Cosign college loan for sibling?

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maroon
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Re: Cosign college loan for sibling?

Post by maroon » Wed Mar 28, 2018 11:02 pm

This is an easy one! OP needs to step up and take over the loan payments for his own college expenses. Right now.
Then, if OP's parents still can't afford to cosign, OP's brother either needs to establish in-state residency or transfer to an cheaper/in-state school.

carruthers209
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Re: Cosign college loan for sibling?

Post by carruthers209 » Thu Mar 29, 2018 12:16 am

You said your dad CO-signed for you. That means that actually the debt was yours and in your name. I agree with the other writers that you should take over what is rightfully your debt. How can you not find out about this loan in your name? You signed the paperwork, right? The amount of loans that students are taking on these days is breathtaking and actually destroying their future. They are mostly totally clueless because it's not real money to them- Your brother could have gone to a community college for those first two years and earned the same credits- and then on to state university for the undergraduate degree-or something similar. He can still transfer for a four year state university for those last two years-without the additional $100,000 in student loans. You might think about offering to help when he's in law school-when it might make more sense. He may not even get there.

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BL
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Re: Cosign college loan for sibling?

Post by BL » Thu Mar 29, 2018 1:03 am

Did your Dad cosign on your loans? If so, they are your debt. Nevertheless, you need to pay off those loans and then pay him back for loans paid. As a side benefit it will be easier for you to refuse to cosign when you have demonstrated some responsibility with your loans.

Your Dad absolutely must file his tax returns, even if he cannot pay anything owed. Also the FAFSA or whatever school info should be done.

Your Dad is risking his retirement by supporting college for his kids. I hope you are all prepared to support him when he needs it as well. He can't afford to spend any more on his kids and the kids need to step up and repay him now for his generosity.

Life isn't fair and last son can't count on help from father any more. Get a good paying job for summer at least, and work during school if not actually moving to a lower cost school.

jminv
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Re: Cosign college loan for sibling?

Post by jminv » Thu Mar 29, 2018 2:23 am

I might do it if my exposure was minimal, ie, at in state university. It's not, though. It's serious money and your brother is spending 200k on only the first step of his degree. He will then probably spend a similar amount on his law degree. He will then realize that the legal profession isn't what it once was, his salary won't match his expectations, and he will have an incredibly difficulty time trying to pay back 400k in student loans.

If I did go forward with this I'd make my own personal situation very clear, how I was doing this because he was family, and that our future relationship depended on him paying down the loan that I cosigned before all others. I wouldn't even reach this step before sitting down with him and finding out exactly what his plans are post-law school (is he going to do non-profit law or something like that?) and show him exactly how much his projected loan balances are going to cost him every month versus his planned salary. There's lots of relatively poorly paid lawyers who took out huge amounts in debt. Look at some of the stories online.

Also, your father needs to file his taxes. He can't not file - even he doesn't have the money to pay.

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celia
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Re: Cosign college loan for sibling?

Post by celia » Thu Mar 29, 2018 3:18 am

ofrivia wrote:
Wed Mar 28, 2018 6:17 pm
My brother is currently in his sophomore year of college, attending an out of state school that is $50k a year in tuition and housing. His goal is to attend law school. So far his grades are great and he is on track.
How many scholarships has he applied for? How many did he get/how much in tuition was paid by a third-party?
If he hasn't applied for any, why not? The best ones to apply for are those that have the least competition (fewest applicants). The financial aid office can point him in the right direction or use some of the school's money for grants/scholarships (unless it is a state university, which usually doesn't have the funds that private colleges have). But to be eligible for any of these funds, the parents and brother need to apply for financial aid which requires their tax returns. In this case, they need to submit their 2016 tax return, for which the filing deadline has already passed. (They need to file even if the can't yet pay the tax.) Even if this take 10-40 hours of your brother's time, the potential "payout" can be huge for writing those essays.
Added into this mess is my parents selling their house next month to downsize property and taxes. After purchasing a smaller house they'll be applying the balance of funds to paying off the owed income taxes and already existing student loans. That is the carrot being dangled, so to speak. That this house sale will "clear all the debt" and suddenly my dad will be in good financial standing and able to cosign the senior year, if not also the junior year.
This is not a "carrot", but rather a warning that the dad just replaces debt with new debt. He cannot afford his current debt nor can he afford the new mortgage, if any. How are his retirement plans progressing? Does he have any? (I know this is a separate issue, but it looks like if his kids who have/had student loans paid for them don't repay him, they will be supporting them in their retirement years.)

