in-laws/student loans

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VGSailor
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in-laws/student loans

Post by VGSailor »

I wanted to post the following situation in order to get some perspective on the situation.

The in-laws live on the west coast, but have a daughter going to college on the east coast. The daughter (my sister-in-law) goes to college near where my wife and I live (30 miles away). This fall, the daughter will be embarking on her third year of college in a 6-year program. The in-laws are not in a good financial situation. They essentially live month to month with no significant savings, so in order to attend college, the daughter has to also take out private student loans.

So for the first year, I sat down with my sister-in-law and explained to her about loans, the importance of saving up, and paying off the loans as quickly as you can. I told her, the less you can borrow the better. I recommended getting a job in her field as soon as she could. She appeared to have understood everything I said and agreed that after finishing college, she would live with her parents and pay down the student loans within a couple of years. The reason why I even advised on this financial situation was because I essentially had to co-sign the loan. (I say essentially, because at the time, my wife and I agreed that we would help out by co-signing to get a lower interest rate for her...but it turns out, that there is no way she or her parents would have been able to secure a loan).

At any event, fast forward to now, and my sister-in-law is still without a field-related job (or any job for that matter, although she is pursuing a lead right now), and is about to enter the third round of college financing. As it turns out, this past summer a little secret came out that my sister-in-law has been in a secret relationship with a guy for the past 6 years with no one in the family the wiser. Upon hearing this and considering the finances of the in-laws, I told my wife that I was no longer comfortable co-signing on the loan. It was one thing to trust the sister-in-law to be responsible but having a third-party involved (the secret boyfriend, whom she says she is committed to marrying after school) makes me nervous. Say they do get married and then he's like, let them (me!) pay the loans and she goes along with it...yikes!

Anyways, I didn't want to seem like not being helpful, so we sat down with sister-in-law and told her that in order for me to co-sign, she needs to get a job and work at least an average of 20 hrs/wk during the year and save up $5,000 to pay towards the loan. I even came up with a budget for her, consulted with my wife and two co-workers. Everyone agreed that it was reasonable and doable. We went through it with her and she seemed willing and able. I told her if she wasn't comfortable with the plan, to counter-propose and we could discuss it further. This was about 2.5 months ago. Now, when we ask her about the situation, she is reluctant to say anything, saying that she has to focus on school, etc. She says she found a bank that would loan her money without having me co-sign. We offered to take a look at the loan offer to see if it was legit, etc. but she has not taken us up on the offer.

My sense is that the sister-in-law talked to her parents and they were totally against the idea of her having to work while in school. They want her focused 100% on school. This is just our hunch though, based on the way they raised my wife and siblings. Our sense is also, that the parents want to shut us out of everything with the sister-in-law. I'm not about to get into a discussion with them about why spending 100% of her time on school isn't good or healthy, and since no one has broached the topic with us anymore, i'm just letting the situation be.

At this point, I'm not counting on having to co-sign (which is a relief), but I can't help but wonder if I did or am doing anything wrong. Are there any steps I should take? Or do I just let the situation evolve?
NorCalDad
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Re: in-laws/student loans

Post by NorCalDad »

VGSailor wrote:This fall, the daughter will be embarking on her third year of college in a 6-year program. The in-laws are not in a good financial situation. They essentially live month to month with no significant savings, so in order to attend college, the daughter has to also take out private student loans.
There's a big difference between "has to" and "wants to." I don't see why anyone has to take out private loans to attend college. If the in-laws are as bad off as you suggest, their daughter should qualify for tons of grant aid and scholarships. She could attend community college and public universities, using federal student loans and work-study aid to make it work. It sounds like she has chosen a private college that is a luxury her family can't really afford and/or her parents make too much money to qualify for aid but still live paycheck to paycheck. It sounds like this may be a specialized program if it takes 6 years, but unless it leads to a high-paying profession chock full of jobs, I can't see the justification over a public school path.

I understand that family dynamics are difficult, but I cringed when I read the words "co-sign" and "student loan." I would not co-sign any loan you can't easily pay yourself. You should consider any loan you co-sign a gift from you to the borrower. I also wouldn't go down the path of placing work conditions on co-signing a new loan - this is a tricky path that could end in you losing even more money and also losing your relationship with your in-laws.

I think the best path you can take is to let her secure her own financing, help her navigate the financial aid system and urge her to consider cheaper education alternatives. Good luck.
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OAG
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Re: in-laws/student loans

Post by OAG »

NEVER lend money to friends or family. It has a GREAT chance of turning into a gift at best and destroys the relationship usually.
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Re: in-laws/student loans

Post by Rubiosa »

Saviors are always crucified.
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Raymond
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Re: in-laws/student loans

Post by Raymond »

When I saw "co-sign", I stopped breathing for a few seconds.

I thought, "Oh, fiddlesticks, OP's now on the hook for paying the loan."

Oxygen flow returned when I saw that you had NOT co-signed. Bullet dodged :P

As you have done, withdraw from the situation and let the situation evolve on its own. Offer advice if requested, but do not cosign.

One can only hope your sister-in-law will pull her head out of her fourth point of contact and find a better educational situation as described above.

[Edit] As an aside, I mentioned this thread to my wife, who blurted out (in reference to the SIL's secret boyfriend): "Six years! What girl keeps a secret boyfriend for six years unless he's already married or her sugar daddy?!" :confused

[Edit] OP, please clarify - did you cosign an earlier loan? I'm so confused! :?
Last edited by Raymond on Tue May 27, 2014 2:39 pm, edited 2 times in total.
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BL
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Re: in-laws/student loans

Post by BL »

Did you or did you not co-sign anything with her?

