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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.

By Karen Datko May 1, 2012 5:28PM

Image: Checkbook (© Royalty-Free/Corbis/Corbis)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:

120Comments
May 1, 2012 11:18PM
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How about a   level term life insurance that must be obtained by the student  , the cost would be minimum

and it can include  an accidental death benefit  , because of the age of the studen,t it is a no brainer

should be included in all  student loans

May 1, 2012 7:45PM
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life insurance is the best and least expensive alternative. My daughter is 24 and just finishing up graduate school and has a very heavy loan burden to pay back. We calculated out what the total cost of her loans would be including interest and took out a 20 year level term policy for $11 per month.
May 2, 2012 8:40AM
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Isn't this the ENTIRE point of having a co-signer?  Terrible situation, but how can you honestly make the bank out to be the bad guy in this situation.

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. 

May 1, 2012 7:13PM
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I have to say, that that happened to me, but Citibank immediatley did the right thing.  My daughter passed away after her sophomore year.  I knew that her stafford loan would be forgiven, but thought i would have to continue to pay her Citbank Loan.  A couple of months after sending proof of her death to get the Stafford Loan forgiven, i got a letter from Citi advising me that they became aware of my daughters death and the loan was forgiven.   Now thats a stan up bank!
May 2, 2012 8:42AM
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hooray to sensible tipper:WTF?  He co-signed the loan.  That means you're responsible for it, even if the primary is dead.  Who is going to have to foot the bill for that forgiven loan?  The bank?  Yeah right, more like future students through higher tuition rates.

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.
May 2, 2012 12:07AM
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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.

May 2, 2012 3:20PM
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This loan would not have been forgiven without the pressure of the people, so lets not get carried away thinking that they were being so magnanimous.

 

May 2, 2012 5:21AM
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I can not imagine what it is like to loose a child, and I also pay school loans that my kids racked up as part of their educations. I had to co-sign for them (real brick and mortar schools with transferable credits) and our deal was if they graduated in something other than finger-painting or law (just kidding) I would pick up the cost of the sheep skin. While I feel sorry for the parents, wouldn't it be the same if they had co-signed for any other loan for any other purpose? The bank and school were living up to their part of the contract, and although tragic I believe I would be obligated to pay for what I promised to. At the same time I am happy the Bank has forgiven the debit and is going to change their policy as I had said before just loosing a child is beyond my comprehension. Good luck to them.
May 1, 2012 6:29PM
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Part of a fee I had to pay was for a life insurance policy--if I die then the loan is paid off.
May 2, 2012 9:04AM
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This is a perfect example of why people need life insurance at ANY age, if your death will cause a financial burden on others. This kid could have likely gotten a $100,000 term policy for under $10/mo.
I feel bad for the dad, but would a lender be obligated to in essence 'pay' the $50,000 debt because one of the borrowers died? 
If one of the owners of a company that you work for dies, does that mean that they no longer should feel a need to pay whatever salary you were owed at the time of his death? What about if you sell a car or house to someone and hold the note? If they die, you don't get paid, and don't get the property back? 
May 1, 2012 9:55PM
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Didin't we, as tax payers, just bail out the banks?  I don't know anyone who died in the banking business, yet we forgave them for making bad decisions.  Give the family a break.
May 1, 2012 6:33PM
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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.

May 2, 2012 10:50AM
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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. 

May 2, 2012 11:22AM
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The person co-signing should have checked that out before co-signiing. I am glad they forgave balance for these people but the bank was not to blame.  The family could have purchased some term life  insurance on the student eqauling the loan for very little cost. I don't think this is much differant than people going under water on car loans or home loans. Where is personall responsibility in these matters.
May 2, 2012 11:21AM
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While I most certainly sympathize with the family, and am happy to hear that the bank chose to offer relief, a contract is a contract.  Does it make a difference that the primary borrower died while still a student?  Would it be different if the "kid" were 27 and had been out of school for a few years?  Is it really fair to expect the bank to take the hit?
May 2, 2012 12:38AM
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75,000 signatures? all they had to do was pay a dollar each and most of it would have been paid off. some would give  more.

May 2, 2012 11:02AM
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Here's the lesson in this cautionary tale:  NEVER co-sign for ANYONE!  If one is deemed unreliable or a risk and, thus,  in need of a co-signer, for any reason, then he/she is also a risk for you.
May 1, 2012 6:43PM
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Life Insurance is not "morbid".  It is a necessary evil in taking the risk out of life.  You have insurance on your possessions, ie land, home, auto, etc.  And usually the most valuble asset you have goes uninsured...YOU!
May 2, 2012 12:55PM
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So I have to die to get out of debt with my student loans....don't tell my wife....
May 2, 2012 9:08AM
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This is why insurance is needed on this type of loan. 
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