Then there is the issue of your mom. Does she work? Can she contribute somehow or has she been doing that through their family finances already?

Captain kangaroo
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Re: Cosign college loan for sibling?

Post by Captain kangaroo » Thu Mar 29, 2018 4:18 am

200k for a degree is just madness.
And no don't do it.

Your brother will get over you not signing it much easier then you will get over him stiffing you with a 50k bill.

gotester2000
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Re: Cosign college loan for sibling?

Post by gotester2000 » Thu Mar 29, 2018 5:15 am

400k student loans and not for studying medicine either ??? What is more worrying is how the OP's parents are going to take care of their own retirement?
The other side of the story which OP doesnt tell/know is how much are his student loans? It is hard to accept that OP doesnt have this information.
OP should pay his debt fully - that will help his brother's education - brother should pay his own debt later - that will help parent's retirement.
Co-signing means you own the loan - and this is not an emergency life or death situation - there are other options mentioned in this thread which should be considered.

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F150HD
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Re: Cosign college loan for sibling?

Post by F150HD » Thu Mar 29, 2018 5:21 am

DaftInvestor wrote:
Wed Mar 28, 2018 7:09 pm
F150HD wrote:
Wed Mar 28, 2018 7:03 pm
His undergrad degree will cost him about $200,000. Then law school on top of that.
I must be missing something. $200k for a 4 year degree?
There are lots of schools that are $50K to $60k per year and 50 time 4 is 200.
"50 time 4 is 200" - thanks for helping me figure that one out :happy

yea, am aware some schools are that much......just sayin. This doesn't include the cost of law school.

_

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F150HD
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Re: Cosign college loan for sibling?

Post by F150HD » Thu Mar 29, 2018 5:25 am

Captain kangaroo wrote:
Thu Mar 29, 2018 4:18 am
200k for a degree is just madness.
+1

maybe a compromise- OP offer to help if brother switches to a cheaper school. Either via gift? or? let him live w/ you to decrease cost of living etc. then OP doesn't offend anyone, and it alleviates the associated guilt.

timmy
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Re: Cosign college loan for sibling?

Post by timmy » Thu Mar 29, 2018 5:30 am

Don't do it. It's a bad idea to do as a favor. And you aren't obligated in any way, shape, or form.

And don't worry about offending anyway because this was not a reasonable ask of you.

denovo
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Re: Cosign college loan for sibling?

Post by denovo » Thu Mar 29, 2018 5:31 am

I vote for dad filing accurate tax returns. Should make brother eligible for a bunch of grants and loans that don't need a co-signer.
"Don't trust everything you read on the Internet"- Abraham Lincoln

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djpeteski
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Re: Cosign college loan for sibling?

Post by djpeteski » Thu Mar 29, 2018 6:03 am

cosigner == paying the loan

If you are comfortable paying the 50k, the by all means cosign. If not, then don't.

What is going to happen year 4? How is law school going to happen? How much is law school going to cost if undergrad is 50k/year?

BTW my son is in law school right now, and I am paying for it. He is going part time. So far the first two semesters have cost me about $2400. That is because of his work ethic (he works full time at a job that offers tuition assistance). The money is already saved.

We all have choices in this life. Why was such an expensive school chosen when there was no money? Why was there no money? This is not your responsibility.

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dogagility
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Re: Cosign college loan for sibling?

Post by dogagility » Thu Mar 29, 2018 6:10 am

A tangled family financial web was woven and continues to be woven tighter by the college choice made by the parents and brother.

1) The OP's after tax take home pay is $120,000, according to another thread started by the OP. Given your parent's financial situation, I agree with others that you should pay your parents back for every dollar they spent on your college education.

