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Tuesday, October 30, 2007

Cosigning 23k of loans for my sister

I've made some financial mistakes in my past, but the single past decision that worries me the most is agreeing to cosign for my younger sisters student loans.

Why did I, a 21 year old sibling, have to cosign her student loans? There were several reasons. She needed a cosigner because she had once got a Victoria's Secret credit card, bought a few things, and didn't make payments. She was not eligible for federal loans (which never need a cosigner) due to poor grades the previous year. She had no money saved up because she didn't have a job (even in the summer!), though she did do a little work for my dad to earn some money to live on. Also, my parents were not eligible to cosign due to their own issues.

After listing those reasons, it seems incredibly obvious that I shouldn't have agreed to do this. At the time, I didn't understand the ramifications of my signature, and my parents assured me that if she ever neglected to make payments, they would take care of it. So I agreed, because if I hadn't, she wouldn't be able to go to college spring semester. My parents asked me to do this, and I trusted they wouldn't lead me wrong. I don't think they intended to, but I also don't think it was a wise move.

Since I was in a different city, I gave her permission just to sign my name for me to save the hassle of mailing back and forth. (I realize this is not appropriate, but it is what I did at the time.) She got the loan, took the classes, and did a little bit better in school. She still didn't get a job, but instead took summer classes, financed by a second student loan. I also cosigned that loan again letting her to sign my name. When fall came around and i was asked again, I was so busy with my college career that I said "sure, whatever", not even knowing the amount of the loans.

This January, I got a letter in the mail stating that a loan that I had cosigned for $6000 was approved. Not only did I not sign the loan papers (which admittedly was standard practice), but I wasn't even asked if this was okay with me! I pulled my credit report, tallied up the balance of her loans, and came up with over $23000. To put this in perspective, when I graduated, I had $27000 for myself. I had several scholarships, well paying internships, and worked through school, so it is understandable that she would have more.

Still, it set of huge alarm bells in my head. After complaining to my dad (who had told my sister she was required to call and ask me about this), I bit the bullet and called my sister directly. I said that I was no longer comfortable cosigning her loans, as she had me on the hook for almost as much as I had for myself. I said she was old enough that she should have her own credit established, and if she wasn't eligible for federal aid, she really needed to improve her grades. I told her I would allow this last loan to go through, but after that she was on her own, or she had to ask someone else. She didn't argue.

She is still in school. I have no idea how she is financing it. I don't need to know, because I'm no longer involved. That provides some relief. I wish I could get through to her the importance of being careful with the amount of money you borrow, even if it is for a good reason. I worry about it for her sake, and also for mine.

I do not doubt that my parents intend to take care of any issues, as promised. However, legally I'm responsible for it. Also, I am unfortunately aware from from past experience that it is a pain in the butt having to call my parents every month to collect a payment. It puts an unnecessary strain on the relationship.

I say that I regret this, but even knowing what I know now, I'm not convinced I would have said no for the first semester. Beyond that, I would have been more firm. But it is family, and it is money for education, and it is hard for me to turn my back on that.

I wish that I was a few years older and wiser when asked to do this. There is no way I can spare $6000 a semester to support her (and no reason that I should). However, I could offer a more reasonable (say, $1000) amount as a gift towards her education, with no expectations of payback. Perhaps on the condition she worked part time, and full time in the summers! It is more my parents place to do this than mine, but I feel very blessed to have a good job and could spare the money to further her education. She is family, and I only want the best for her.

3 comments:

Anonymous said...

You did the right thing but it's also good you're questioning your decision. Even though it's family, it's sometimes not in their best interest to hand-hold too much. Plus it doesn't sound like your sister is that interested or good at school. Maybe taking a job would have been a better choice. I knew many woman who really didn't want to go to college but felt they had to. Many woman work very briefly before getting married and staying home, while still paying off student loans for a 'useless' education.

SJean said...

Thanks for the comment. If she had showed a different attitude, I don't know if I would have been as concerned and cut it off.

I think I did the right thing the first semester, but the wrong thing the next and the next.... But, it is done now, and I can't change it.

SJean said...

PS - It is easy for all of us financially knowledgeable people to say "never cosign a loan", but I really just didn't know much about it at the time and it didn't seem like a big deal.

