Student loans used to be simpler. You would take out a loan from a particular lender and pay it back to that same lender. If you had any problems, you would know who to call. Nowadays, student loans are often sold and then repeatedly resold and sometimes combined into bundles that are sold to investors, which is reminiscent of the way mortgages were bundled into securities before the 2008 financial crash.

A grieving father has become trapped in a system where he is unable to find the information he needs about his son’s loans. The father, a gardener who makes about $21,000 per year, co-signed the loans for his son, who was the first member of the family to go to college. Tragically, his son died in a car accident soon after he graduated. The father mourns the loss of his son and regrets that he deals with creditor harassment at the same time.

Only a few months after his son’s death, creditors started harassing the father for payments on his son’s loans. He is unable to find out who currently owns the loans, apply for loan forgiveness, or even find out exactly how much he owes. One loan, for example, was sold to a Swiss bank and then resold to private investors whose identity was protected by a confidentiality agreement. That one loan alone, after interest is added, could cost the gardener as much as $279,000.

Meanwhile, the debt collectors keep on calling. They can call, but they should legally be limiting their calls to the attorney that the family has turned to for help. Student loans normally can’t be discharged in bankruptcy, but the gardener is trying to get a special hardship discharge. Now, as he waits for a ruling, all he can do is hope.

Source: Propublica, “Grieving Father Struggles to Pay Dead Son’s Student Loans,” Marian Wang, June 14, 2012