Relatives Of Man Dead For 27 Years Haunted By Student Loans
Vísir reports that the heirs of a man who died 27 years ago —his grandchildren, more precisely— are now being charged, for a student loan that the man’s stepson took, and for which the now deceased man then signed as guarantor.
The Ghost of Systems Past
In recent years, some changes have been made to the Icelandic student loan system. Most notably, in 2009, the left-left Alþingi majority abolished the requirement of a third party guarantor. Until then, the requirement meant that a prospectful student needed the signature of someone with a clean financial record, who thereby assumed responsibility in case the student would, later on, not meet his or her payments.
Those who took student loans before 2009, however, remain bound to a guarantor. Until death do them part, and then some.
The student loan fund’s manager explains to Vísir that according to law, such guarantees are inherited, and remain valid as long as the original debtor, in this case the stepson, lives. Reykjavík Grapevine called the Ministry of Education, and was informed that this process had little to do with the ministry, as the law it is based on is valid for guarantors of all loans, not student loans in particular. The Ministry’s lawyer said that this was not the first case of the its. When pressed further on that, how common this sort of entanglement is, he said he did not know, but had simply seen earlier cases in news media.
The public student loan fund LÍN was founded in 1961. According to some estimates, those who finish five year studies today, will not earn enough through their life-time to fully pay back their student loan.