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If I co-sign for my grandchild's student loan, can the lender garnish my Social Security check if they don't repay the loan?

Private student loan companies are not allowed to garnish your Social Security check. But a lender could take you to court for loans you have co-signed if the primary borrower doesn’t pay them.

Companies that offer private student loans are not allowed to garnish Social Security checks of co-signers if the borrower doesn’t repay the loan. But the lender can still pursue you and even take you to court to try to collect the amount due on the loan. Keep in mind that private loans do not carry the same consumer protections as federal student loans.

Only federal student loans can result in garnishment, or offset, of Social Security benefits. However, most federal student loans do not require a co-signer. A biological or adoptive parent (or in some cases, a stepparent) can borrow a certain type of federal student loan called a Direct PLUS loan to help a child pay for college. Grandparents must formally adopt grandchildren to be eligible to apply for Direct PLUS loans.

Encourage your grandchild to explore all federal student aid options before taking out a private loan.