He should open a go fund me account. :/ :(
latashac
by Bronze Member on Jul. 29, 2014 at 3:07 PM

I used to never understand why my mother wouldn't co-sign for me on anything except my first car, now I get it. As much as I would want to help out I don't think I would do it for anything this much. Very sad story but you always gotta think about the worst case scenario when you do these things.

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