I agree not to co-sign any loans for anyone. Unless you care to gift them, you can lose your money, your good credit ratings, etc., when they cannot/will not follow through.
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Re: in-laws/student loans

Post by JW-Retired »

BL wrote:Did you or did you not co-sign anything with her?
As I read it the OP co-signed the first two years of loans. Not something I would advise someone to do for a sister-in-law.
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YttriumNitrate
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Re: in-laws/student loans

Post by YttriumNitrate »

Raymond wrote:When I saw "co-sign", I stopped breathing for a few seconds.
I thought, "Oh, fiddlesticks, OP's now on the hook for paying the loan."
Oxygen flow returned when I saw that you had NOT co-signed. Bullet dodged :P
It seems a bit unclear if the OP has already co-signed on the loans...my thought was: "boy, I sure hope that 6-year program is Pharm D. program to increase the chances the OP will get repaid."
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Re: in-laws/student loans

Post by Calm Man »

I don't understand a part of this. I thought you cosigned already? Regardless, and in the spirit of cutting to the chase, I would tell you "thank you, I will borrow from the bank". First, why should she have had to tell you about her boyfriend? Second, I agree that she is in school to do well in school and if she (and maybe parents) believe it requires her focusing 100% on her studies, so be it. Your opinion is different. But if she is in a "six year program" (your words) that implies some specialized degree or education of some sort. As industrious as I was in college, with my science and lab load, I could not have worked 20 hours a week and maintained any life. For her to get a fraction of a grade less to satisfy your requirements to work 20 hours a week while full time in college would not be my desired way to go if I could borrow money. I hope you rethink this. If you are going to help the young lady, a spirit of "generosity" is needed. Otherwise, just don't. Good luck to the young lady...
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Re: in-laws/student loans

Post by YttriumNitrate »

Calm Man wrote:First, why should she have had to tell you about her boyfriend?
While a boyfriend in college may be none of the parents/(money lending relatives) business, the OP stated this is a six year relationship which would put the starting point around freshman year of high school.
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Re: in-laws/student loans

Post by Calm Man »

YttriumNitrate wrote:
Calm Man wrote:First, why should she have had to tell you about her boyfriend?
While a boyfriend in college may be none of the parents/(money lending relatives) business, the OP stated this is a six year relationship which would put the starting point around freshman year of high school.
And therefore she has to tell them about it?
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noyopacific
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Re: in-laws/student loans

Post by noyopacific »

It appears that you are in a very weak position to negotiate with your sister-in-law. As cosigner, you are on the hook for her loans and if she is unwilling or unable to pay them back, you will have to pay on them in order to protect your own credit rating and to avoid being sued by the lender. The fact that she is not being open and honest with you tends to suggest that there may be a problem when it is time for her to start paying on the loans. It sounds like she told you whatever you wanted to hear when she needed you to cosign for her, now that she has what she wanted, she has little incentive to dance to your tune.

In the mean time I'd be wondering if she were still able to continue getting advances on any of the loans I co-signed for, if so, can I contact the lender and inform them that I am not willing to accept liability for any additional amounts? I would also be looking at my options for collecting from her, any future payments I might have to make. Can I sue her if she doesn't pay? As she has decided not to follow my suggestions that she work etc., I would not, under any circumstances cosign on any new loans.

If I were able to prevent additional debts on the cosigned loans, I would let her know that due to her lack of openness, I was concerned that I was going to end up paying back her loans and was trying to limit my liability. I'd make every effort not to get angry with her but simply tell her that I am very uncomfortable about the risk of my having to repay her loan. I'd say that while I would like to help her, there are limits to how far I'm willing to stick my neck out, especially since she has been giving some pretty ominous signs about her commitment to me (us.) "Frankly sis, you are starting to scare the bejesus out of me !"

I would stop giving her financial advice. She was apparently had been willing to listen politely and agree in the past only because she needed me to cosign. In the mean time I would be as friendly as possible and keep the door open to her otherwise. It sounds to me like she is looking for a reason to justify not paying back the loan and leaving it to you. I'd be trying to avoid giving her any additional excuses to do that.

Did you do anything wrong ? It doesn't especially sound like it. I try to help family members too, but when it comes to family and money, one needs to be willing to accept the likelihood that things don't always work out the way we plan. You might have put her on a short leash and require that she perform certain things in order to continue to get your support with financing but that doesn't matter much now. Sorry VGSailor, but I think you need to be prepared to pay back your sister-in-laws student loans. I hope that you are able to keep it from creating any further deterioration in your relationship with your in-laws. You didn't mention her major. If she happens to be going to law school, I would consult with a lawyer immediately.
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VGSailor
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Re: in-laws/student loans

Post by VGSailor »

To clarify:

She is in a Pharm D program. It was not a wise financial decision to do so, and I made those points to the family back three years ago, but her parents said doesn't matter and essentially forced her to go this route. Clearest cut path to the big bucks!

I did co-sign the first two years, with the understanding that the sister-in-law told me/agreed that once she finished college, she would live with her parents and pay off the loans within a few years. I did do this with generosity as being part of the family.

I am now not comfortable co-signing future loans. This would mean years 3-6. The main reason was the breach in trust of (1) having a secret boyfriend whom no one knew about; granted that is her personal life, but if she is capable of this, then she is also capable of not paying back a loan; and (2) she started talking about marrying the guy and not being able to live with her parents, etc. which is opposite to what she agreed to before - as i mentioned, this makes me nervous because now the guy could influence her decisions to pay the loans back or not. We did sit down with her and told her these exact reasons why we feel nervous about co-signing. As such, the in-laws are now very distant and cold to us. I believe the issue stems from them not understanding the implications of co-signing (it's just a signature, why aren't you helping!!!!????).

