Hi-I'm a brand new user with a huge problem I'm hoping someone can help me with...
My wife and I co-signed loans for our daughter to go to college. Long story short, daughter did not graduate after 5 years,now has baby,is unemployed, and the loans are coming due. The amount of the loans is somewhere between $60,000-$85,000, depending on how you look at them. These loans were taken through several different companies. We're paying as much as we can on them,but still not satisfying the lenders. They call multiple times a day, day & night, every day. This week, they started calling me at work.
Considering my current financial state, and the state of the economy,I can't afford these payments. I do work full time, been with same company for 21 years. Currently earning about $47,000 per year.
My 401k has $132,000 in it. I'm fully vested. What I'd like to know, is can enough be taken out to pay off these loans? I know it would cost a huge amount in taxes, but I see no other way. I'd be willing to take the hit if I could be rid of these loans.
I currently have a loan out on 401k that will be paid off in Jan. 2012 (paid off house with it). Even if I didn't have this loan, I don't think I could take a big enough one from 401k to pay off the student loans. My house isn't worth enough to pay the student loans off, either. Deferment of loans has been tried, and failed.
Due to family history & heredity, I do not expect to live long enough to retire (men in my family tend to die at around 60-62, and I'm 48 now), and if I have to pay these loans off out of pocket over time, that will prevent retirement anyway.
I don't think bankruptcy would help, and I don't want to do that anyway. It's not the lenders fault that I'm in this situation, and I do want to pay this money back.
Thank you.

If you pay the first loan off with your 401K you can take out another loan. You can borrow half the amount of your account.

You could also talk to your 401K administrator about taking out a hardship withdraw. You do not have to pay this back but you do have to pay tax on it.

Early payoff is not possible, as I am currently paying over $700 per month on the original loan, and $450.00 on a vehicle loan, which also will be paid off in Jan.2012.
I've checked on the hardship withdrawal; the amount I could get wouldn't even dent the student loans. Thanks for your reply...

You can borrow against your 401K and pay off the debt, then pay back at a very low interest rate normally to the 401 K

You may find that your employer's 401(k) plan does not allow you to take a withdrawal, as your case does not fall into any of the so-called "hardship" cases under which the IRS requires empoyers to allow their employees to take withdrawals. But plans vary, so you should ask. But in any case, if you do take a withdawal (as opposed to a loan as the other's have suggested) you will be hit with income taxes plus the 10% early withdrawal penalty.

I'm curious as to how you expected to pay these loans off when you first took them out? I suppose you thought your daughter would pay them - if that was the understanding, then I would suggest that your daughter step up and start taking some responsibility here. Can she take a part time job? Move back in with you so that your wife or neighbor can watch the child while she works? Just some thoughts...

Actually, I was fully expecting my daughter to graduate, get a good jod, and pay these things off herself. She was very smart in high school, but seems to get dumber as time goes by. (much as I hate to say that) I was not at all prepared for what is happening now. I just wanted to help her get started right in life.
Last winter, I worked reduced hours all winter, and barely escaped downsizing (or "rightsizing" as my employer calls it) this past spring.
I'm still trying to recover from the past year.
I have talked to the 401k people in the last 24 hours; due to new IRS rules, even if I paid my current loan off today, I wouldn't be able to take out a full, new loan for a year. I am exploring other options.
Thank you to all who have tried to help.

And she and the boyfriend moved back in last August. He is not the most ambitious person on the face of the earth; she's returning to work, very part time, this week. Thanks again.