Banks in general have not gotten much good press these last few years, heck not for this last decade. I have shared the feeling that many have had that the newly unregulated banks had a big part to play in our financial crisis, though I think they were not the only parties responsible by a long shot. I’m not prone to conspiracy theories or deep class suspicion though, and view banks as a necessary service. I don’t love or hate them, just a commodity type of service one uses to handle money. So why would I choose to stay with one bank for life?
In order to go to a really great school, Oberlin College, my daughter Claire used a variety of funding sources: academic grants, savings, federal and private student loans. Her dual degrees in Creative Writing and Computer Science were very likely to make her employable and able to pay back her share of the loans. Like everybody else, we don’t understand why college tuition is going up faster than the rest of the economy, or why private student loan interest rates are so high. When many parts of the developed world give college education for free, how will we compete as students are choosing not to go at all, or leave school with enough dept to severely limit their economic mobility or to risk taking on new ventures or joining innovative start-ups? Well, regardless of all the negative aspects of borrowing for college, Claire like many, probably most of her generation, borrowed some money for college. Some if it from Wells Fargo.
College costs have been a big political football too, but not one many in congress have been willing to catch and run with. In 201o, there was some movement going on in congress to provided relief for student debt in the worst of cases: after the death or disability of the student. In these cases the co-signer of the loans, generally the parents who may not have really expected to fully bear a burden like this, becomes responsible, and with less rights than a regular borrower. Here is a link to more information about this. The proposed laws so far have not passed through congress. If you are a parent or family member helping a student out with these enormous debts by co-signing a loan, you had better think really hard about some sort of life insurance or you may find yourself in a terrible position should the worst happen to your child.
Wells Fargo decided to do something without a congressional mandate. At that time in 2010, though they said it was not related to the bills going through congress at the time, Wells Fargo quietly announced they would forgive loans in the event of death or permanent disability. They weren’t forced to do this by congress, nor did most of their competitors make a similar policy shift. I knew nothing about it at the time, nor would I have likely paid much attention if had known. As far as I was concerned, my daughter was doing great at school and would be paying back her student loans along with us as we had planned.
And then, in May 2013, she died unexpectedly, one year into a phd program at USC.
This unimaginable turn of events was the most wrenching, grueling, rip away your faith in all good things a parent could ever experience. But wait, there’s more. If you are not careful, as I wasn’t, you are also now responsible for all of your child’s private student loan debt. Federal loans are already forgiven, but most private loans fall to the co-signer. There is no built in insurance policy like you might have gotten on a car loan.
This did not happen to us, thanks to Wells Fargo. There were two phone calls, an exchange of legal documents, a condolence letter, and it was over. We still had our grief and our memories. But we were not also looking at a decade of debt.
So there it is. I’ve been a customer for over a decade anyway, had ups and downs, but have been generally satisfied the last few years. After this experience, I think I’ll stick around a lot longer. If you are a parent of a student with student loan debt, I’d recommend you pay careful attention to what could happen if the unimaginable happens to you.