If you have a high student loan balance, you may have breathed a sigh of relief when you heard the White House extend the student loan deferral until August. But as we’ve seen with some security clearance applicants before, if you didn’t pay your loans before COVID, today’s deferrals can’t help you alleviate the debts you didn’t pay yesterday. .
True or False: If the student loan debt involves a child, it will not be charged to you in an audit investigation.
A recent security clearance denial before the Office of Defense Hearings and Appeals (DOHA) noted an individual with $123,000 in delinquent student loan accounts. In his response to his statement of reasons, the plaintiff denied any responsibility for the student loans, saying his wife was responsible for raising his children and paying the student loans. He noted that the loans were for his son’s education and said he learned about them during a security clearance interview, although he did not disclose them on the SF-86.
Yes, your children’s student loans will affect you if you are promising it
About 1 in 5 parents take out a student loan on behalf of their children. Parent PLUS loans are extensions of the FAFSA, but in a Parent PLUS loan, only the parent is the borrower and only the parent is responsible for the student loan. The DOHA case did not state what type of loan it was, but did note that it was a student loan held solely by the parent, on behalf of the student. When it comes to debt, the type of debt matters, the purpose of the debt matters, and whether or not the individual took action to mitigate the debt matters – a lot.
We often see the blame-debt game come up when someone faces a security clearance denial due to financial issues. But this is an argument that rarely holds water. Even if the debt was for your child, or your spouse was supposed to pay it, if it was in your name, you are liable. This is why we recommend that a person request a copy of their credit report before applying for a security clearance – if you see a debt there, take steps to address it before submitting the SF-86. This is the step that is key. You don’t need to have the debt paid off. But acknowledging the responsibility before it and agreeing to a payment plan will show that you are reliable, trustworthy, and willing to take action to resolve your issues.
False: take out a student loan for your child and you will have to pay.
We frequently see how spouses can make or break a denial or revocation of permission. But student loan debt is just one way your child could be a career killer, too. Being willing to pay for your children’s education is admirable. But just know that if you run into a problem and you’re unable to pay, it could end up costing you your own career, rather than creating career opportunities for your child.