As for the work thing, I saw it as an opportunity for the sister-in-law to show that she would partake in the risk of taking out the loans and not just my neck on the line. It was also an opportunity for her to get experience in her chosen profession. She's going to be a third-year and still has not had any working experience. She herself has admitted as much that she is behind in that regard to her peers. I also don't think average 20 hr/wk is not unreasonable especially if you can work full-time during the summers. I think it is more about effective time management. For example, she stays with us on some weekends and sleeps in until 3pm. That is not efficient or effective use of her time.
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Re: in-laws/student loans

Post by awval999 »

Oh God, don't sign onto PharmD loans. And this comes from a pharmacist. Google around the internet and look at the job market for pharmacists. It's not hot like it was. And it gets worse every year.
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Re: in-laws/student loans

Post by blu9535 »

VGSailor wrote:To clarify:

She is in a Pharm D program. It was not a wise financial decision to do so, and I made those points to the family back three years ago, but her parents said doesn't matter and essentially forced her to go this route. Clearest cut path to the big bucks!
Assuming she can find a job...

Don't want to derail the thread, but the job market for Pharm D graduates is a bubble and is getting increasingly bad. Schools are pumping out lots of pharmacists because the schools make lots of money off them, and there just aren't enough jobs for them in most areas, particularly in metro areas. And there's some question as to whether the traditional highly-paid retail pharmacist position will even exist in the future. Search online for articles on the pharmacist job market if you want to learn more. Very similar situation to law degrees.
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Re: in-laws/student loans

Post by tyrion »

I think you realize by now that it wasn't a real good idea to cosign the loans. But what's done is done.

You could try to have the inlaws get additional loans to cover the existing 2 years that you are on the hook for. Since that will likely be at higher rate, furthering their opinion that you're just not helpful, that sounds like it will further strain an already tenuous relationship.

I think your best bet is to try to mentor your SIL, hope she can find a job in the short term which will help her land a job in the long term, and cross your fingers.
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Re: in-laws/student loans

Post by denovo »

Why shouldn't she be eligible for a ton of federal financial aid if her parents are low to moderate income?
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Re: in-laws/student loans

Post by roymeo »

Wow. I can't imagine at 18 years old being trusted to enter an agreement whereby I agree to find a job close to and live with my parents in about 6 years--for a 'short' duration of time equal to me paying off loans at an accelerated pace.

What if the loans I got for my 6th year of college have much higher rates?

What if I don't graduate in 6 years/at all?

What if I can't get a job close to my parents' home?

I can totally imagine not wanting to pick up the phone when the person who thought that was a good contract for everyone calls.


Conversely, I'm not sure that other people quite get the OP's dismay at the SIL having a boyfriend: (According to the OP) She entered into this extended conditions "indentured" contract agreeing that she would live at home, and one wonders how much she really thought that was likely with the 4-year boyfriend relationship seeming to be able to make the college transition.


It's such an odd arrangement: You're going to college for 6 years, so we're going to start you out with a condition that really railroads your choices for something more like the next 10, and we all think this is reasonable and do able. A normal, timely loan payment schedule isn't good enough for some reason. I guess the OP feels the longer they're potentially on the hook for the loans is much worse for everyone involved and a huge weight to get out from under compared with the alternative of pressuring the student to burn out either before or after graduation.

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Re: in-laws/student loans

Post by NorCalDad »

The greater risk to co-signing these loans was always that you were vouching for a teenager without a college degree or job, not to mention a lack of real-world experience. I think you assumed a lot when you thought an 18-year-old would stick to an aggressive payback schedule and live with her parents six years down the road. That's too much to ask of even the most responsible 18-year-old, IMHO.

As others have reiterated, you never should have co-signed in the first place. Unfortunately, that gave your wife's family unrealistic expectations for the duration of the student's college career.

Is she currently receiving Stafford loans, federal/state grants, school grants or outside scholarships? To restore your relationship and protect your finances, I think your strategy should be to seek ways to replace your private loans (unfortunately, they are yours) with any alternative forms of student financing you can find.
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VGSailor
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Re: in-laws/student loans

Post by VGSailor »

Suffice to say, I did not want to get involved with any of this. But I'm family, so the obligation was there to help.

For what it's worth, I trust the sister-in-law to pay the loans back. I've framed the situation to her that if she doesn't pay the loan back herself when she is finished school, then she's essentially taking money from her newborn niece for her education. Aunty, by the looks of it, gets that. (I know it was very risky and not financially prudent, but again...family dynamics). It is the secret boyfriend that I don't trust. And now knowing how "committed" they are, I told the sister-in-law that this was the primary reason I am not comfortable just co-signing anymore. When it was just her, I could trust and maybe deal with the situation. But when it's her and her "husband," then that's just too much to control/manage. I told her this and that the situation of co-signing became much too risky.

I then said, I don't want you to not be able to go to college, so I'm flat out not just going to say no to co-signing. That's when I came up with the work plan, which I thought was reasonable, but many here seem not to. As I mentioned, the work wasn't just to have money to reduce the loan amount, but also to get experience/references, which are critical to developing skills and future networks. This is me more venting and I don't mean to compare, but I worked 40 hours a week doing an engineering major. I still had a life, got good grades, etc. All I'm asking for her is for her to put in a little effort. She comes to visit us on the weekends sometimes (I pick her up after work) and she ends up sleeping until 3pm on both days. That's not efficient or effective use of her time. I also see her spending money on clothes, purses, and shoes...all things that she doesn't need right now (she's even admitted as much saying that she has been spending too much money), so I'm trying to get her to be a bit more responsible, learn how to budget, live within her means (which her family does not know how to do). Tyrion, you told me to mentor her...bad idea, I think, since her parents now think I'm trying to teach their daughter how to live.

This whole thing may be a blessing in disguise. Now, I probably don't have to cosign for the next 4 years. She apparently has found other sources of funding that don't require a cosigner, but as I mentioned, the entire family is now distant and won't disclose too much information.

