Ask Terry Questions Co-signed my son’s student loan

Co-signed my son’s student loan

By Terry Savage on June 01, 2021 | College Savings / Student Loans

Hi Terry
Regrettably I co-signed on my son’s student loan (Navient). I, with the help of Lisa Madigan’s office were able to settle the debt with a negotiated one time payoff amount. The problem is that even though the loan is paid in full, because the negotiated settlement was less than the full amount due, it was reported against my credit and has had a lasting impact. How do I resolve this for myself and my son. We shouldn’t be punished for life. Thanks

Terry Says

It will roll off your credit report eventually — in about 7 years. What really concerns me is whether they sent you a 1099 as income for the amount forgiven! You would owe taxes on that amount, unless the settlement included a disclaimer of taxes.
Gosh, Lisa Madigan always did a great job for consumers. And I’m posting your email as a warning to other parents. Last year more than 65,000 seniors had their Social Security benefits reduced to pay off student loans they signed mostly for their children who defaulted.

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