Tuesday, October 30, 2007

Cosigning 23k of loans for my sister

I've made some financial mistakes in my past, but the single past decision that worries me the most is agreeing to cosign for my younger sisters student loans.

Why did I, a 21 year old sibling, have to cosign her student loans? There were several reasons. She needed a cosigner because she had once got a Victoria's Secret credit card, bought a few things, and didn't make payments. She was not eligible for federal loans (which never need a cosigner) due to poor grades the previous year. She had no money saved up because she didn't have a job (even in the summer!), though she did do a little work for my dad to earn some money to live on. Also, my parents were not eligible to cosign due to their own issues.

After listing those reasons, it seems incredibly obvious that I shouldn't have agreed to do this. At the time, I didn't understand the ramifications of my signature, and my parents assured me that if she ever neglected to make payments, they would take care of it. So I agreed, because if I hadn't, she wouldn't be able to go to college spring semester. My parents asked me to do this, and I trusted they wouldn't lead me wrong. I don't think they intended to, but I also don't think it was a wise move.

Since I was in a different city, I gave her permission just to sign my name for me to save the hassle of mailing back and forth. (I realize this is not appropriate, but it is what I did at the time.) She got the loan, took the classes, and did a little bit better in school. She still didn't get a job, but instead took summer classes, financed by a second student loan. I also cosigned that loan again letting her to sign my name. When fall came around and i was asked again, I was so busy with my college career that I said "sure, whatever", not even knowing the amount of the loans.

This January, I got a letter in the mail stating that a loan that I had cosigned for $6000 was approved. Not only did I not sign the loan papers (which admittedly was standard practice), but I wasn't even asked if this was okay with me! I pulled my credit report, tallied up the balance of her loans, and came up with over $23000. To put this in perspective, when I graduated, I had $27000 for myself. I had several scholarships, well paying internships, and worked through school, so it is understandable that she would have more.

Still, it set of huge alarm bells in my head. After complaining to my dad (who had told my sister she was required to call and ask me about this), I bit the bullet and called my sister directly. I said that I was no longer comfortable cosigning her loans, as she had me on the hook for almost as much as I had for myself. I said she was old enough that she should have her own credit established, and if she wasn't eligible for federal aid, she really needed to improve her grades. I told her I would allow this last loan to go through, but after that she was on her own, or she had to ask someone else. She didn't argue.

She is still in school. I have no idea how she is financing it. I don't need to know, because I'm no longer involved. That provides some relief. I wish I could get through to her the importance of being careful with the amount of money you borrow, even if it is for a good reason. I worry about it for her sake, and also for mine.

I do not doubt that my parents intend to take care of any issues, as promised. However, legally I'm responsible for it. Also, I am unfortunately aware from from past experience that it is a pain in the butt having to call my parents every month to collect a payment. It puts an unnecessary strain on the relationship.

I say that I regret this, but even knowing what I know now, I'm not convinced I would have said no for the first semester. Beyond that, I would have been more firm. But it is family, and it is money for education, and it is hard for me to turn my back on that.

I wish that I was a few years older and wiser when asked to do this. There is no way I can spare $6000 a semester to support her (and no reason that I should). However, I could offer a more reasonable (say, $1000) amount as a gift towards her education, with no expectations of payback. Perhaps on the condition she worked part time, and full time in the summers! It is more my parents place to do this than mine, but I feel very blessed to have a good job and could spare the money to further her education. She is family, and I only want the best for her.

3 comments:

Anonymous said...

You did the right thing but it's also good you're questioning your decision. Even though it's family, it's sometimes not in their best interest to hand-hold too much. Plus it doesn't sound like your sister is that interested or good at school. Maybe taking a job would have been a better choice. I knew many woman who really didn't want to go to college but felt they had to. Many woman work very briefly before getting married and staying home, while still paying off student loans for a 'useless' education.

SJean said...

Thanks for the comment. If she had showed a different attitude, I don't know if I would have been as concerned and cut it off.

I think I did the right thing the first semester, but the wrong thing the next and the next.... But, it is done now, and I can't change it.

SJean said...

PS - It is easy for all of us financially knowledgeable people to say "never cosign a loan", but I really just didn't know much about it at the time and it didn't seem like a big deal.

