My mother co-signed student loans for my sister, who is now disabled. How can we pay them back?

How to get out of student loan debt.

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Ask: My mother co-signed my sister’s student loan for her online school, but life got in the way of my sister and due to her mental health (she is now considered fully disabled) she was unable to make her payments. Then the student loan company somehow altered the student loan to make my mother the primary owner of that debt and my sister doesn’t even take out the student loan anymore.

My father died a few years ago and my mother got money from his life insurance, but it wasn’t much. It saddens me that the only income she has left is being taken by a student loan company. Is there any advice I can give her to offer a glimmer of hope? I emailed a lawyer who said there wasn’t much that could be done as she was the co-signer and was responsible for it as well. I am appalled that there is no protection for her as my mother does not speak English and she may not have been informed of the details of the loan as it was all in English.

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Reply: Unfortunately, if your mother agreed to be a co-signer of the original loan, she agreed to pay it back legally if her daughter could not. “When co-signers are struggling to pay their monthly student debt bill, their only options are the private lender’s options,” says Anna Helhoski, student loan expert at NerdWallet. However, “some private lenders promise to pay off the debt if the main borrower becomes completely and permanently disabled,” explains Andrew Pentis, certified student loan advisor and college finance expert at Student Loan Hero. Other private lenders are only allowed to do this, for example, if the main borrower dies.

What should your mother do now? If she can’t make payments, professionals recommend that you contact your student lender to negotiate new payment terms or temporarily lower payments. “Otherwise, the only options are trying to pay off the debt with the lender or seeking to forego private student loans through bankruptcy, which can be difficult and expensive,” says Helhoski.

But don’t despair because that doesn’t mean your mom is without options. “If she’s on a limited income, it might be wise for her to set up a debt management plan with a nonprofit credit counseling agency. That way, you and your loan advisor could agree on a three to five-year loan repayment, perhaps at a reduced interest rate, and your advisor could mediate,” Pentis says. The National Foundation for Credit Counseling (NFCC) and the Financial Counseling Association of America (FCAA) both provide nationwide resources for nonprofit credit counseling.

Even before she commits to such a plan, your mom can likely get free counseling from a nonprofit organization accredited by the NFCC. For example “at GreenPath [a financial wellness nonprofit], you can talk to a student loan advisor about all your options and develop a customized plan without breaking the bank. If a more drastic strategy, such as filing for bankruptcy, is required as a means of paying off debt, the advisor can make a recommendation,” says Pentis.

Another option, if your mother can get a co-signer on the loan (she may need one), would be to refinance the loan at a lower interest rate with another private lender. “She could extend the term of the loan to keep her monthly payments down, although that would increase the overall cost of the loan due to the interest incurred. The eligibility criteria for refinancing are pretty strict, so your mother or the co-signer would need strong credit to make up for limited cash flow,” says Pentis.

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