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Father's plight illustrates the tyranny of student loans

Francisco Reynoso, with his wife Silvia and daughter

Francisco Reynoso, with his wife Silvia and daughter Evelyn in the background, co-signed for his son's student loans. When his son Freddy was killed in a car accident after graduating from college, Reynoso not only had to deal with his grief but also with debt collectors constantly calling him to repay his son's loans. Credit: ProPublica/J. Emilio Flores -- Francisco Reynoso

A parent fears nothing more than burying a child. But if that child leaves behind private student loans, bankruptcy might become the next worry.

Francisco Reynoso lost his son, Freddy, in a car accident four months after the young man graduated from Boston’s Berklee School of Music in 2008. Not long after Freddy was buried, the debt collectors came calling — and calling.

Reynoso, a gardener from Palmdale, Calif., who supports his wife and daughter on just $21,000 a year, is on the hook for an estimated $286,400 in principal, interest and fees for his late son’s education.

Reynoso’s plight, which came to national attention via ProPublica, makes him a kind of poster parent for the growing phenomenon of student indebtedness. The sum of this debt has grown fivefold in little more than a decade to an astonishing $1 trillion. His case demonstrates how hard it is to get rid of this debt, even when the borrower has died. It also shows how badly we need improved disclosure, so that students and their parents understand just what they owe — and to whom.

Reynoso cosigned the loans, both federal and private, because “as a father, you’ll do anything for your child.” The federal loan was canceled after his son’s death, but the private loans have been sold repeatedly since 2005. Now, no one seems to know who holds them.

Two private loans are in default, and only one company has given a clear figure as to what is owed. The smaller loan, originated at Bank of America, had a balance of around $7,400 in March. The other, much larger loan, is harder to pin down, but a 2009 lending disclosure document shows that the nearly $160,000 Freddy borrowed will cost $279,000 if all payments are made on time.

Add these estimates together and it equals Reynoso’s entire salary for more than 13 years — around $286,400 in fees, interest and loans for an education his son never had the chance to use.

Reynoso has been working with lawyers to sort out exactly what is owed and to whom, but answers are scarce in both categories. Legally, collectors must go through the debtor’s attorney, but Reynoso continued to be harassed multiple times a day, every day for more than a year.

Private student loans are not dischargeable through bankruptcy or death unlike most debts, and neither Reynoso nor the firm can find out who has the authority to dismiss them. Despite everything, the bills keep coming with more interest and more fees, yet any other information is a mystery no one seems able to solve.