Friday, April 20, 2012

What Happens if a Educational Loan Cosigner Dies?

By John Johnson


College tuition money may be hard to come across. For numerous, scholarships appear out of reach when the grades or sports abilities aren't there. Grant cash can also be reserved for the poorest of the poor. This leaves numerous students within the middle, and these students usually take out education loans. A lot of these students require a cosigner on their college loans. Many people wonder what happens if a education loan cosigner dies. This could be determined by a couple of factors such as what type of loan the student has and what status the loan is in.

Federal loans and private loans are the two kinds of loans available to university students. The Stafford Loan program is low-interest student loans that don't need a credit check. These loans need a cosigner only when the student is regarded as a dependent student younger than 24. The student is the one ultimately accountable for repaying these loans and also the cosigner is never held liable.

In the event the education loan cosigner dies with a federal Stafford Loan, the student is nonetheless responsible to pay. Should the student becomes deceased, the loan is forgiven and the estate isn't held liable. In some instances, the loan can be forgiven if the education loan cosigner becomes deceased. Check with your individual lender to find out if this is the case for you.

Private loans use a stricter application procedure and are harder to come by. These are generally provided by big banks and lending institutions as a way to bridge the gap between educational costs and also the amounts awarded by federal loans and grants. Occasionally tuition is so high that private loans are needed, but students are young and have not had time to construct credit. In these instances, students need to get a cosigner. What happens to these loans in the event the student loan cosigner dies? These loans are treated much like any other private loan through a bank like a vehicle or home loan. As long as the payments aren't in default, absolutely nothing will occur to the estate of the deceased in the event the education loan cosigner dies. If the payments are in default, there's very little chance that the estate will be held liable. They are much more likely to pursue the living person on the loan and send them to creditors or pursue other litigation against them, since they were an equal partner on the loan.

Cosigners may be an essential part of student loan applications. What to do if a student loan cosigner dies is really a common question, but the process is treated just like any other loan, with the exception of federal loans.




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