Schumer proposal forgives student loans upon death

Wednesday, February 27, 2013
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27 year old Colonie High School graduate Lauren Tanski in Albany on September 25, 2012. Lauren's body was found beaten and strangled to death in her apartment in New Orleans late Sunday night.
Photographer: Patrick Dodson
27 year old Colonie High School graduate Lauren Tanski in Albany on September 25, 2012. Lauren's body was found beaten and strangled to death in her apartment in New Orleans late Sunday night.

— Linda Tanski hadn’t finished grieving for her murdered daughter before the requests for student loan payments arrived.

Colonie native and SUNY Cobleskill graduate Lauren Tanski, 26, was found strangled and beaten in her New Orleans apartment on Jan. 14. She died with about $30,000 in outstanding federal student loans and about $60,000 in private loans.

The federal loans were immediately forgiven, per federal law, but the private loan, a “signature” loan from Sallie Mae, lived on, according to her mother.

“As a matter of fact, they only gave me a 60-day grace … [then] they immediately dropped that into my lap,” Linda Tanski said.

Despite sending her daughter’s death certificate to the private loan firm, she said they offered their condolences and were still requesting payment of the loan. The company, said the 53-year-old, wanted payments of $540 a month.

Help could be on the way, though, with U.S. Sen. Charles Schumer, D-N.Y., sponsoring legislation that would require all student loans to be forgiven if the borrower dies.

The law would include instances where a parent was a co-signer on the loan, which was the case with Tanski.

Schumer’s legislation is called “Andrew’s Law,” which is in honor of a Syracuse man, Andrew Prior, who was killed in a hit-and-run accident.

His federal loans were forgiven, and two of the private loan firms forgave the loans, but American Education Services kept demanding payment from Andrew’s parents.

It took more than two years of work by Andrew’s parents and Schumer’s office to get the third private loan forgiven.

“No parent should ever be put through the ringer by callous servicers and lenders,” said Schumer in a news release. “And there is no question that we need to put this common sense and compassionate policy into law.”

Many private companies like Wells Fargo already have established policies that forgive student debt in the case of death or disability. Sallie Mae now forgives its Smart Option Student Loan, which replaced the signature loan Laura Tanski received.

“Sadly, we can’t always rely on these private companies to do the right thing for suffering parents and we need to write the rules,” he added.

Tanski hopes Schumer’s proposal becomes law, saying “it would be great.”

In the wake of Laura Tanski’s death, some of her friends planned on organizing a fundraiser to help pay off some of the loans.

One of those friends, Raechelle Gonzalez, said in a text message, “I don’t think it’s fair that Lauren’s family has to deal with the grief of losing her, funeral expenses and now the expense of her education that she cannot even utilize.”

Linda Tanski is in the process of writing a letter to Sallie Mae to again make the case that the loan should be forgiven.

Schumer is looking for someone to sponsor his legislation in the House of Representatives.

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February 28, 2013
7:56 a.m.
Niskyboy says...

In the case where someone dies and leaves an estate, I don't see why their student loan obligations shouldn't be paid out of that estate just like their other obligations. Does Schumer's bill address this?

February 28, 2013
8:45 a.m.
albright1 says...

You can bet that if Schumer had lent the money personally to the poor Tanski family, he wouldn't be forgiving the loans. As long as it's someone else's money, Schumer is all for "load forgiveness"

February 28, 2013
10:18 a.m.
duke1942 says...

Just what you would expect from Schumer and all his Liberal Leftists/Socialists, more entitlements for more votes. They continue to spend to bankrupt the system using the Cloward-Piven strategies. The Takers outnumber the Makers and that is a recipe for collapse of the US.

February 28, 2013
10:29 a.m.
biwemple says...

A student loan is not like a mortgage held by an older adult where there is an actual asset that can be used for collateral. Typical students are still living with their parents, do not have any 'estate' to speak of and it is rare that this will be needed. I don't have a problem with this at all really. If necessary you could perhaps require student borrowers to pay some small fee for insurance up front on this student loan, similar to that with a mortgage, where loan would be paid off if they should die before repayment too.

February 28, 2013
2:37 p.m.
albright1 says...

Biwemple, I can see how you might not have a problem with this case. Obviously a tremendous tragedy. But a law that requires loan forgiveness? That seems wrong. Really, what if you lent the family the money to send Lauren to college? Would you want government officials passing laws that say you must forgive the loan?

February 28, 2013
3:04 p.m.
dlombardo says...

How do people feel about current law, which requires the federal government to forgive loans in the case of death or disability? The federal government accounts for a majority of student loans.

February 28, 2013
4:52 p.m.
LOST says...

