student loan

[angie4235]

(Texas) My 17-year-old daughter received a student loan 13 years ago (against my wishes and to my dismay) for $4,638.00 to attend a local business college (which closed two years later). I was horrified that she could get such a loan by herself at that age and knew it was a big mistake from which she would most likely never benefit. She paid back $2,334.00 (leaving $2,104 unpaid) before getting married, having a child, then divorcing and having to go on medicaid and AFDC up until two years ago. She worked as a waitress, car washer, and mover for a moving company at minimum wage just barely surviving and supporting her child. She is now 30 years old and re-married two years ago and lives in Ohio, and the financial institution is now wanting the remainder of their money, and rightly so. They say the loan is now up to $10,000+, and they will accept a settlement of $5,299.00 "if" it's paid within 3 months. Otherwise, she has to pay the full $10,000+ in monthly payments. Her husband, who had nothing to do with the loan, is a bit upset because they are trying to make him responsible (and because she let this get so far out of control). She does not work outside the home and is now raising two children, so their only income is his. She realizes now this huge financial obligation was indeed a mistake made by a young and foolish 17-year-old and is ashamed at her naivete since she never benefited whatsoever from the "certificate" she received through this 8 month fly-by-night school, but hind-sight is 20-20. She and her husband agree they should pay the loan back as soon as possible, but this amount would be difficult, if not impossible, for most people to come up with. My question is - would it do her any good to try and negotiate a settlement with this institution offering to pay them ONLY the remaining $2,104.00 (in other words excluding interest and fees accrued for the past 10+ years to nearly FIVE TIMES what actually remains from the original loan) if she paid them promptly? The $2,104 would be within the realm of possibility since they could probably borrow that much, but the $5,299.00 would be out of the question to borrow and the $10,000 would take the rest of their lives to pay (not to mention creating a tremendous financial burden on them). In other words, she wants to pay only the remainder of the original loan which is $2,104. Is it possible they will accept that offer (if paid promptly) or is that a ridiculous thought? She knows they can garnish her wages if she ever decides to work outside the home and that they can take some of their income tax refund. If her husband died, could they take the insurance money and other assets he leaves for my daughter and their children as they have been telling her, leaving her with nothing to fall back on? How much can they take of what he might leave behind for his family should he precede them in death at an early age?

[Edited by angie4235 on 05-01-2001 at 12:05 PM]