Nov 16, 2024
When 86-year-old Rebecca Finch received a letter from loan servicer Navient stating that her $31,730.76 private student loan balance was forgiven, it was a huge relief.
Finch cosigned a student loan for her daughter and wound up on the hook for paying it despite being in her 80s with medical issues and a monthly income of just $1,650 from Social Security.
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She eventually qualified for a disability-related discharge in September since she’s unable to work. But the process to get there, as CNBC reported, was "very difficult," according to Finch's daughter.
If you're on the hook for a student loan, you may be hoping for similar relief. But unfortunately, navigating the process may prove more challenging than expected.
The problem with cosigning a student loan
Cosigned student loans are far from an anomaly. Lending Tree reports that about 93% of private undergraduate loans and 69% of private graduate student loans were cosigned during the 2023 to 2024 academic year.
The problem, though, is that when you cosign a student loan and the primary borrower is unable to make payments, that burden shifts onto you. And if you’re retired and on a fixed income, making those payments may be tough or close to impossible.
The average retired worker today on Social Security collects about $1,924 per month. And many seniors end up living mostly or solely on Social Security. Getting stuck with student loan payments in that situation could be extremely detrimental to your finances — so much so that getting your debt forgiven may be your only viable option.
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The challenge of student loan forgiveness
Federal student loans come with built-in protections for borrowers with permanent disabilities. Unfortunately, those protections are harder to come by with private loans — even in situations where the debt in question is clearly going to be difficult to pay off, like in Finch's situation.
CNBC references an analysis by nationally-recognized student loan expert Mark Kantrowitz when it says only about half of private student loan lenders offer the possibility of loan forgiveness in the event of a borrower becoming disabled and unable to work. But even when private lenders technically offer this option, figuring out how to access it can be tough.
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And while you'd think calling your loan servicer would do the trick, it often doesn't. Even if you get someone helpful on the phone, they may not have the information needed to steer you in the right direction.
Visiting your loan servicer’s website might prove similarly fruitless. This is a stark contrast to the experience of federal student loan borrowers who can visit a dedicated website to learn about their discharge options in the event of a disability.
If you’re in a situation like Finch’s where you’re stuck with private student debt you can’t repay, remaining persistent can pay off. You may want to utilize every communication method possible to contact your lender by phone, email and standard postage explaining your situation until you’re able to find someone to walk you through the process. It may take a few tries, but if your lender offers the option of forgiveness in the event of a disability, you should find the right avenue to at least apply.
Even if your lender insists that they don’t offer student loan forgiveness for borrowers living with disabilities, you can still try to renegotiate your monthly payments by asking for a compassionate review of your situation.
And if you're ever asked to cosign a student loan again, you may want to say ensure you can foot the bill if you need to. That way, it’s less likely to weigh you down in a situation like this.
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Maurie Backman has been writing professionally for well over a decade. Since becoming a full-time writer, she's produced thousands of articles on topics ranging from Social Security to investing to real estate.
