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I Don’t Live in the U.S. But My Student Loan Cosigner Does

Written by Steve Rhode


Dear Steve,

I moved to NYC from France to find work in 2002, and somehow was convinced that I needed to have a Masters degree form an Ivy League school in order to get a shot at a good job. So I took out a loan with Navient (Sallie Mae) back in 2003 with the help of a guarantor (US citizen) to pay for my studies at Columbia University. If I stop paying, they will claim the payments from my guarantor.

I am currently living in Panama, and still owe $68,000. I am paying interest only for 5 years already, which is all I can do on a Panamanian salary, and my debt remains the same.

My payments represent 20% of my monthly paycheck and I am unable to save any money, or do anything else at the moment. I am trapped =(

How can I get out of this bond with my guarantor? Is there a way that he can get out of this contract?

Could he for instance sue me?

He is a business owner in the US, so I can’t jeopardize his financial situation.

Once he is out of the picture I would simply stop making payments, but as long as his name is on the contract I am trapped.

Any advice you can provide on this situation is highly appreciated.



Dear Evelyne,

I’m not unsympathetic to your plight. It reminds me of another woman I met who had a cosigner for $220,000 of student loan debt.

In a perfect world you should be able to takeover the liability for the loan and release the cosigner from their obligations and responsibility. But we don’t live in a perfect world. Government studies demonstrated very few cosigners are ever released from liability. Read 90 Percent of Private Student Loan Borrowers Who Applied for Co-Signer Release Were Rejected.

I can appreciate your desire to want to not harm the cosigner of your student loan. But situations like this always make me scratch my head. Obviously your friend and cosigner has some experience with legal agreements and contracts. As a business owner they must understand the importance of a written agreement.

READ  I Cosigned for a Private Student Loan and The Loan Has Gone Missing. - Jan

When a cosigner places their name as the guarantor of a loan, they are agreeing to be 100 percent responsible for the loan in case of a default by the person receiving the loan or benefit.

Contracts are generally absolute but life is not. Contracts expect you to make the same payment each month, regardless of whatever your life looks like today. Things have happened in your life that make that less likely to continue.

While your loan guarantor could sue you in the U.S. if you stopped making payments, they would probably have to claim you broke an agreement with the cosigner.

But the bigger issue is you are in Panama and from France. I wonder if you are even headed back to live in New York at all.

If your cosigner does sue you, that would not prevent you from entering and visiting America.

At the end of the day, all you can do is all you can do. If the amount you are paying now is unsustainable or you had a reduction in income and could not pay, the loan will fall on to the shoulders of the cosigner. At the current payment level you are not even paying down the loan, just treading water by paying interest. That may be better than defaulting but it is not a real plan to pay off the debt.

When people cosign or guaranty loans I always want to shake them and yell, “Why did you do that?”

If you are not going to default on the loan, then you are trapped. If you find yourself defaulting on the loan then your cosigner will wind up in the very position they voluntarily agreed to be in, to pay the loan if you didn’t.

But if you do default, the cosigner may be able to settle the total amount owed for about half. It is possible to settle a defaulted student loan if you know how. You might want to direct your cosigner to read This is How You Can Settle Your Navient Student Loan.

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.

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