Tuesday, October 30, 2007

Cosigning 23k of loans for my sister

I've made some financial mistakes in my past, but the single past decision that worries me the most is agreeing to cosign for my younger sisters student loans.

Why did I, a 21 year old sibling, have to cosign her student loans? There were several reasons. She needed a cosigner because she had once got a Victoria's Secret credit card, bought a few things, and didn't make payments. She was not eligible for federal loans (which never need a cosigner) due to poor grades the previous year. She had no money saved up because she didn't have a job (even in the summer!), though she did do a little work for my dad to earn some money to live on. Also, my parents were not eligible to cosign due to their own issues.

After listing those reasons, it seems incredibly obvious that I shouldn't have agreed to do this. At the time, I didn't understand the ramifications of my signature, and my parents assured me that if she ever neglected to make payments, they would take care of it. So I agreed, because if I hadn't, she wouldn't be able to go to college spring semester. My parents asked me to do this, and I trusted they wouldn't lead me wrong. I don't think they intended to, but I also don't think it was a wise move.

Since I was in a different city, I gave her permission just to sign my name for me to save the hassle of mailing back and forth. (I realize this is not appropriate, but it is what I did at the time.) She got the loan, took the classes, and did a little bit better in school. She still didn't get a job, but instead took summer classes, financed by a second student loan. I also cosigned that loan again letting her to sign my name. When fall came around and i was asked again, I was so busy with my college career that I said "sure, whatever", not even knowing the amount of the loans.

This January, I got a letter in the mail stating that a loan that I had cosigned for $6000 was approved. Not only did I not sign the loan papers (which admittedly was standard practice), but I wasn't even asked if this was okay with me! I pulled my credit report, tallied up the balance of her loans, and came up with over $23000. To put this in perspective, when I graduated, I had $27000 for myself. I had several scholarships, well paying internships, and worked through school, so it is understandable that she would have more.

Still, it set of huge alarm bells in my head. After complaining to my dad (who had told my sister she was required to call and ask me about this), I bit the bullet and called my sister directly. I said that I was no longer comfortable cosigning her loans, as she had me on the hook for almost as much as I had for myself. I said she was old enough that she should have her own credit established, and if she wasn't eligible for federal aid, she really needed to improve her grades. I told her I would allow this last loan to go through, but after that she was on her own, or she had to ask someone else. She didn't argue.

She is still in school. I have no idea how she is financing it. I don't need to know, because I'm no longer involved. That provides some relief. I wish I could get through to her the importance of being careful with the amount of money you borrow, even if it is for a good reason. I worry about it for her sake, and also for mine.

I do not doubt that my parents intend to take care of any issues, as promised. However, legally I'm responsible for it. Also, I am unfortunately aware from from past experience that it is a pain in the butt having to call my parents every month to collect a payment. It puts an unnecessary strain on the relationship.

I say that I regret this, but even knowing what I know now, I'm not convinced I would have said no for the first semester. Beyond that, I would have been more firm. But it is family, and it is money for education, and it is hard for me to turn my back on that.

I wish that I was a few years older and wiser when asked to do this. There is no way I can spare $6000 a semester to support her (and no reason that I should). However, I could offer a more reasonable (say, $1000) amount as a gift towards her education, with no expectations of payback. Perhaps on the condition she worked part time, and full time in the summers! It is more my parents place to do this than mine, but I feel very blessed to have a good job and could spare the money to further her education. She is family, and I only want the best for her.

3 comments:

Anonymous said...

You did the right thing but it's also good you're questioning your decision. Even though it's family, it's sometimes not in their best interest to hand-hold too much. Plus it doesn't sound like your sister is that interested or good at school. Maybe taking a job would have been a better choice. I knew many woman who really didn't want to go to college but felt they had to. Many woman work very briefly before getting married and staying home, while still paying off student loans for a 'useless' education.

SJean said...

Thanks for the comment. If she had showed a different attitude, I don't know if I would have been as concerned and cut it off.

I think I did the right thing the first semester, but the wrong thing the next and the next.... But, it is done now, and I can't change it.

SJean said...

PS - It is easy for all of us financially knowledgeable people to say "never cosign a loan", but I really just didn't know much about it at the time and it didn't seem like a big deal.

