Does anyone know about co-signing student loans?

[indysteel]

I'd also want to know the approximate amount in student loans they anticipate needing for the totality of their education. In other words, how manageable will their total indebtedness be upon graduation? It's one thing to cosign a $5k loan if the student's total debt will be $10k. It's another thing when the total debt will be (as it often is these days) $50k or more.

[lovelygamer]

Is the student not able to get federal loans by themselves? and yes, they aren't able to be written off in bankruptcy. Co-signers are liable, just like with a car lien.

[goldfinch]

Ask to read the loan paperwork to find out whether you will get notices and other info from Sallie Mae. I have heard of cosigners and guarantors of loans not finding out there was a problem until there was a demand that they pay off the entire loan in full immediately. I do not know what Sallie Mae's paper work looks like but you will want to know if the loan goes in default and you will want to have the opportunity to cure the default by catching up on past due payments and continuing with monthly payments.

[indysteel]

Is the student not able to get federal loans by themselves? and yes, they aren't able to be written off in bankruptcy. Co-signers are liable, just like with a car lien.

A student should try to exhaust federal student loans and all other aid before private loans are considered. There are a lot of resources on the Web explaining the pros and cons of federal versus private loans. I'd encourage you (and the student you're considering co-signing for) to read up on it before securing a private loan.

Some of the cons of private loans: Sometimes, although not always, repayment begins immediately rather than after the student graduates. The loan often survives the student's death or disabilty. Interest is often not subsidized, meaning that even if the loan repayment is deferred until graduation, interest will accrue from the time the loan is issued. Also look out for higher interest rates, prepayment penalities and other harsher terms.

[colorisnt]

When I took out a private student loan back in 2006, it was really easy with a good credit score to get a better rate and terms than with a federal loan. My Dad is a banker and that's why we went that route for "flow" money that we could use for the next four years. I barely took out any federal loans in college, but definitely have needed them in grad school. I looked to go the private route again before coming here and no one was lending with reasonable terms so I gav up. The loan that I have privately is half way paid off and I am very pleased with what it has done for me. It was only for $5000.00. My Dad cosigned knowing that he would have to pay it if I couldn't but trusting that I could. 5 grand is not a lot considering what many people I know owe.

I would NOT cosign unless I knew for a fact I COULD pay it back myself. At some point, you WILL be let off the hook if payments are made consecutively in a timely manner, as said above. But once more, if things don't go well and a kid doesn't have a job, you are in trouble if you can't pay it back - just like any other loan you take out. If the payments aren't made it will hurt your credit score. My Dad is on my private loan still because it is HELPING his credit score. My mother is still cosigned on my car loan despite her ability to be released because my payments are improving her FICO score. The loan has also helped build my credit - another reason we opted to go the immediate repayment way. So there are a lot of pros and cons here, but you have to know you can pay that loan back if you need to.

[beccaB]

NY Biker, can you get the Parent Plus loan? My first kid wasn't offered this option and we got a private loan in her name to cover the extra that the fafsa didn't get for us. Unfortulately the interest rate ended up being way more that we could figure on at first and we are going to be helping her pay this. Any loan you can get from the Fafsa in a fixed rate loan and usually has better terms. I didn't want the loan to be in mine and my husbands name and not in my child's name, but the interest rate is a whole lot better. we will have to work with this 2nd child that we are getting the parent plus loan for, to have him help pay it back since it is saving him money in the long run.

[farraD]

Most of the time the lender will require the student to get a cosigner for their loan since most college students do not have a proven credit rating or sufficient income. When you are asked to co-sign a student loan, you need to be aware of the obligations that you are incurring by putting your name and credit rating on the dotted line.