2) Your brother should not have attended the $50k/year out of pocket private college. The two years are water under the bridge, but the solution going forward is for your brother to transfer to a cheaper university... preferably one that is close to home so he doesn't have the expense of "room". I would also suggest the brother work for a few years to build up sufficient savings to pay for college.

A law degree isn't the golden ticket to wealth; it's very likely your brother will struggle to pay back $400k in student loans... adding yet more financial stress within the extended family.

3) Since your brother is no longer an entering freshman, it is very unlikely he will get any significant non-loan aid from the private university. He could try, but this would require full disclosure of your parent's financial situation to the university. Could get ugly since they haven't filed taxes recently.

4) Another poster's comment about your wife having veto power over any decision in this situation was astute. And yes, communicate this decision to your family as if it was your decision, not your wife's decision.
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zkzkzk
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Re: Cosign college loan for sibling?

Post by zkzkzk » Thu Mar 29, 2018 6:34 am

Ask yourself one question......can I afford to give 50, probably 100K (will be even tougher saying no when he only has 1 year to go) away knowing I wouldn't get it back? If no then you have your answer.
I personally think it was very wrong for your father to put you in such a tough spot........that alone would make my answer no, but then again I have been called the world's only living heart donor.

mmmodem
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Re: Cosign college loan for sibling?

Post by mmmodem » Thu Mar 29, 2018 6:48 am

Contrary to the other replies here, I would cosign the loan and consider it a gift. If it is paid back, all the better. I would not cosign above the ability to pay for our own childrens' education. As long as:

1. Your spouse agrees.
2. You sit down with brother and he's doing fantastic in school and is doing everything he can to reduce the amount of loan you need to cosign.
3. Dad paid for and is still paying your education so it's only right to pay it forward.
4. You want to help your dad and you want your brother to succeed.

JoeRetire
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Re: Cosign college loan for sibling?

Post by JoeRetire » Thu Mar 29, 2018 6:54 am

ofrivia wrote:
Wed Mar 28, 2018 6:52 pm
My father cosigned the loans for me and indeed still has some he is paying off.
Your father is paying off your loans? Why?
That's not what is typically expected when someone needs a cosign.

IMHO, you should be paying off your own loans. Perhaps that will free your father to cosign other loans.

craimund
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Re: Cosign college loan for sibling?

Post by craimund » Thu Mar 29, 2018 7:12 am

When you say "out of state", I assume you mean an out of state state school. Why does your brother need to go out of state to get a degree at another state's state school? This makes no sense unless the state schools in your home state are unacceptable - I'm not aware of any state that has in state schools that would preclude him from advancing a law career.

What degree is he pursuing? Law school does not require a certain type of degree for admission. I went to law school with an undergrad in engineering. Some schools have a "pre-law" major which hopefully he is not pursuing since it does not qualify him for any other type of job. His GPA and LSAT scores will be more important than where he went to school, unless maybe he is going to an ivy league school and wants to get into another ivy league law school (although getting into any of the top law schools is a crap shoot, even for someone with top scores and grades from a "prestigious" undergrad). The top law schools have so many applicants that they can be extremely selective.

There are many people with law degrees who do not even practice law. Big law corporate practice can be very lucrative but the work can be unrewarding, especially for a recent grad. Many people get burned out. He may end up going into another area of practice that is less lucrative. Those debts will make flexibility in the type of law he wants to practice difficult.

Definitely a no-go on the co-signing. He needs to step up and make some changes (i.e., transfer to an in state school or get his own loans).
"When you ain't got nothing, you got nothing to lose"-Bob Dylan 1965. "When you think that you've lost everything, you find out you can always lose a little more"-Dylan 1997

craimund
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Re: Cosign college loan for sibling?

Post by craimund » Thu Mar 29, 2018 7:16 am

mmmodem wrote:
Thu Mar 29, 2018 6:48 am
Contrary to the other replies here, I would cosign the loan and consider it a gift. If it is paid back, all the better. I would not cosign above the ability to pay for our own childrens' education. As long as:

1. Your spouse agrees.
2. You sit down with brother and he's doing fantastic in school and is doing everything he can to reduce the amount of loan you need to cosign.
3. Dad paid for and is still paying your education so it's only right to pay it forward.
4. You want to help your dad and you want your brother to succeed.
The problem with cosigning is that the the borrower's failure to pay his loan back can cause problems for the cosigner. As others have written, a gift would be better. $50,000 is a hell of a gift.
"When you ain't got nothing, you got nothing to lose"-Bob Dylan 1965. "When you think that you've lost everything, you find out you can always lose a little more"-Dylan 1997

dowse
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Re: Cosign college loan for sibling?

