Grieving parents hit with $200,000 in student loans

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Grieving parents hit with $200,000 in student loans

NEW YORK — When his 27-year old daughter Lisa died suddenly of liver failure five years ago, Steve Mason was as devastated as any father would be.

He and his wife Darnelle immediately took in Lisa’s three children — ages 4, 7 and 9 at the time — even though they knew it would be a huge struggle to support them. Steve earns less than $75,000 per year as a pastor, while Darnelle earns even less as a director at the same church.

Then the student loan bills started coming.

Mason had co-signed on the $100,000 in private student loans that his daughter took out for nursing school, and the lenders wanted their money.

Unable to keep up with the monthly payments on top of all of the other mounting expenses, the $100,000 balance ballooned into $200,000 as a result of late penalties and interest rates of as high as 12 percent.

“It’s just impossible on a pastor’s salary raising three kids to pay $2,000 a month on loans,” said Mason, who has been searching for a second job.

If these had been federal student loans, Mason could have had the loans discharged or at least received some sort of financial assistance. But since they are private loans, he has little to no recourse.

He called each lender to explain his situation and beg for help, and while they sympathized with him, they told him they weren’t required to do anything.

And they’re right — private lenders aren’t bound by any federal requirements to help borrowers — or co-signers — facing financial hardship, even when it’s a parent whose child has passed away, says Deanne Loonin, an attorney at the National Consumer Law Center. Any loan forgiveness is up to the discretion of an individual lender.

Navient Corp., which manages several of Mason’s loans, said it has reduced the balance and lowered interest rates and payments for Mason in the past, and provides relief to customers on a case-by-case basis.

“We extend our deepest sympathies to the Mason family on the loss of their daughter,” the company said in a statement. “We’re reaching out to Mr. Mason to offer further assistance as appropriate.”

After being contacted, Mason said Navient lowered his interest rate to 0 percent on three of four loans and reduced the total amount owed to $27,000 from nearly $35,000.

American Education Services, which handles the bulk of Mason’s other loans, said as a loan servicer it’s in charge of collecting payments and doesn’t make the rules about forgiveness. Mason would therefore need to contact the original lender, National Collegiate Trust, directly. He did this, and says the lender refused to provide him with any relief. NCT could not be reached for comment.

Mason has considered declaring bankruptcy, but student loans are the only type of debt that generally can’t be discharged through bankruptcy.

“People with other debt from splurging — they can discharge that,” he said. “Student loans should really be the one type of debt they do discharge because it’s done to further an education and career. But somehow getting [my daughter] an education has encumbered me for the rest of my life.”

Similar financial nightmares are haunting other grieving families.

Angela Smith, a mother from Chesapeake, Va., filed a petition on several years ago asking private loan provider First Marblehead Corp. to forgive the $40,000 in student loans that her husband had co-signed for their son Donte, who was shot to death in 2008.

“Shortly after Donte died, that’s when the collection calls started. It was like a punch in the gut — we didn’t know what hit us,” Smith wrote in the petition. “All of a sudden we not only had to deal with the police and attorneys investigating his murder, but we also had to deal with collectors constantly calling and reminding us of our son’s death in the worst way.”

The petition received more than 150,000 signatures from sympathizers but no action from the lenders. First Marblehead didn’t respond to a request for comment, and Smith says the loan was recently sold to another company.

At least four other petitions from families in this situation have been started on There’s been one success story so far, where the brother of a deceased borrower petitioned a bank to stop going after his grieving father for payments, and the loan was forgiven.

Legislation aiming to help people in these situations, including recent bills that would allow student loan debt to be discharged in bankruptcy, have been introduced over the years but have yet to pass in Congress.

For now, the only option parents really have is to propose a payment plan with the lender or try to prove undue financial hardship to the courts in order to get the debts discharged in bankruptcy — which is rarely approved, said Loonin. And for anyone not already in this terrible situation, be very wary of taking out private loans — always try to get as much federal aid as possible first.

As he approaches 60, Mason’s dreams of retirement have been shattered. He’s done the math, and he will have dependent children living under his roof until he is almost 70 years old. He hasn’t taken a vacation with his wife since his daughter died, and doesn’t realistically see that happening for many years to come.

“We’ve pretty much gone through our retirement [funds] already — we didn’t have a lot saved to begin with and now any extra money goes to the kids, as it should, and then whatever we can pay on the loans, we do,” said Mason. “At my stage of life, I should have a very different lifestyle than I do.”


    • Anonymous

      I believe Deborah is right… he cannot file on federal student loans, but should be able to file bankruptcy on.private loans.. his debtors might be informing him he cannot file on them, but he needs to consult with a bankruptcy attorney and see what he can legally do to get out from under the loans.

      • RJ

        Even private student loans are STILL Student Loans and will NOT be discharged through bankruptcy. I worked with a woman who had taken out private student loans. Even though she declared bankruptcy, she still had to adhere to the payment plan as specified by the courts and repay the debtors.