Tuesday, October 30, 2007

Cosigning 23k of loans for my sister

I've made some financial mistakes in my past, but the single past decision that worries me the most is agreeing to cosign for my younger sisters student loans.

Why did I, a 21 year old sibling, have to cosign her student loans? There were several reasons. She needed a cosigner because she had once got a Victoria's Secret credit card, bought a few things, and didn't make payments. She was not eligible for federal loans (which never need a cosigner) due to poor grades the previous year. She had no money saved up because she didn't have a job (even in the summer!), though she did do a little work for my dad to earn some money to live on. Also, my parents were not eligible to cosign due to their own issues.

After listing those reasons, it seems incredibly obvious that I shouldn't have agreed to do this. At the time, I didn't understand the ramifications of my signature, and my parents assured me that if she ever neglected to make payments, they would take care of it. So I agreed, because if I hadn't, she wouldn't be able to go to college spring semester. My parents asked me to do this, and I trusted they wouldn't lead me wrong. I don't think they intended to, but I also don't think it was a wise move.

Since I was in a different city, I gave her permission just to sign my name for me to save the hassle of mailing back and forth. (I realize this is not appropriate, but it is what I did at the time.) She got the loan, took the classes, and did a little bit better in school. She still didn't get a job, but instead took summer classes, financed by a second student loan. I also cosigned that loan again letting her to sign my name. When fall came around and i was asked again, I was so busy with my college career that I said "sure, whatever", not even knowing the amount of the loans.

This January, I got a letter in the mail stating that a loan that I had cosigned for $6000 was approved. Not only did I not sign the loan papers (which admittedly was standard practice), but I wasn't even asked if this was okay with me! I pulled my credit report, tallied up the balance of her loans, and came up with over $23000. To put this in perspective, when I graduated, I had $27000 for myself. I had several scholarships, well paying internships, and worked through school, so it is understandable that she would have more.

Still, it set of huge alarm bells in my head. After complaining to my dad (who had told my sister she was required to call and ask me about this), I bit the bullet and called my sister directly. I said that I was no longer comfortable cosigning her loans, as she had me on the hook for almost as much as I had for myself. I said she was old enough that she should have her own credit established, and if she wasn't eligible for federal aid, she really needed to improve her grades. I told her I would allow this last loan to go through, but after that she was on her own, or she had to ask someone else. She didn't argue.

She is still in school. I have no idea how she is financing it. I don't need to know, because I'm no longer involved. That provides some relief. I wish I could get through to her the importance of being careful with the amount of money you borrow, even if it is for a good reason. I worry about it for her sake, and also for mine.

I do not doubt that my parents intend to take care of any issues, as promised. However, legally I'm responsible for it. Also, I am unfortunately aware from from past experience that it is a pain in the butt having to call my parents every month to collect a payment. It puts an unnecessary strain on the relationship.

I say that I regret this, but even knowing what I know now, I'm not convinced I would have said no for the first semester. Beyond that, I would have been more firm. But it is family, and it is money for education, and it is hard for me to turn my back on that.

I wish that I was a few years older and wiser when asked to do this. There is no way I can spare $6000 a semester to support her (and no reason that I should). However, I could offer a more reasonable (say, $1000) amount as a gift towards her education, with no expectations of payback. Perhaps on the condition she worked part time, and full time in the summers! It is more my parents place to do this than mine, but I feel very blessed to have a good job and could spare the money to further her education. She is family, and I only want the best for her.

3 comments:

Anonymous said...

You did the right thing but it's also good you're questioning your decision. Even though it's family, it's sometimes not in their best interest to hand-hold too much. Plus it doesn't sound like your sister is that interested or good at school. Maybe taking a job would have been a better choice. I knew many woman who really didn't want to go to college but felt they had to. Many woman work very briefly before getting married and staying home, while still paying off student loans for a 'useless' education.


SJean said...

Thanks for the comment. If she had showed a different attitude, I don't know if I would have been as concerned and cut it off.

I think I did the right thing the first semester, but the wrong thing the next and the next.... But, it is done now, and I can't change it.


SJean said...

PS - It is easy for all of us financially knowledgeable people to say "never cosign a loan", but I really just didn't know much about it at the time and it didn't seem like a big deal.