KGMI News Reporting
By Tracy Ellis
SEATTLE, Wash. – Students who take out private loans to pay for college could face a nasty surprise if their co-signer dies or files for bankruptcy.
The lender may suddenly demand the loan be paid in full or even worse, put that loan in default, even though all payments are being made on time.
Consumerman Herb Weisbaum wrote about it in his column for NBC News.com.
Federal student loans rarely require a co-signer and even when they do, there is no auto-default penalty.
Private loans tend to have higher interest rates and fewer protections than federal loans.