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Dear Quentin,
Please help! I am very concerned for both of my parents. I’m pretty sure my brother took out student loans under my parents’ names without their knowing and I don’t think they understand that they are responsible for paying the money back (not my brother) even though this was done without their consent.
I’m not sure how my brother did this, but we found out a couple of years ago when my dad received a letter in the mail from the Department of Education. Thinking it had to do with my brother’s financial aid, he opened it to find out that “he” had taken out thousands of dollars in loans to pay for my brother’s college education.
“‘They are also so close to finally paying off their mortgage, I’d hate to see them prolong their retirement due to the loans or, even worse, lose the home they worked so hard for.’”
At first, he was shocked but when I explained it to him, he pretended to know what was going on. Since then he’s basically ignored the loans until recently when he received another letter notifying him that his loans are being transferred to a new servicer (with new loans added, total sum now being over $20,000).
My mom keeps ignoring the loans because they were not taken out under her name. When I told them I was intending to confront my brother about it, they told me to stay out of it. But I can’t stay out of it. I care about both of my parents, and I don’t think it’s right for them to pay back debt that was never theirs.
Both of my parents are about to turn 60 soon and they are starting to think about retirement. They are also so close to finally paying off their mortgage, I’d hate to see them prolong their retirement due to the loans or, even worse, lose the home they worked so hard for.
If my brother couldn’t afford the school with loans under his name he should have never gone there. Is there any way we can switch the loans to my brother’s name so he pays back his debt? And can the loans affect my mother since my parents are married?
Concerned Daughter
Dear Daughter,
If you are sure that your brother took these loans out without your parents’ consent, and forged their signatures on the loan documents, you could put your brother on notice that he faces severe consequences if he fails to pay off the loan in a timely manner. It may or may not light a fire under him to at least make sure collection agencies don’t knock on your parents’ door.
You can’t force your parents to take action, of course, unless you reported the alleged loan fraud to the police and — even then — your parents could say they approved the loan, making any future claim difficult. The longer your parents know about the loans taken out in their name and continue to do nothing about it, the more complicated the case for discharging them becomes.
An unpaid student-loan debt owed by your father impacts both parents: it could become a drain on their joint income/savings; if your father’s credit rating suffers, that affects your mother should they need to refinance their home due to medical emergencies or other unforeseen events. If they live in a community-property state, they may both be responsible for the loan.
If they wanted to discharge this debt? They would likely need to file an identity-theft claim. Again, that would require a police report and/or a court conviction. But it seems like they don’t want to put your brother — or themselves — through such a traumatic process. In that case, they have no option but to pay the debt if your brother defaults, and take it out of his inheritance.
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
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