She does get federal loans, both subsidized and unsubsidized. The private loans cover the rest of tuition, including her rent.
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Re: in-laws/student loans

Post by LeeMKE »

I have step daughters like this. They will listen intently, signal agreement, and then walk out and do the opposite.

The way you can tell teenagers are lying is because their mouths are moving. And today, teenage behavior continues to about 28 from what I can tell.

Might want to sock a bit away over the next few years with the loans you co-signed are deferred.
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Re: in-laws/student loans

Post by Calm Man »

VGSailor wrote:Suffice to say, I did not want to get involved with any of this. But I'm family, so the obligation was there to help.

For what it's worth, I trust the sister-in-law to pay the loans back. I've framed the situation to her that if she doesn't pay the loan back herself when she is finished school, then she's essentially taking money from her newborn niece for her education. Aunty, by the looks of it, gets that. (I know it was very risky and not financially prudent, but again...family dynamics). It is the secret boyfriend that I don't trust. And now knowing how "committed" they are, I told the sister-in-law that this was the primary reason I am not comfortable just co-signing anymore. When it was just her, I could trust and maybe deal with the situation. But when it's her and her "husband," then that's just too much to control/manage. I told her this and that the situation of co-signing became much too risky.

I then said, I don't want you to not be able to go to college, so I'm flat out not just going to say no to co-signing. That's when I came up with the work plan, which I thought was reasonable, but many here seem not to. As I mentioned, the work wasn't just to have money to reduce the loan amount, but also to get experience/references, which are critical to developing skills and future networks. This is me more venting and I don't mean to compare, but I worked 40 hours a week doing an engineering major. I still had a life, got good grades, etc. All I'm asking for her is for her to put in a little effort. She comes to visit us on the weekends sometimes (I pick her up after work) and she ends up sleeping until 3pm on both days. That's not efficient or effective use of her time. I also see her spending money on clothes, purses, and shoes...all things that she doesn't need right now (she's even admitted as much saying that she has been spending too much money), so I'm trying to get her to be a bit more responsible, learn how to budget, live within her means (which her family does not know how to do). Tyrion, you told me to mentor her...bad idea, I think, since her parents now think I'm trying to teach their daughter how to live.

This whole thing may be a blessing in disguise. Now, I probably don't have to cosign for the next 4 years. She apparently has found other sources of funding that don't require a cosigner, but as I mentioned, the entire family is now distant and won't disclose too much information.

She does get federal loans, both subsidized and unsubsidized. The private loans cover the rest of tuition, including her rent.
Did you really tell her that if she did not pay you back that you wouldn't be able to help your daughter go to school? Did you expect her to believe this? Why would you say something like this?

I am glad that the young lady has found her a to finance her education without relying on you any further. It sounds like you were a reluctant lender. I wish her well.
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Re: in-laws/student loans

Post by Wildebeest »

Hi VGSailor,

Rule number one: never cosign a loan to family. Gift them the money.

I do not think you did not anything wrong.

However your expectation that cosigning /lending money IMHO gave you control is mistaken. She has the control since you have no recourse. Reading your replies, I infer you do not agree.

Have you considered how you sister in law may have perceived the whole situation? If I had been in your sister's in law position, I would be very angry about being counseled. On the other hand I would have never borrowed money from any body, who thinks that lending me money gives them the right to counsel me. Better have the anger directed at an evil bank, garnishing future incomes from the first born to come.

If I would be in your position the way out I would be most comfortable with, would be to offer no further advice and to kiss the money goodbye you cosigned on. Do not cosign on any further loans for any family members unless you willing to let the counseling go.

You might always be pleasantly surprised if she would pay you back all or something.

Good luck.

PS my spouse paid on the money back for the college education from the uncle who nicely offered the money in an unsecured fashion. He was a better person as is my spouse.
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Re: in-laws/student loans

Post by NightOwl »

Hi VGSailor,

It seems to me as though you were put from the start of this mess in a no-win situation; at this point I think we're strictly in damage-control mode. I'm guessing that you have what your in-laws consider to be "lots of money"? They certainly seem to be treating you as a piggy bank that should pay out and keep silent.

I want to say right off the bat that I am not of the "never co-sign" mindset. I would co-sign for my siblings for sure. And, if my wife asked me to (did your wife ask, or did her parents ask?), I would co-sign for her siblings. So here we are.

If I were you, I'd start by planning how best to handle the worst-case scenario -- paying the entire amount of the loans you've co-signed -- and coming to terms with doing so without bitterness for the sake of the marriage. If you get any form of remuneration from your sister-in-law, great; I wouldn't count on a thin dime. Then I'd take many deep calming breaths. Then I'd sit down with my wife, talk to her about the effects of taking money away from our household, and ask "honey, what do you want me to do about this situation with your sister?" The bottom line (though I might not say it in so many words) is that she needs to be "the bad guy" with her own family, and if she won't do that, you're in a terrible position.

The boyfriend thing is, I think, irrelevant to you, though I don't think it should be irrelevant to your wife. I hope that she sees that her sister is very much capable of not sharing really big elements of what is going on in her life, and if that extends to a relationship that could become a marriage, it certainly extends to job prospects, her employment situation, and her ability to repay a loan.

You're in a very bad situation, and I hope that your wife steps up to talk to her sister and sort this all out. In any situation in which you are the bearer of bad news to your wife's family, you simply cannot win.

NightOwl
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Topic Author
VGSailor
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Re: in-laws/student loans

Post by VGSailor »

Calm Man wrote:
VGSailor wrote:Suffice to say, I did not want to get involved with any of this. But I'm family, so the obligation was there to help.

