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I Cosigned for My Daughter’s Student Loans. – Terry

“Dear Steve,

Single mother of 2 adults kids. Work FT. No savings, own a home.

I cosigned for my daugher’s student loans. She went to an art school that she thought would give her what she wanted but after a year decided it was not for her. Now she has huge loans and credits are not transferrable unless she went to another art school.

She can’t go to college without taking more loans and I certainly can’t sign them so she is working retail.

The only asset I have is my house and with the housing market, I don’t really know how much equity is in it but whatever it has I want to know can I lose the house if she defaults which is where this appears to be heading. She makes minimal wage. The minimal payments on her loans are 4 times what she makes. What about my retirement? Can they take that too? What if I give my house to my son who has a clean credit history? In addition to answer the questions, can you just tell me the best thing to do i.e. contacting the banks and what should I tell them. Thank you


Dear Terry,

Repeat after me, never cosign.

By cosigning you are now liable for the entire debt if your daughter fails to make her payments. If you default the consequences are pretty severe with student loans and can result in a lien against your property, wage garnishment, bank account attachment, interception of tax refunds, etc.

If these are government backed loans your daughter should contact the servicing department handling her account and inquire how to get on the Income Based Repayment (IBR) program. I don’t think transferring the house to your son’s name is a smart move. Any transfers may be questioned and who know what kind of risk you are placing that asset in by handing it to someone else.

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Can I suggest she gets a second job?

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • My husband co-signed for a Sallie Mae loan for my daughter in 2005.  My daughter broke every promise that she made to us concerning paying the loan and dropped out after her first semester.  She never made payments, we have had to make payments for the past seven years and we still owe over $5000.00.  My daughter is now 27 years old and working, but refuses to help with payments. Is there anything legally we can do to force her to take on her loan payments?

    • In reality, not much. I suppose you could sue her in small claims court and then you’ll have to try to collect on your victory which leaves you in the same spot.

      This isn’t really a failure by Sallie Mae but in the relationship between you and your daughter. When you co-sign you agree to be fully responsible for the debt. Your daughter’s failure to honor her promise to you is between you and her, not her and Sallie Mae.

      I wish I had better news but it is what it is.

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