As we wrote last week, while many parents consider it a no-brainer to co-sign their children’s student loans, that decision can come back to bite them later. And if that child passes away, there’s little stopping loan servicers from piling debt on the parents’ grief. But here’s one story where Sallie Mae ultimately opted to not go that route.

The Newark Star-Ledger’s Bamboozled column has the story of a New Jersey family who lost their daughter in 2010 at the age of 24. When she died, the daughter still had a balance of around $120,000 due to Sallie Mae.

Unfortunately, her father and grandmother had co-signed for the money, and Sallie Mae was looking to them to continue paying it off. But while their daughter had been able to score a decent job right out of college, earning enough to make her loan payments, her parents’ financial situation is not as sound.

“We are in the process of selling our home in a short sale, meaning our mortgage is higher than the value of our home,” the mom tells Bamboozled.

To keep current on the payments, the late woman’s 65-year-old father recently went back to work.

The family tried contacting Sallie Mae but say their calls were redirected to call centers in the Philippines where no one seemed to know what they were talking about.

But after reading about how Sallie Mae had forgiven a family in a similar situation, the family contacted Bamboozled, which was able to get someone at the loan servicer to listen to their story.

Sallie Mae reviewed the case and decided to write off the entire loan.

Bamboozled asked for an explanation for the change of heart and was told, “This is a tragic circumstance that no parent can fathom when investing in a child’s education, and we have reached out to the family with assistance.”

While that is awfully sweet of Sallie Mae to forgive the loan, we have a pretty good feeling that it’s only doing so because the media got involved. It and other student loan servicers need to have clear review procedures for these situations. They obviously have a right to recoup the loan, but co-signers should also be able to at least make their case for a reduction.

College debt after death not a singular concern [NJ.com]

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