For what it's worth, I trust the sister-in-law to pay the loans back. I've framed the situation to her that if she doesn't pay the loan back herself when she is finished school, then she's essentially taking money from her newborn niece for her education. Aunty, by the looks of it, gets that. (I know it was very risky and not financially prudent, but again...family dynamics). It is the secret boyfriend that I don't trust. And now knowing how "committed" they are, I told the sister-in-law that this was the primary reason I am not comfortable just co-signing anymore. When it was just her, I could trust and maybe deal with the situation. But when it's her and her "husband," then that's just too much to control/manage. I told her this and that the situation of co-signing became much too risky.

I then said, I don't want you to not be able to go to college, so I'm flat out not just going to say no to co-signing. That's when I came up with the work plan, which I thought was reasonable, but many here seem not to. As I mentioned, the work wasn't just to have money to reduce the loan amount, but also to get experience/references, which are critical to developing skills and future networks. This is me more venting and I don't mean to compare, but I worked 40 hours a week doing an engineering major. I still had a life, got good grades, etc. All I'm asking for her is for her to put in a little effort. She comes to visit us on the weekends sometimes (I pick her up after work) and she ends up sleeping until 3pm on both days. That's not efficient or effective use of her time. I also see her spending money on clothes, purses, and shoes...all things that she doesn't need right now (she's even admitted as much saying that she has been spending too much money), so I'm trying to get her to be a bit more responsible, learn how to budget, live within her means (which her family does not know how to do). Tyrion, you told me to mentor her...bad idea, I think, since her parents now think I'm trying to teach their daughter how to live.

This whole thing may be a blessing in disguise. Now, I probably don't have to cosign for the next 4 years. She apparently has found other sources of funding that don't require a cosigner, but as I mentioned, the entire family is now distant and won't disclose too much information.

She does get federal loans, both subsidized and unsubsidized. The private loans cover the rest of tuition, including her rent.
Did you really tell her that if she did not pay you back that you wouldn't be able to help your daughter go to school? Did you expect her to believe this? Why would you say something like this?

I am glad that the young lady has found her a to finance her education without relying on you any further. It sounds like you were a reluctant lender. I wish her well.
Well, if she ends up not paying back the loan herself, and I have to, then the money comes from my pool of savings. As someone said, money is fungible, so the pool of savings includes the savings for my children's education. That doesn't mean that I wouldn't be able to help my daughter with school, but that there'd be less resources to do so.
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Re: in-laws/student loans

Post by VGSailor »

Wildebeest wrote:Hi VGSailor,

Rule number one: never cosign a loan to family. Gift them the money.

I do not think you did not anything wrong.

However your expectation that cosigning /lending money IMHO gave you control is mistaken. She has the control since you have no recourse. Reading your replies, I infer you do not agree.

Have you considered how you sister in law may have perceived the whole situation? If I had been in your sister's in law position, I would be very angry about being counseled. On the other hand I would have never borrowed money from any body, who thinks that lending me money gives them the right to counsel me. Better have the anger directed at an evil bank, garnishing future incomes from the first born to come.

If I would be in your position the way out I would be most comfortable with, would be to offer no further advice and to kiss the money goodbye you cosigned on. Do not cosign on any further loans for any family members unless you willing to let the counseling go.

You might always be pleasantly surprised if she would pay you back all or something.

Good luck.

PS my spouse paid on the money back for the college education from the uncle who nicely offered the money in an unsecured fashion. He was a better person as is my spouse.
I don't think that by co-signing I have any control. The situation stands right now that she still needs four more years of loans. In order to mitigate the risk that I would take on by co-signing, I asked her to reduce some of that risk by working. It was not an ultimatum, but rather a proposal, which I told her we could discuss on.

I didn't want to become involved in this from the beginning, but like NightOwl mentioned, I'm in a no-win situation. All I was willing to do was inform the in-laws of the consequences of their actions (choosing this school) and what taking out a loan means, etc. The choice(s) they make are up to them. But then they chose to come here but couldn't secure private loans. And if I didn't sign, it would be my fault she can't go to the school of her choice. She wont' become successful and it's all my fault. Like I said, they see it just as a signature. Why is he not willing to sign his name?

So yes, I understood the risk of co-signing (didn't want to). I also don't think it is fair to my sister-in-law that everyone thinks she won't pay back the loan. Like I said, I trust her to do that. I may be naive, hopeful, whatever to think that way, but I do. Having said that, I also understand that there is a chance that she won't and I will have to pay on the loans that I co-signed.

So it seems like:

(1) Definitely don't co-sign any more loans...no matter the situation
(2) Keep my opinions to myself
(3) Continue to be cordial to the family

I just hope that in a month or so (when loans are required), that they don't confront me about the situation. In a sense, I'm not sure how to respond.
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Re: in-laws/student loans

Post by Professor Emeritus »

I am with those who say
1) co signing was a mistake , write the money off as a lesson learned. Nothing is your fault, since you have no such obligation.
2) You have absolutely NO right whatever to information on her private life. NONe Zero NADA. Stop mentioning it, Stop thinking about it. Especially DO NOT use it as a reason to not continue to make loans , because that goes over the line to really kinky. (look up grooming, if you like) BTW her sister has no right to it either , unless they share the guy.
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Re: in-laws/student loans

Post by ginyah »

If I were you I would start paying off the student loans you cosigned for. They are just accumulating interest now. Your sister in law can always pay you back when she gets a job. This way you reduce the amount of total debt owed as well as your risk that she defaults on the loans and ruins your credit. JMO
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Re: in-laws/student loans

Post by Professor Emeritus »

NightOwl wrote:Hi VGSailor,


The boyfriend thing is, I think, irrelevant to you, though I don't think it should be irrelevant to your wife. I hope that she sees that her sister is very much capable of not sharing really big elements of what is going on in her life, and if that extends to a relationship that could become a marriage, it certainly extends to job prospects, her employment situation, and her ability to repay a loan.

