Quick Answer: A son who drops out of college after his mother pays off his student loans with a home equity loan is still ethically obligated to repay the debt to her. The mother’s spending habits on vacations and luxuries don’t eliminate the son’s responsibility, though he can negotiate modified payment terms with her directly.
Question:
Dear Steve,
I dropped out of college a year ago after taking out many loans, and my mom took out a home equity line of credit to pay off the loans. I now work a second job solely to pay off her debt and live paycheck to paycheck in her house.
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She retired at 48 and lives off of social security and still goes on vacations and goes to casinos and purchases many luxuries.
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Am I a bad person if I move out and stop paying her debt for her?
Brock
Answer:
Dear Brock,
Wow. That’s a great question. So layered in ethics and larger issues. Thank you.
What we have here is a problem of apples and oranges. For whatever reason, you decided to leave school. That education was paid for with borrowed money. Your mother decided to help you out and borrowed against the equity in her home to pay off the loans. You apparently entered into some agreement to pay her back and have been working hard to make those payments.
The fact your mother retired at a young age and has decided to spend her money on luxury or leisure items isn’t really the issue here. Your mother made a decision to help you out with the loans for some reason. I’m not sure why.
When she did that she became your creditor. Your debt is owed to her, not the bank from where she borrowed the money. If you need to modify the terms of your loan then you need to discuss that with your mother and see if you can come to a meeting of the minds.
Now it would be interesting if your mother was asking you to pay more monthly than for just the amount she borrowed to pay off your loans. That issue is not clear in your question.
Technically you could stop paying and walk away. Your mother would have to go after you or even sue you to recover the money she let you borrow you. You see the home equity loan is your mother’s debt and obligation to pay back to the bank.
It appears you have some resentment at the way she lives her life and spends her money. Before you toss your relationship totally away by ditching the debt I’d strongly suggest making sure you are only repaying that part of her debt which was used to pay off your loans. Then come to an agreement with her about how much you can afford to pay each month.
Unless your mother forced you to go to school, take out the loans, and be financially trapped in her home you have to accept some personal responsibility for making the decision to go to school, to incur the debt you elected to, to take out student loans, and to borrow from your mother.
The corner you are in today is the culmination of all the choices you made earlier. The bigger question is if you can learn from those past decisions or will the trend continue by walking away instead of working something fair and reasonable out?
You will need to start making all sorts of smart financial decisions or your future will look a lot like your past.
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Asked question about stopping paying Mom.