Post by dowse » Thu Mar 29, 2018 7:30 am

The vast majority of financial articles I've read on this topic advise never to co-sign any loan for any reason. There was one exception I recall reading about. I can't recall the details, but the point of it was that the writer also believed this, but was willing to make an exception when he knew something about the borrower that the lender did not and would not consider. In this case, it was a son coming out of the military who was highly motivated, but had not yet established his own credit rating. We had a similar situation in our household. Wife co-signed a car loan for a son, but ended up regretting it. He had a steady job, but had simply not had any credit cards or loans of his own to establish credit. Through some poor decisions, the steady job was lost. We ended up paying off the car loan and taking possession of the car, which at the time was the newest car in the household. We transferred an old car with 200K+ miles to him to have something to drive. For that same son, who was considering going to a school with dubious credentials, I once had a conversation with a person at the school about financing where it was suggested that I co-sign a loan to pay the tuition. I said, if your school is so great, then YOU co-sign the loan! End of conversation. As an aside, I am of the opinion that the college financing system is very broken. If schools could be forced to guarantee student loans, it would go a long way towards fixing it. Of course, it will never happen.

Finally, as another poster pointed out, if you do go against consensus and conventional wisdom and go ahead with co-signing, do make sure there is a life insurance policy on your brother that names you as a beneficiary. It should be very cheap for a healthy young person. I've read articles in the past with horror stories about parents being left on the hook after a tragic death of child for whom they co-signed a student loan. The loan must still be repaid.

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Re: Cosign college loan for sibling?

Post by deltaneutral83 » Thu Mar 29, 2018 9:00 am

The probability of cosigning and this working out in the sense that OP's brother goes onto law school, get's the stellar big law job, is able to service his now $400-500k debt on time is about 5-10% in my best guess. The odds of this being a complete disaster for OP and spouse is well over 50%. OP's father never enters the picture for me but slight chance he adds cash flow to the arrangement but much greater odds he does not. Information about OP's father's financial situation is also relevant, I do not take financial recommendations from people in this position. Paying down OP's tuition that father took out is certainly admirable at this point.

oldfatguy
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Re: Cosign college loan for sibling?

Post by oldfatguy » Thu Mar 29, 2018 9:04 am

ofrivia wrote:
Wed Mar 28, 2018 6:52 pm

My father cosigned the loans for me and indeed still has some he is paying off. So that is what makes me feel partially responsible.
Are you sure your father cosigned your loans? Or did he take out parent loans?

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badgerland
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Re: Cosign college loan for sibling?

Post by badgerland » Thu Mar 29, 2018 9:22 am

Seems like a recipe for disaster

timmy
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Re: Cosign college loan for sibling?

Post by timmy » Thu Mar 29, 2018 9:30 am

I listen to Dave Ramsey. That shows my bias.

Anyway, the number of horror story calls (into his show) is enough to scare the hell out of one. It seems these things never end kind of bad ... they end relationships and split families.

The fact that this is for college (vs.car, house, start a business) makes no difference.

ofrivia
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Re: Cosign college loan for sibling?

Post by ofrivia » Thu Mar 29, 2018 2:45 pm

Thanks to everyones comments. Wanted to come back and update.

I spoke with my brother first, who is 20 and a junior. I told him we cant sign because it jeopardizes us being able to get loans for our kids. That its ultimately about our kids. He wasn't upset and understood. Obviously very stressed about how to take care of funding his school. And he is looking at options like coming back to state.

Spoke with my father and shared as well. He understood as well. It was a short call.

So thats it. My brother and dad are going to figure it out. As a Boglehead since I was a teenager, I offered to help look at the financial picture and lend advice on how to clear up past due tax payments and get the situation resolved. But no co-signing. Thank you everyone. It was a pretty crappy set of phone calls but had to be done.

timmy
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Re: Cosign college loan for sibling?