NightOwl
OFGS There is a line between public and private life. My wife waited 15 months to tell our parents we were engaged.
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VGSailor
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Re: in-laws/student loans

Post by VGSailor »

Professor Emeritus wrote:I am with those who say
1) co signing was a mistake , write the money off as a lesson learned. Nothing is your fault, since you have no such obligation.
2) You have absolutely NO right whatever to information on her private life. NONe Zero NADA. Stop mentioning it, Stop thinking about it. Especially DO NOT use it as a reason to not continue to make loans , because that goes over the line to really kinky. (look up grooming, if you like) BTW her sister has no right to it either , unless they share the guy.
With regards to number 2, I have never requested information about her boyfriend. I'd like to make that clear. I totally agree about me not having a right to that information. I think you misunderstand the situation here. The fact came out that she had a boyfriend. I no longer became comfortable co-signing on future loans knowing this. (I'd like to understand why you think it isn't a reason - I was reluctantly ok to co-sign when it was just her, but if she has someone else that can influence her decisions and thought process, than I am no longer reluctantly ok to co-sign). That is the honest truth and I was honest with her about it.

I
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Re: in-laws/student loans

Post by HomerJ »

The real problem with co-signing is that the other person can also ruin your credit...

If they don't tell you they stopped paying the loan payments, YOUR credit may be dinged as well as theirs. Make sure there's some way you can monitor if the payments are being made, so if they aren't, you can make them.

Never co-sign... Loan or gift the money, but never co-sign.
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Re: in-laws/student loans

Post by VGSailor »

HomerJ wrote:The real problem with co-signing is that the other person can also ruin your credit...

If they don't tell you they stopped paying the loan payments, YOUR credit may be dinged as well as theirs. Make sure there's some way you can monitor if the payments are being made, so if they aren't, you can make them.

Never co-sign... Loan or gift the money, but never co-sign.
Fortunately, I can monitor the accounts online. We requested that she at least pay the interest that is accruing on the loans while in school. I checked recently and she did make a payment for the interest amount.
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Re: in-laws/student loans

Post by flyingbison »

VGSailor wrote: With regards to number 2, I have never requested information about her boyfriend. I'd like to make that clear. I totally agree about me not having a right to that information. I think you misunderstand the situation here. The fact came out that she had a boyfriend. I no longer became comfortable co-signing on future loans knowing this. (I'd like to understand why you think it isn't a reason - I was reluctantly ok to co-sign when it was just her, but if she has someone else that can influence her decisions and thought process, than I am no longer reluctantly ok to co-sign). That is the honest truth and I was honest with her about it.
Maybe you're just not explaining it well, but the bolded part above come across as more than a little creepy.
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Re: in-laws/student loans

Post by texasdiver »

The problem that no one has really mentioned so far is that these sort of private student loans can really mushroom in time due to accumulated interest and fees if they ever go delinquent. What might be a $10,000 loan today could mushroom to double or triple that down the road if she defaults. And you are still on the hook, or especially on the hook at that point. In other words, you are not only on the hook for the original loan, you are on the hook for whatever additional charges she occurs due to irresponsibility.

What I would do in your situation is the following:

1. Contact the lender and figure out how to pay the loan off now either with your own funds, or by taking out some other kind of loan that you have control over such as a home equity loan. This is what is coming anyway, might as well get ahead of the curve.

2. Give your sister the new loan terms. Whatever payment schedule is reasonable for her to pay you back. You could use the original loan terms for the sake of simplicity or cut her a break on some of the terms if they are excessive.

3. Tell her you can't do any more co-signing because you need to be devoting all of the rest of your resources to saving for your own children's college education.

4. Don't bring up any extraneous information about her choice of school, degree, boyfriend, living situation, etc. etc. None of that is relevant.

5. Don't "negotiate". You made a financial decision that you think is fair. You have your own family to look out for. End of discussion.
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Re: in-laws/student loans

Post by VGSailor »

flyingbison wrote:
VGSailor wrote: With regards to number 2, I have never requested information about her boyfriend. I'd like to make that clear. I totally agree about me not having a right to that information. I think you misunderstand the situation here. The fact came out that she had a boyfriend. I no longer became comfortable co-signing on future loans knowing this. (I'd like to understand why you think it isn't a reason - I was reluctantly ok to co-sign when it was just her, but if she has someone else that can influence her decisions and thought process, than I am no longer reluctantly ok to co-sign). That is the honest truth and I was honest with her about it.
Maybe you're just not explaining it well, but the bolded part above come across as more than a little creepy.
Ok. I don't quite get why you would think that is creepy, but let me explain.

My sister-in-law is honest and fully intends to pay back the loan that she took out (I understand that I co-signed) to fund her education. She looks at the situation as it is her debt to be repaid. This is something that she inherently believes. I believe that about her.

Now, let's say she finishes college, decides to get married, and they run into some difficulty or whatnot. Or maybe the guy just doesn't want to be saddled with debt. At that point, he could start telling/convince her, let's not pay back the loan. Let your BIL deal with it. We have our own problems. Not wanting to upset her family dynamic, she is convinced and says sorry, I can't pay back the loan because it will cause me problems. This is what I mean by someone influencing her. In the scenario I described, she could feel pressured/compelled to do something that she intrinsically does not want to.

