WASHINGTON–A growing number of parents and grandparents who co-signed on student loans for children and grandchildren are discovering they’ve put their own financial security in jeopardy, according to a new survey.
“While cosigners, or guarantors, aren’t primarily responsible for repaying student loans, they still suffer when their children miss payments or default on their loans,” Yahoo Finance reported. “Because while it’s not their account, any issues with staying current on payments will be reflected in their credit profile.”
Yahoo Finance pointed to a recent LendEDU survey that found that 35% of cosigners regret cosigning on a private student loan, and 34% said they wouldn’t make the same decision again if they could turn back time.
Debt Approaches $2 Trillion
The report noted that student loan debt in the U.S. totals around $1.774 trillion — with private loans from sources like banks and credit unions accounting for around 8.4% of that total, according to the Education Data Initiative.
The national private student loan balance exceeds $120 billion — with 88.7% going towards undergraduate loans and the remaining 10.93% lumped under graduate loans, Yahoo Finance added.
Additional Findings
Some of the findings in the LendEdu study include:
- · 33.20% of cosigners did not fully understand the risks of cosigning when they initially agreed.
- 56.80% of cosigners believe that their credit scores have been negatively impacted by cosigning on private student loans.
- 34.40% of cosigners’ children have made a late payment the cosigned loans.
- 51.20% of cosigners felt that their children’s student debt is putting their retirement in jeopardy.
- 58.40% of cosigners answered that their children have asked them for help making monthly payments.
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