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He is on community Medicaid now in rehab we just started 5yr look back. His granddaughter is still in college and nothing required to be paid on loans at this time.

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If Grandpa co-signed responsibility for a loan, I think it is actually a much simpler situation than suggested. Grandpa may have a debt to pay in future. It’s a potential liability, not an asset. Nothing was ‘gifted’.
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AlvaDeer Nov 12, 2024
According to some attorneys online it was considered gifting the day he co-signed the law. Others say it isn't relevant. I think they best consult an attorney if this is a problem before filling out paperwork. Each state is individual, and having it come back to bite you later if pretty tough.
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It could, but would be down the road for this. Right now as still in school, no loan payments due. They will come due maybe 18 months after she stops full time enrollment.
Now when she does the filing in the Spring for next academic year student loans, you or whomever is the POA has got to make sure that she does not just do a rollover, e.g. info from the past used and lending based on it. I’d suggest that she does an absolutely fresh student loan applications and fresh FAFSA.

Find out what type of loans she has. If she hasn’t done Stafford, try to get her to do these as debt is purely hers. Like maybe get her to right now, apply for a Stafford for this Spring semester to provide for a bit of a cushion for future costs if at a high cost Uni.

If this is private student loans (I bet it is), she absolutely needs to make sure that going forward there is new paperwork and grandpa is removed totally. If this means she won’t qualify for this type of lending, y’all need to know this now so she can file for Stafford, scholarships, Perkins, grants, student work offsets asap so that she has the funding for next academic year. No $ to pay tuition, they won’t let her enroll. My experience - as ours graduated fairly recently and I very much recall FAFSA, etc. - is Federal, State & the private lenders make easy to borrow $ & private lenders loan way waaaaay more than they need. Like if tuition, fees, dorm 75K yr, a private lender will loan out 100K yr routinely. Grandpa is on the hook to pay if she defaults.

If there are issues, it will be imho when loan payments are due. If she defaults, then whomever cosigner will be hit on to pay. Can become an issue for Grandpas LTC Medicaid eligibility. Heres why, hang with me as not straightforward….. student loan debts are not really dischargeable. They can’t go into bankruptcy and go away. If student borrower does not pay, and student borrower does not have a job, the lender will place this all on the coborrower as they know he has a home, income, credit cards, other resources he can use to pay the debt. If any of the loans involve Federal or State lending, that places Feds & State in the unique position of being a “supercreditor”. Supercreditors are IRS, any Federal lenders, most State lending. Being a super means they can attach grandpas SS income, any other retirement income, to be used to pay on the defaulted Fed / State student loan debt. SSA income and pensions are almost always sacred & untouchable by creditors, like credit card companies cannot attach SS income to pay even if they got a judgement. But supercreditor can attach. It does happen & seems to be abt 1/3 of SSA income paid.

Now this becomes a very big problem for grandpa. Because under the requirements of LTC Medicaid program, he has to - HAS TO - do a copay of almost all his monthly income to the NH. In his application all the details on his SSA income, any other retirement income etc are submitted. So LTC Medicaid has a fixed # to use for that copay. It’s his Share of Cost aka a SOC. Has to do SOC and if he is having $ seized by a supercreditor, then can’t do the precise SOS so out of compliance for LTC Medicaid and ineligible.

LSS granddaughter cannot default as it would be an issue for Grandpa. You need to make sure she understands this & make sure he is not a coborrower from here on out.

As others have said, it’s not “gifting”. He didn’t pay tuition, that would be gifting. It’s debt due as a cosigner. LTC Medicaid does not give a rats butt about applicants debt. They only care about income & assets. Medicaid assumes they will default on debts due to the SOC and not their problem. Unless debt involves a supercreditor and they can’t pay the SOC. That’s a problem you want to avoid.

Do get her to get you the EOY or end of semester loan summary. So u know how much $ it is and look at the interest rate. Could be heart stopping.
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Kdawn68 Nov 11, 2024
Thank you for your response. I appreciate you providing so much information. I do not believe it is her intention to default and appreciate how important it is for her not to default. The application for LTM is in process now.
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This from the internet (where I get most of my answers!):

"This is going to become more of an issue as higher education becomes increasingly expensive and more parents and even grandparents have to step in to help their children and grandchildren pursue undergraduate and graduate degrees. Fortunately, this will have no effect on parents' eligibility for Medicaid. In fact, paying down such a loan should not be deemed to be a transfer of assets for Medicaid purposes since it would constitute the payment of a legal obligation, not a gift to the child or grandchild. The gift occurred when the loan was taken out and the parent or grandparent assumed the obligation."

Hopefully your daughter fully intends to pay her debts.
Your father is responsible for them if she does not pay them.
The above opinion from the internet seems to indicate that "a gift occurred" at the time the grandfather co-signed". So it is possible that this will be considered gifting, and only asking your state's Medicaid offices or an elder law attorney can clear all that up.

Your father doesn't have any money at this point, so it's very important if he can be accused of "gifting" in the 5 year lookback (2 1/2 in California).
As to the loan itself, the loan company is most likely to come after whomever has the deepest pockets. They can do a court action and place a lien on anything daughter or grandfather has or gets in the future. Medicaid will likely beat them to anything left on the plate in terms of home or car of grandfather's; your daughter may not be so "lucky". This may be a debt that would follow her, given that some student loans aren't even forgiven when you are bankrupt or getting SS.

I recommend paying the debt as she promised to do. Best for all involved. But your father need answer only questions ASKED DIRECTLY of him on Medicaid forms. If he is asked if he has any outstanding loans the answer is "no". If he is asked if he ever co-signed any loans the answer is yes. I doubt it matters as long as he has no assets.

A good question for call to Medicaid . And if Igloo is around (she's best at these questions) I hope she will chime in here as well. When you call, ask for an advice counselor. They will give you a long wait time but they are very nice in most circumstances once you get them on the phone. Many work from home.
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Kdawn68 Nov 11, 2024
Thanks for the information. I do not believe his granddaughter’s intentions are not to pay on the student loan. At this time payments are not required as she is a junior next year and she is paying interest. I was interested to know if co-signing would effect the 5yr look back and his eligibility transferring from community Medicaid to institutional medicaid
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