I feel like if she were single, then I could reason with her if things went south. But if she is married and there is a third person involved, I don't want to be in that situation. If it came to that situation, I would just stay out of it.
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Re: in-laws/student loans

Post by texasdiver »

VGSailor wrote:To clarify:

I am now not comfortable co-signing future loans. This would mean years 3-6. The main reason was the breach in trust of (1) having a secret boyfriend whom no one knew about; granted that is her personal life, but if she is capable of this, then she is also capable of not paying back a loan; and (2) she started talking about marrying the guy and not being able to live with her parents, etc. which is opposite to what she agreed to before - as i mentioned, this makes me nervous because now the guy could influence her decisions to pay the loans back or not. We did sit down with her and told her these exact reasons why we feel nervous about co-signing. As such, the in-laws are now very distant and cold to us. I believe the issue stems from them not understanding the implications of co-signing (it's just a signature, why aren't you helping!!!!????).
I think this paragraph goes to the heart of your problem. You have identified the main point of conflict (you are uncomfortable co-signing any more loans). But you are coming up with a problematic reason for doing so.

I suggest you restate your reasons in strictly financial terms. I would say something like the following:

1. You didn't do enough research into what you were signing the first time around and now that you have you aren't comfortable with the terms of the loans (interest rates, penalties, whatever). By co-signing you are agreeing to those terms and you can't do so anymore. In other words, you changed your mind because you learned more about the loan itself, not because you learned more about your sister in law.

2. You are trying to put your own finances in order to get ready for.....(future home purchase, future college costs for your own kids, or whatever future credit needs you have) and you can't afford to tie up any more of your credit.

3. Your financial adviser/attorney/accountant etc. is saying that you can't do any more co-signing. Go hire a fee-based financial adviser to help you put together a financial plan and then have them tell you not to do any more co-signing if you have to do have someone else tell you not to do it. Many a businessman had said no to something by simply saying...."sorry my accountant says I can't do it"
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Re: in-laws/student loans

Post by Raymond »

OP,

Revisiting this situation, I heartily agree with texasdiver's advice to either pay off the co-signed student loan now or refinance it with a loan you personally control.

Speaking of control, presumably your wife's sister is an adult of sound mind, so I would highly recommend just stepping back.

From reading your posts, you are expending way too much time and energy on all this.

And if your in-laws insist that you co-sign more loans, tell them to go pound sand (or as mentioned above, blame it on your accountant).
"Ritter, Tod und Teufel"
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Re: in-laws/student loans

Post by Calm Man »

VGSailor wrote:
Professor Emeritus wrote:I am with those who say
1) co signing was a mistake , write the money off as a lesson learned. Nothing is your fault, since you have no such obligation.
2) You have absolutely NO right whatever to information on her private life. NONe Zero NADA. Stop mentioning it, Stop thinking about it. Especially DO NOT use it as a reason to not continue to make loans , because that goes over the line to really kinky. (look up grooming, if you like) BTW her sister has no right to it either , unless they share the guy.
With regards to number 2, I have never requested information about her boyfriend. I'd like to make that clear. I totally agree about me not having a right to that information. I think you misunderstand the situation here. The fact came out that she had a boyfriend. I no longer became comfortable co-signing on future loans knowing this. (I'd like to understand why you think it isn't a reason - I was reluctantly ok to co-sign when it was just her, but if she has someone else that can influence her decisions and thought process, than I am no longer reluctantly ok to co-sign). That is the honest truth and I was honest with her about it.

I
You would have cosigned the loan, as you did, if she didn't have a boyfriend -- but if you knew she had a boyfriend you wouldn't have? Gee, that seems like yet another strange requirement but I am so perplexed by your opinions that I shall now just agree to disagree with your approach. Good luck.
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Re: in-laws/student loans

Post by roymeo »

I can understand being uncomfortable with the boyfriend/potential spouse situation because it goes against the "you'll live with your parents cause you owe me" dream and adds complications to the perfect storm...er plan where her loans are treated more seriously than cancer.

I don't understand that this boyfriend seems to be some sort of malevolent force whispering in the ear of a responsible young woman "Hey baby, it's OK, those loans aren't yours, they're sugar-brother's loans. Don't you love me?"

If, after 6 years of college, she's that malleable, you're in trouble. Then again, maybe she is as she's agreed to your 10 year plan.
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Re: in-laws/student loans

Post by hiddensee »

So your wife's parents are asking you to pay for their other daughter to go to college.

I think this sort of request is outside common decency. It may feel bad to just decline, but I think that is what you should do. They should never have asked.

While I appreciate that you meant well, turning yourself into your in laws' bank manager-cum-probation officer is a possibility away from which you should not walk, but run.
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Re: in-laws/student loans

Post by istoner »

VGSailor wrote: Ok. I don't quite get why you would think that is creepy, but let me explain.

My sister-in-law is honest and fully intends to pay back the loan that she took out (I understand that I co-signed) to fund her education. She looks at the situation as it is her debt to be repaid. This is something that she inherently believes. I believe that about her.

Now, let's say she finishes college, decides to get married, and they run into some difficulty or whatnot. Or maybe the guy just doesn't want to be saddled with debt. At that point, he could start telling/convince her, let's not pay back the loan. Let your BIL deal with it. We have our own problems. Not wanting to upset her family dynamic, she is convinced and says sorry, I can't pay back the loan because it will cause me problems. This is what I mean by someone influencing her. In the scenario I described, she could feel pressured/compelled to do something that she intrinsically does not want to.

I feel like if she were single, then I could reason with her if things went south. But if she is married and there is a third person involved, I don't want to be in that situation. If it came to that situation, I would just stay out of it.
When you co-signed the loan did you expect her to not become involved with anyone for the next six years (or longer, I guess -- until the loans were paid back?) That seems like a stretch.
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Re: in-laws/student loans

Post by denovo »

I still don't understand how you ended up co-signing a loan. If this is an accredited school, the federal government provides financial aid to cover tuition and living expenses for students.
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Re: in-laws/student loans

Post by danwhite77 »

I'm agnostic on this boyfriend discussion, to me at the end of the day you should NOT cosign for any further loans regardless of her relationship status. If you want to help out with payments later -- at your sole discretion -- great, go ahead and do that. By cosigning a loan, you are every bit as liable as she is for the loan and it sounds like you have much more (financially) to lose. At this point, if for some unforeseen reason she dies, you will still have to repay that loan which is a non-dischargeable obligation, even in bankruptcy. Simply do not agree to cosign for any additional loans and do the best you can to manage your existing exposure.
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Re: in-laws/student loans

Post by tyrion »

I'm not the OP, but on the subject of the boyfriend...

