When a Grandfather’s Good Deed Turns Sour
A well-meaning grandfather co-signed a student loan from the Massachusetts Educational Financing Authority (MEFA) to help his grandson. However, the grandson failed to make payments, leaving the loan in default. To make matters worse, the grandfather has since passed away, leaving the family wondering what happens next.
Fortunately, the good news is that the deceased grandfather’s estate is no longer liable for the loan. According to MEFA, upon the death of a non-student co-borrower, the estate is released from its obligations. The estate should notify MEFA’s loan-servicing company, AES, to provide the necessary documentation.
However, the bad news is that the loan remains the responsibility of the student borrower. If the loan is 180 days past due, it is considered defaulted and may be referred to a collections agency. The student borrower must take action to manage their loan obligations or face the consequences.
This situation highlights the importance of co-signers understanding the risks involved. Research shows that one-quarter of co-signers end up making at least one payment, which can impact their credit score. Even co-signing for a loan can affect a person’s credit score, making it essential to carefully consider the terms before committing.
In this case, the grandson may be able to request a lower monthly payment or explore rehabilitation programs offered by some lenders. However, it’s crucial for him to take responsibility for his actions and work towards resolving the debt.
The issue of student-loan debt is a significant burden for many Americans, with the total amount currently standing at $1.75 trillion. It’s essential to approach the situation with empathy and understanding, recognizing that the real problem is the unpaid debt, not the individual. By working together, the family can find a way to address the debt and move forward.
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