Singletary: If asked to co-sign a loan, key word is ‘no’

You are probably saying, “Yeah, I knew student loans were on the rise.”

However, here’s something really troubling in the findings. A greater percentage of people 60 or older have student loans. Now, it’s not a large percentage — below 5 percent in 2014 — but the average amount has increased to $27,168 from $14,696 in 2005. The study also found that 48 percent of these loans include a senior consumer as a co-signer.

My husband and I have a blanket policy against co-signing. We will not co-sign for anybody, including our children and our children’s children, who haven’t been born yet but who will learn from their parents that they better not ask us to co-sign. The request will be met with a long lecture.

Still, I understand how it happens on college loans even to people who would never co-sign for a car or even a home. People lose their will. They see college as a way for their children, grandchildren or other family members to get a start toward a successful life. College debt is viewed as good debt.

But know this. I’ve said it before and I’ll keep saying it. You are not a backup borrower when you co-sign. Don’t let anyone play down the seriousness of what you are doing when you put your signature on the loan documents. That loan is yours, too. It’s on your books, and it is reported to the credit bureaus as your debt as well.

Here’s another way to look at co-signing. You are also taking a risk that even the lender, who has far more resources than you, wouldn’t take. That’s why they need you to step in and put your finances on the line.

Even if your child or grandchild is paying off the loan, late payments can have a negative impact on your credit history. A report released last month from the Government Accountability Office also cautioned about the increase in the number of older Americans who drag student loan debt into their senior years.

“Borrowers 65 and older hold defaulted federal student loans at a much higher rate, which can leave some retirees with income below the poverty threshold,” the GAO report said. “Although federal student loans can remain unpaid for more than a year before the Department of Education takes aggressive action to recover the funds, once initiated, the actions can have serious consequences. For example, a portion of the borrower’s Social Security disability, retirement or survivor benefits can be claimed to pay off the loan.”

From 2002 through 2013, the number of individuals whose Social Security benefits were tapped to pay student-loan debt increased to 155,000 from about 31,000.

Did you know that the lender could pursue you first even before going after the primary borrower if loan payments are missed?

Here’s something else to consider: What if the borrower decides to go back to school or runs into financial trouble and gets the loan deferred? This means the loan amount could grow, putting you on the line for even more money.

Am I trying to scare you?

I sure am.

Is it working?

By now, you may have guessed the powerful word.

If someone asks you to co-sign, just say, “No.”

Or, if that sounds too harsh, try: “Honey, I would love to help you with college, but I cannot co-sign. It’s too risky for me. Love ya but it’s a no.”

Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, D.C. 20071; or singletarym@washpost.com.