I don't think it's the fact that she is dating someone. I think it's the fact that she has been secretly dating someone for the last 6 years (since she was a freshman in high school), and this is just now coming out. Dating someone is not a big deal. Dating someone for 6 years is not a big deal. Secretly dating someone (for 6 years!), concealing that knowledge from everyone in the family, and now they are 'committed to marrying after school'.... that's a big deal and changed the OP's internal calculations on the likelihood of any defaults on the loans he co-signed.
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Re: in-laws/student loans

Post by Doom&Gloom »

VGSailor wrote:Suffice to say, I did not want to get involved with any of this. But I'm family, so the obligation was there to help.
I just began reading this thread and have not completed it yet, but my recommendations would fall in line with the majority I've seen so far.

However, after reading the quoted above, I just had to add that until you change this belief, you will encounter nothing but misery from yourself and others regarding this entire situation (and probably others as well.)

My wife comes from a dysfunctional family (I'm beginning to believe that everyone does). Many of them are wont to refer to very distant relatives as "family". A distant cousin has recently died which has resulted in squabbling and fighting among many of his relatives over the disposition of his meager estate even though he left a recent will. After observing all of that from a comfortable distance, I remarked to my wife that some members of her family "are about to learn the difference between 'family' and 'relatives' ".
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Re: in-laws/student loans

Post by VGSailor »

istoner wrote:
VGSailor wrote: Ok. I don't quite get why you would think that is creepy, but let me explain.

My sister-in-law is honest and fully intends to pay back the loan that she took out (I understand that I co-signed) to fund her education. She looks at the situation as it is her debt to be repaid. This is something that she inherently believes. I believe that about her.

Now, let's say she finishes college, decides to get married, and they run into some difficulty or whatnot. Or maybe the guy just doesn't want to be saddled with debt. At that point, he could start telling/convince her, let's not pay back the loan. Let your BIL deal with it. We have our own problems. Not wanting to upset her family dynamic, she is convinced and says sorry, I can't pay back the loan because it will cause me problems. This is what I mean by someone influencing her. In the scenario I described, she could feel pressured/compelled to do something that she intrinsically does not want to.

I feel like if she were single, then I could reason with her if things went south. But if she is married and there is a third person involved, I don't want to be in that situation. If it came to that situation, I would just stay out of it.
When you co-signed the loan did you expect her to not become involved with anyone for the next six years (or longer, I guess -- until the loans were paid back?) That seems like a stretch.
That is correct. Without delving too far in to it, there is a cultural thing with which the sister-in-law has foregone now.
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Re: in-laws/student loans

Post by VGSailor »

tyrion wrote:I'm not the OP, but on the subject of the boyfriend...

I don't think it's the fact that she is dating someone. I think it's the fact that she has been secretly dating someone for the last 6 years (since she was a freshman in high school), and this is just now coming out. Dating someone is not a big deal. Dating someone for 6 years is not a big deal. Secretly dating someone (for 6 years!), concealing that knowledge from everyone in the family, and now they are 'committed to marrying after school'.... that's a big deal and changed the OP's internal calculations on the likelihood of any defaults on the loans he co-signed.
+1 from me, the OP. If it hadn't come out, no one will have known for 10 years!
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Re: in-laws/student loans

Post by Meg77 »

Just want to chime in that it is a terrible idea to sign any more student loans. Student loans are looong term commitments. You are so worried about her spending habits now and possible marriage in 3 years; the reality is that unless you pay these loans off for her, you may be looking at decades of stressing about her choices and ability/willingness to repay this debt. I understand that she made a naive teenage promise to spend 6 years in school and then another 2-5 in her parents' basement dutifully repaying her loans quickly, but you should have known better than to believe her. Nobody, least of all teenagers, can be expected to reasonably predict the next 10 years of their lives. Things change, and whether it's this guy or some other, it's quite possible that she might want to get married during the next decade - or move for a job - or or otherwise launch her independent life.

If you really want to help then you should lend her money yourself - with a formal credit agreement. The terms of your loan can require payments to begin immediately (meaning she'd be forced to work or otherwise figure out an income stream). You'd have more control over the loan terms, and you can write off the loss if she doesn't repay you. You could even charge her less interest, and you lending $5K would be much more helpful than a regular $5K loan because she could avoid the deferred and compounded fees and interest.
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Re: in-laws/student loans

Post by istoner »

tyrion wrote:I'm not the OP, but on the subject of the boyfriend...

I don't think it's the fact that she is dating someone. I think it's the fact that she has been secretly dating someone for the last 6 years (since she was a freshman in high school), and this is just now coming out. Dating someone is not a big deal. Dating someone for 6 years is not a big deal. Secretly dating someone (for 6 years!), concealing that knowledge from everyone in the family, and now they are 'committed to marrying after school'.... that's a big deal and changed the OP's internal calculations on the likelihood of any defaults on the loans he co-signed.
But see OP's response to my question. He expected her not to get involved with anyone at all--secret or otherwise--until the loan was repaid (or at least until she was out of school).
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Re: in-laws/student loans

Post by Professor Emeritus »

VGSailor wrote:[I was reluctantly ok to co-sign when it was just her, but if she has someone else that can influence her decisions and thought process, than I am no longer reluctantly ok to co-sign). That is the honest truth and I was honest with her about it.

I

As I wrote, look up "grooming" You want to do her thinking for her. That is where it gets kinky. It is sugar daddy behavior.
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