Dear Dr. Don,

I am the co-signer on a family member’s student loan. Under the terms of the contract I could have been released as co-signer after 24 months of interest and principal payments. Unfortunately, before the end of the second year, the borrower changed the loan to interest only. I was never notified of this change by neither him nor the lender. Is that a breach of contract by the lender?


— Sam Scenario

Dear Sam,

Unless you negotiated that provision in the contract, it’s unlikely that the loan agreement stipulated that the co-signer would have to approve any changes made in the terms by the primary borrower. That’s a tougher standard than just being notified about any change. It’s possible that you would have had to negotiate a notification clause upfront, too.

I suggest that you review your loan documents and then possibly consult an attorney. If you don’t have copies of the loan documents, you’ll probably have to get them from the borrower. The lender typically is under no obligation to provide them to you.

It’s too bad the primary borrower didn’t contact you about considering the change to interest only so close to the date when you could have been released as co-signer. It is possible that you might have been willing to help him pay the difference in loan payments to hit the 24-month goal, securing your release.

Try to stay aware whether the primary borrower is keeping up on the interest-only payments as well as when the payments convert back to principal and interest. You should ask the primary borrower to provide you with copies of the loan payment confirmations.

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