    • St Dogbert

      The catch is “Student Loans”. Public or private, they cannot be discharged thru bankruptcy. The next level is Chapter 11 bankruptcy instead of Chapter 7; Chapter 11 is easier to file for, easier to prove undue burden and restructures the debts that you carry. Any and all loans must adhere to the court’s decision with Chapter 11.

  • Craig Smith

    Sounds harsh but I guess he should have known this when he borrowed the money for his daughter. Who should pay it, an insurance company or us tax payers? Just goes along with this whole country not accepting responsibility in their own actions and news stations spreading the “feel sorry” emotions for someone who made a mistake and is now trying to get out of it. Dont worry, now that he got his name in the news and a “feel sorry” story out of it, I bet he will end up getting all the money to take care of this out of donations. Those bad bad loan companies, they must have really held him down and beaten him to get him to take that money in the first place!

    • solarabyss27

      No, he’s probably someone who’s responsible enough to carry life insurance to cover the costs of loans. Especially when you have kids. Don’t cosign on the loan if you can’t repay it yourself.

  • Christine

    Wow Craig I hope you never have to experience what he is going through.. He is the uncle of a friend of mine and I cant even imagine what he is going through.. this has nothing to do with not accepting responsibility.. he is completely financially ruined because of this.. you seem like a real great person.. :(

    • Anonymous

      Sorry Christine – Craig is exactly right. Co-signing a loan comes with significant legal obligations. It’s not something to be taken lightly. I am sorry, as any reasonable person would be, for your friend’s uncle’s situation. But failing to cover one’s downside, no matter how important the objective of the action (here, his daughter’s education) is the problem of the individual, not of the lender or of society as a whole. Life insurance or not co-signing come to mind as alternatives; that’s not what he did. I hope Craig, and you, don’t have to go through anything like this. But I also would say people need to be aware of what they’re taking on and stand responsible when stuff goes badly.

    • Craig Smith

      Sorry, but he is completely fanancially ruined because he took on a responsibility that he shouldnt have if he couldnt follow through on it. Just because I say the truth and folks dont want to hear it, doesnt make me a bad person. Believe me, I couldnt imagine losing a child….my worst nightmare. And I hope that he gets help paying HIS bills. I just wish people would think about what they are signing these days. Too often I see that everybody feels sorry for people who go through life just borrowing and never reading the fine print and then end up thinking others should foot the bill for them. Too bad he didnt understand that if he got a government loan, he wouldnt have to pay it off. But whose fault is that? His. period.

      • Anonymous

        I feel for this guy, my husband and I work fulltime,work any overtime offered to us and take second jobs when possible. Our kids were only eligible for Stafford loans, no other help was available. So our two youngest kids have 4 yrs worth of private student loans, we consigned all but 2 of them. They are both working and paying over $1000 a month in student loans. They have tried to refinance to get our names off the loans but to date have not been able to accomplish that even after making steady payments for a few years. Kids need a college education just to get an entry level job. I think something needs to be done. Kids can’t afford to move out or get cars because of huge student loan debt.

  • what's wrong with this world

    Life just doesn’t work out according to the plan you have. Its never to early to get life insurance. You just never know what’s going to happen.

  • Annomyous

    However, refugees coming in from other countries get a FREE education!! Thanks to all of us taxpayers. WRONG WRONG WRONG!! Not only do they get a free education, they get first priority in classes!!

  • Anonymous

    Cindy, I was thinking the same thing. “Where’s the father”. Also, I am sure that the grandfather is receiving social security for the three children and also maybe child support…

    • Anonymous

      He’s legally obligated to pay for those kids. Grandpa is willing to ask others to pay for his daughter’s debts, but not for the dad to support his children? ?? Not seeing a whole lot of responsibility in any one in this story. Mom of 3 racking up enormous debt, doesn’t have life insurance to support kids in the event of the unthinkable, dad of 3 not in the picture, grandad co-signing on loans he has no ability to pay. Did anyone ever think they were getting over extended? I’ve had life insurance since I had my first child. Every responsible parent should.

  • Anonymous

    It is a terrible situation undoubtedly. A Kickstarter for this would be ideal. Unfortunately, the fine print says what it says.

  • Mighty Mike

    Life insurance would have solved the problem for a pittance. For the parent obligee. Stupid to not hedge your “bets”

  • Custo

    Get right with God and he would provide their answer. Now his prayer shall be answered and the loans forgiven.

  • tcc

    Ok, So dad is a pastor, daughter who died had three kids.Where is the father of Grandchildren?? Maybe out of wedlock kids?? Oh my! Wish story would tell more details of things like this. Or was she a hussie having a bunch of kids? on welfare etc.?? Maybe the father of the kids died too?? Or just divorced, but where is he?? Prison maybe??

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