Parent Loans
Dear Betsy,
I made a deal with my son that I would take out the loans for his college education, but he had to pay them back. He just lost his job, so he will not be able to make the payments. I really don’t want to make the payments because it is his responsibility. Can he get a deferment for not working? Would this hurt my credit? If so, how do I get the loan out of my name?
Sincerely,
Anonymous
Dear Anonymous,
Eligibility for deferment is based on the actual borrower who signed the promissory note for the loan. So, unfortunately, the loan would not be eligible for an unemployment deferment unless you were the one who is unemployed and actively seeking full-time work. You can ask for something called forbearance while your son seeks work. This will temporarily postpone the payments, but the interest will still accrue on the loan. The interest will capitalize on the principal balance if it’s not paid.
You can’t take the loan out of your name and put it into his unless he takes out another loan, such as a personal loan, to pay this one in full. Since he is unemployed, he may find it difficult to qualify for a loan. So, you may want to look into other options for now.
If you apply for a lower payment option, your son might be able to send in smaller payments until he is again employed. I would attempt that route first, because at least the balance will not increase while he gets back on his feet. Your loan servicer can provide more information about lower payment options.
Regards,
Betsy