Another stupid feel good law. Schumer should tell us where the money is coming from to pay these loans off or who of us is taking the monetary loss. I feel sorry for the parents loss of their daughter, but cosigners should buy life insurance if they can't afford to take the hit or they should not cosign.

February 28, 2013
5:49 p.m.
wmarincic says...

I feel bad for the family but correct me if I'm wrong, had this child not have died the family would have continued to pay this student loan right? It's unfortunate but if you don't pay the loan then someone else has to and Schumer proposes that the taxpayer pay off the loans. We borrow 46 cents on every dollar now because of these STUPID government giveaways. Stop the madness....

February 28, 2013
6:03 p.m.
dan says...

If Lauren didn't die, it would be up to Lauren to pay the student loan, not the family. The mother co-signed the loan because she believed her daughter would be responsible and pay the bills, and if Lauren doesn't pay out of irresponsibility, or her own financial troubles, it would be up to the mother to pay. I think the risk of losing the money due to death is just part of being in the loaning industry. You have to count on the fact that most people aren't going to die, and cut your losses when it does happen. If you loan someone $100 and they die, you're not going to go to the funeral and demand their spouse pay you back. It's reasonable to assume they're not going to die, but you have to be willing to accept that the person's death is a loss for everyone... emotionally and financially.

February 28, 2013
6:09 p.m.
biwemple says...

If the co-signer can't pay because of whatever reason, they'll end up going into bankruptcy and the losses will be spread to even more people instead of just the student loan issuer.

February 28, 2013
7 p.m.
justapto says...

BUY Life Insurance in the amount of the loan. You die; the insurance pays. Perhaps all loan originators should 'require' a debtor to have life insurance equal to the loan balance. Decreasing term insurance is typical of the coverage for a mtg on a home.
Rent an apartment and the land lord will usually require a renters insurance policy to protect his interest against a tenants claim in the event of a liability.
Student loan life insurance is simple, cheap and easy to get when the insured is young.
Problem solved!!! or is this tooo simple for the government to understand???

February 28, 2013
8:54 p.m.
LOST says...

Biwemple, the cosigner is the credit worthy party who will ensure that the loan will be repaid. That is why they cosign; they agree to take the risk. If the cosigner can't pay then bankrupcy is their option. If they don't want to hurt their credit they will pay the loan off. I bet you responsible cosigners will pay their obligations. If this law comes into existence no cosigner will pay off a loan when a student dies. These predicted losses will be made up by lending institutions with higher rates for everyone who takes one of these loans out. If a person has good credit and wants to take the risk as a cosigner they should be free to do so without an added built in cost of paying for death defaults.

On a similar note: What if the student becomes permanently disabled, should the cosigner get off?

February 28, 2013
9:35 p.m.
biwemple says...

I had a grad student loan with no co-signer as an adult student, no collateral, nothing except my promise to repay, nothing to collect, should I have passed away before repayment. There are a lot of others like me who surely had same situation. Basically there was nothing to collect from a non-existent estate then if I had passed away before I paid it off. Either require insurance as had been repeatedly stated above or loaner has to take it as a loss as this bill proposes. If the bill passes it's not going to be used much for certain as its really not a great way to get out of debt. It's a risk the loaner takes, but you can't get blood from a stone here.

March 1, 2013
10:47 p.m.
LOST says...

Biwemple, you got a loan without a cosigner. In your case the loaner took the risk. If you died without an estate you would not be here to to pay it back. But we are not talking about loans without cosigners or estates. In this situation the cosigner agreed to pay the loan if the student dies. The cosigner is then the first in line to pay. What is wrong with the cosigner paying? As long as the cosigner has the ability to generate income or has assets they should pay. Why should everyone pay for a loan that was cosigned? It destroys the concept of what cosigning is. We shouldn't pay and this bill should never be.

March 2, 2013
1:24 a.m.
dan says...

LOST... I don't think cosigners ever agree to "pay the loan if the student dies". Where in the contract does it say that? Death can happen to anyone. It's a risk the lenders are willing to take. The cosigner is vouching for the borrowers responsibleness. If the borrower is irresponsible and can't pay, that's when the cosigner comes into play. If the borrower dies, the lender can make a claim against their assets. Like if it was for a car loan, it would be fair to say the lender can take that car upon death of the borrower. But for a school education? Parents cosign because they trust their kids will pay it off responsibly, and then hopefully use that education to pay the parents back as they age. A lot of parents count on their children for help as they get older. Losing their child is already a financial burden on them for that reason alone. To ask the parents to pay for the now-fruitless education, is just cruel. It wouldn't necessarily be unreasonable if the school split the cost with the lender, but leave the grieving parents out of it.

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