Post by timmy » Thu Mar 29, 2018 2:54 pm

Wise move. And it took guts.

Hulu
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Re: Cosign college loan for sibling?

Post by Hulu » Thu Mar 29, 2018 2:59 pm

You made the right call. Bravo for having the strength to have two difficult situations.

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White Coat Investor
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Re: Cosign college loan for sibling?

Post by White Coat Investor » Thu Mar 29, 2018 3:21 pm

Goal33 wrote:
Wed Mar 28, 2018 6:51 pm
He can get his own loan. Maybe it’ll be at a higher rate. I think as his brother you could offer a nice gift. Maybe a few k to ease the burden but co-signing for 50k, no way.
That's the route I'd take. That allows you to save face (I didn't just loan him money, I GAVE him money) but it also caps your potential loss and puts the responsibility for paying for school exactly where it belongs- on the student.
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White Coat Investor
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Re: Cosign college loan for sibling?

Post by White Coat Investor » Thu Mar 29, 2018 3:23 pm

maroon wrote:
Wed Mar 28, 2018 11:02 pm
This is an easy one! OP needs to step up and take over the loan payments for his own college expenses. Right now.
Another great way to help out in this situation. I'd do that too.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

Big Dog
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Re: Cosign college loan for sibling?

Post by Big Dog » Thu Mar 29, 2018 3:50 pm

just say no to co-signing, but consider picking up the balance due on your loans.

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Re: Cosign college loan for sibling?

Post by Sandtrap » Thu Mar 29, 2018 4:58 pm

1 A parent asking a child to do this is not conscientious. The position of the senior member doesn't easily give the option of refusal.
2 The brother should ask himself. And, bear the consequence of refusal.
3 If you were single it would be different. But you now have your own family to consider just as your dad had his family to consider when you were young and no children had families.
4 This is something that only you and your spouse can discuss, fairly, and without undue influence, from a purely financial point of view. If the loan is never repaid, what would happen to your financial position? Would it be an undue burden? And, of course, it would always change the relationship between dad and son, dad and son's, and brother to brother . . . into cosigner and payee. . . enabler and borrower. . . debtor. . . etc.
5 When you have financial matters between family members and friends, it changes the relationships to a business relationship. And, also sets a precedent, which you have already pointed out, as "brother-bank", just as it is said nowadays, "bank of mom and dad" (no comment on that one).
6 Your priority is your spouse and your family first, then . . . . .
7 Another consideration is. . . what is the relationship and response/reaction if you said yes? If you said no?
If you said "no" and it would be held against you. Then you should say "no". Because you should not have to bear that burden of refusal. Your decision should be honored either way and nothing should change. If the relationships change because you say "no", again, then that is reason for "paws".
8 Be sure that any money owed to either parent or brother is paid off.

I have been in your position and it is very very awkward. "Rock and a hard place". :D
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bubbadog
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Re: Cosign college loan for sibling?

Post by bubbadog » Thu Mar 29, 2018 5:20 pm

ofrivia wrote:
Thu Mar 29, 2018 2:45 pm
Thanks to everyones comments. Wanted to come back and update.

I spoke with my brother first, who is 20 and a junior. I told him we cant sign because it jeopardizes us being able to get loans for our kids. That its ultimately about our kids. He wasn't upset and understood. Obviously very stressed about how to take care of funding his school. And he is looking at options like coming back to state.

Spoke with my father and shared as well. He understood as well. It was a short call.

So thats it. My brother and dad are going to figure it out. As a Boglehead since I was a teenager, I offered to help look at the financial picture and lend advice on how to clear up past due tax payments and get the situation resolved. But no co-signing. Thank you everyone. It was a pretty crappy set of phone calls but had to be done.
It sounds like you handled this about as well as anyone could hope for. It had to be very difficult, but you definitely made the right decision.

DrG
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Re: Cosign college loan for sibling?

Post by DrG » Thu Mar 29, 2018 5:51 pm

Your policy should be to never lend money. They may not be happy with you, but they’ll get over it. If you lend the money you risk being estranged forever. Tell them you value your relationship too much.

