College students default on loans, parents get stuck with the bill
NEW YORK, N.Y. - Last week, Local 6 reported that more college students are defaulting on student loans. Now, the Wall Street Journal reports that it's the parents who are getting stuck with the bill.
According to the paper, some 2.2 million Americans aged 60 or older now owe $43 billion in federal and private student loans. That is up from $15 billion in 2007.
Although the federal government usually doesn't require co-signers for student loans, 90-percent of bank-backed loans require a cosigner, usually parents.
If the parents chose not to pay off the debt that they co-signed, the consequences can be devastating.
Defaulted loans show up on credit reports, and they are counted as personal debt. That can make it tougher to refinance a mortgage or get another loan.