Nasty Niece Leaves Aunt Hanging on Sallie Mae Student Loans

“Dear Steve,

My wife cosigned on several Sallie Mae loans for her niece. Her neice stopped repaying her loans several years ago and my wife has been paying the interest only since then, which Sallie Mae approved per a phone conversation. They never sent a paper confirmation of the agreement, now they claim she should start paying off principal.

When she cosigned she was working full time, she is now retired and no longer has the income she had when she was working, living off a small pension and social security. She was paying about $150. a month, now Sallie Mae wants her to pay about $750 a month. We are not on speaking terms with the niece (her choice). We were told by some relatives that she is working. So hopefully she is capable of making payments.

Can my wife some how force her niece to make the payments? Is there a way to get Sallie Mae to accept the agreement they made several years ago to accept interest only? Is there a way to get Sallie Mae to go after the niece?


Dear Eileen,

So here is the big problem here. When your wife cosigned for the nasty niece she accepted full responsibility to repay the loans if the niece could or did not. Cosigning is a trap. Always has been. Always will be.

Sallie Mae has no forced long term options like a federal loan does. But the first thing to check is if the loan being serviced by Sallie Mae have a federal component to them. If so then better options are available to address the issue. Click here for details on how to do that.

If the loans are truly private loans then there are three basic options. The first is to attempt to negotiate a suitable repayment agreement with the servicer. Second, you can always default on the loans and take your chance they may then offer a better plan and hopefully not sue you. The final option would be to consider bankruptcy to discharge any other debt you may have and hold the lender at bay. Click here to find a bankruptcy attorney for free.

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The truth is the moment the cosigning happened, that’s when the boat started to sink. Sallie Mae is under no obligation to offer either an interest only permanent plan or go after the niece. That’s why they wanted a cosigner to go after from the start.

Please post your responses and follow-up messages to me on this in the comments section below.


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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.
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4 thoughts on “Nasty Niece Leaves Aunt Hanging on Sallie Mae Student Loans”

  1. If the aunt’s only income is social security and a pension, she is uncollectable in that no creditor can garnish wages or take money from her bank account, even if they have a money judgment against her. She should just stop paying on the loans. Eventually, they will go after the niece for payment.

    • If that makes her judgement free? I thought they can still go after social security other $750? Can they ruin her credit? by placing the collection on the Aunts credit bureau accounts? Can the take any assets the aunt may have – like a car paid off or a lien on her house?

      • The entire amount of social security cannot be garnished by anyone. They can report the debt as not being paid, which will negatively affect her credit. Depending on which state the Aunt lives in, yes, they have the right to take other assets up to a certain amount in dollar value but in reality they never do because its not cost effective to do so.


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