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Re: Cosign college loan for sibling?

Post by TropikThunder » Thu Mar 29, 2018 5:59 pm

ofrivia wrote:
Thu Mar 29, 2018 2:45 pm
Thanks to everyones comments. Wanted to come back and update.

I spoke with my brother first, who is 20 and a junior. I told him we cant sign because it jeopardizes us being able to get loans for our kids. That its ultimately about our kids. He wasn't upset and understood. Obviously very stressed about how to take care of funding his school. And he is looking at options like coming back to state.

Spoke with my father and shared as well. He understood as well. It was a short call.

So thats it. My brother and dad are going to figure it out. As a Boglehead since I was a teenager, I offered to help look at the financial picture and lend advice on how to clear up past due tax payments and get the situation resolved. But no co-signing. Thank you everyone. It was a pretty crappy set of phone calls but had to be done.
We still haven't heard what avenues your brother has pursued re: financial aid. Whether it was going to be him, your dad, you, or some combination, I still don't see why private loans was the end-all be-all of college funding.

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Re: Cosign college loan for sibling?

Post by drake19 » Thu Mar 29, 2018 5:59 pm

It sounds like your father and brother understood. I'm sure your dad is upset that he can't help your brother, especially since he helped you. It sounds like your parents are in a bit of chaos financially. If your student loans are in your name (and they are co-signers), I would definitely ask for a loan statement, so you know that your loan is being paid properly. You could find out who owns your loan on your credit report. Sounds like your parents really can't afford your loan either. I would start making the payments. It is the fair thing, and would help your brother not feel resentful.

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Re: Cosign college loan for sibling?

Post by dogagility » Thu Mar 29, 2018 6:28 pm

TropikThunder wrote:
Thu Mar 29, 2018 5:59 pm
We still haven't heard what avenues your brother has pursued re: financial aid. Whether it was going to be him, your dad, you, or some combination, I still don't see why private loans was the end-all be-all of college funding.
Non-loan financial aid is a marketing tool used by universities to attract new students. Once a student is already attending, getting this type of aid is typically difficult, unless there is a drastic change in student/family finances.

The OP's family should explore this, but I wouldn't expect anything (especially with the father not filing taxes in 2016 and 2017).

OP: Job well done with the discussions you've had with your brother and father. Best of luck to your family!
Taking "risk" since 1995.

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Re: Cosign college loan for sibling?

Post by rotorhead » Thu Mar 29, 2018 7:34 pm

OP, good job on not co-signing for your brother's loan. These can be tough decisions when there is family involved; but in the long run you will all realize it was the right thing to do.

Good luck to all of you in the days ahead.

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TxAg
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Re: Cosign college loan for sibling?

Post by TxAg » Thu Mar 29, 2018 8:14 pm

ofrivia wrote:
Thu Mar 29, 2018 2:45 pm
Thanks to everyones comments. Wanted to come back and update.

I spoke with my brother first, who is 20 and a junior. I told him we cant sign because it jeopardizes us being able to get loans for our kids. That its ultimately about our kids. He wasn't upset and understood. Obviously very stressed about how to take care of funding his school. And he is looking at options like coming back to state.

Spoke with my father and shared as well. He understood as well. It was a short call.

So thats it. My brother and dad are going to figure it out. As a Boglehead since I was a teenager, I offered to help look at the financial picture and lend advice on how to clear up past due tax payments and get the situation resolved. But no co-signing. Thank you everyone. It was a pretty crappy set of phone calls but had to be done.
Good job. What about your loans in your dad's name? I'd want to pay those of myself.

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Re: Cosign college loan for sibling?

Post by ThePrince » Thu Mar 29, 2018 9:19 pm

Dottie57 wrote:
Wed Mar 28, 2018 6:29 pm
golfCaddy wrote:
Wed Mar 28, 2018 6:23 pm
A good rule of thumb is never make a personal loan, that you couldn't afford to write off as a gift.

+1

You are not a bank and should not be used as one. To me it is either no or a gift of money.

Has your brother looked for scholarships or considered transferring to less expensive school.?
+1

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