Bank finally forgives dead student's loan
A father was obliged to keep paying long after the son had died because he had co-signed for the private student loan.
It took six long years, but a bank has finally forgiven the student loan debt of a young man who died in 2006 after spending two years in a persistent vegetative state.
KeyBank did the decent thing only after the family of Christopher Bryski had collected more than 75,000 signatures in less than a week on Change.org, petitioning the bank to forgive the debt, ABC News says.
Here's something else you may not know: KeyBank was under no legal obligation to do so, because Bryski's father had co-signed the private student loan -- making him responsible to pay it off when his son, a Rutgers junior who suffered a traumatic brain injury in a fall from a tree, could no longer do so.
Federal student loans go away when the borrower dies. Some private lenders have a similar policy. But not KeyBank.
"Our dad has had to come out of retirement to make the monthly payments," Christopher's brother Ryan wrote on Change.org. "When Christopher died, my family didn't just lose a loved one -- we inherited debt for an education that will never be used." (Post continues below.)
The Wall Street Journal detailed the situation nearly two years ago:
The Bryskis continue to make the monthly payments on the private loans, which have risen to $518 from $366 because of interest rate changes and to make up for forbearance periods. The family will end up paying $85,800 by the time the repayment plan ends.
By the time the debt was forgiven last week, the family had paid more than $20,000 toward what was originally a $50,000 student loan, ABC News said.
KeyBank is now changing its policy. Says The Philadelphia Inquirer:
"Key Bank is changing the manner in which it will handle, God forbid, that this should ever happen to anyone again, that a student dies with student loans outstanding," (a bank spokeswoman) said. "We will look at these things on a case-by-case basis."
Why not forgive the debt whenever this happens? There seems to be plenty of precedent. Reports Inside Higher Ed:
The federal government forgives all debts when students die. Most private lending agencies do the same, said Harrison Wadsworth, special counsel to the Consumer Bankers Association's Education Funding Committee.
"The general practice is that the bank would relieve the co-signer," Wadsworth said after the CBA conducted an informal survey of several members Thursday afternoon to learn about their policies.
Better disclosure of a co-signer's responsibilities in the case of death or disability would be required by the Christopher Bryski Student Loan Protection Act, introduced in the U.S. Senate and House.You can find more details at the family's blog.
Should it be a law that private student loan debt be forgiven, particularly when the borrower dies without an estate, which was the case for Christopher?
More on MSN Money:
If you personally loaned someone 50,000 and made someone co-sign, would you do the same thing? Doubt it. So easy to be a couch activist.
Edit: Diddo what that other guy said. 75,000 people could have chipped in .50 cents and Key Bank could have gotten their money that was OWED to them AND the guy could have fulfilled his obligation.
Or tax payers.
But this was a private loan so more than likely future students.
Explain to me again how this is a good thing?
you know the student loan doesn't forgive me because my exhusband left me with ruined credit and student loans out the ****. i pay what i can and they still don't like it. while my heart goes out to the family, the father is responisble for the loan.
I worked in collections on student loans - both federally & private insured. I would NEVER take out a privately insured loan! They are the biggest rip-off there is - my only advise - if you don't have to borrow don't. However, that is somewhat un-realistic. The worst deadbeats I had to collect on were "lawyers" who couldn't pay back their debt. Most of them should have never gone into the field in the first place - many had $100,000-$250,000 in student loan debt! Ironically, they tried spent more time trying to get out of paying their debt with "laws" - than they actually tried paying back their debt. Heck - 95% of the portfolio on the coming I last worked for was deadbeat lawyers. The kicker is that if they ever defaulted on a student loan debt - they never wanted to pay it back - and if you even mentioned going to court they cried because they knew if they did, the judge would suspend their license! These deadbeats now make the laws...............what a bunch of losers. If you don't want to be responsible for the debt - do NOT cosign it. Cosigners are needed because the borrower is not credit - worthy - or in other words, the bank now has a reliable source when "junior" can't pay his debt. You would not believe the number of families I worked with that defaulted loans shattered their families.
That's why you should never cosign a load you can't afford to pay yourself. It was nice of the bank to forgive the loan. I don't see why the bank had to eat the loss. They could have petitioned the school to refund some of the costs too. Neither were responsible to do anything. But it would have been worth a shot to spread the loss around since the dad had already paid almost half of the principle.
Edit: dogtracks has the right idea. I borrowed some money from my grandfather and his condition was that I had a life insurance policy to cover the loan with him as the beneficiary. He knew how to cover himself.
I don't want to come off sound cruel or cold, but when a bank "forgives" a loan some, if not all, of the "loss" is shifted to everyone else using the bank's services. Banks are in business to make money. If they don't make money they go out of business. It's just that simple. Yes, some of them have made some terrible decisions in the name of making money and what has happened? Many of them have failed because they lost too much money.
I cannot imagine the pain of loosing a child. If something happened to one of my children I might just go crazy, but if I cosigned a loan for them, I believe I should have to pay the loan off. You shouldn't obligate yourself to something you can't afford, even for your kids. Bad things can and do happen and we shouldn't expect every other customer of the bank to make up for our bad decisions. At the very least, insurance should be taken out to cover the loan should something bad happen. I carry enough insurance to pay off all of my debts if anything should happen and with a term policy, it's not that expensive.
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