Co Signing Student Loans

Co-signing student loans is still a thing in society, however it’s not as prevalent as it once was. However, many people are finding themselves co signing their children’s education loans, and being forced to pay them off even if they’re already delinquent on payments.

Co-Signing student loans is becoming increasingly popular among parents who want to help their kids out financially when they graduate college, but don’t have the means to do so. There are a few reasons why parents tend to choose to co sign their kids’ loans; either to help with tuition costs, or simply to provide financial security for their kids after graduation. Many parents feel that providing financial stability early on in their child’s life will allow them to succeed later in life by having fewer worries about money.

Parents who chose to co sign their children’s loans often do so because they feel like their kid isn’t capable of handling his/her own finances. In addition to believing that their child is incapable of managing his or her own finances, parents may also feel that their child should receive some sort of assistance from a third party.

Another reason for choosing to co sign their children’s loans is that parents believe that their kids need additional time to develop their skills before taking over for themselves. If a parent feels that their kid is going to take awhile to get established in a career path, he or she might want to give them enough time to become comfortable with their responsibilities.

When a parent chooses to co-sign their child’s loan, they are essentially giving him or her permission to use their name as collateral whenever the student needs to borrow money. Because of this, even if the student can afford to make regular payments, they won’t be able to avoid paying any interest charges accrued while using someone else’s name as collateral.

Once the student graduates, the co-signer of their student loan becomes responsible for repaying the debt. And unfortunately, this responsibility doesn’t go away just because the student no longer needs the money anymore. So long as the student has outstanding loan balances, the co-signers’ names remain as the default holders of the debt.

While many students aren’t aware that they’re borrowing money under their parents’ names, others find out at the worst possible times. Students with bad credit scores are often asked to show proof of employment before receiving approval for school loans. Because of this, many students end up with their parents’ names on their student loans.

To avoid getting stuck with a massive bill after graduating college, students should try to pay down their student loans as soon as possible. A good way to ensure that your student loans start showing up lower on your credit report is to make regular payments towards them. You can also work with a private lender to help you refinance your student loans. Both options can help you reduce the amount of interest you owe on your loans and potentially lower your monthly payment.

Though student loan rates are steadily declining, they still vary widely based on factors such as where you attend school and what type of loan program you choose. For example, federal Stafford loans currently have the lowest interest rate at 3.86% whereas private loans such as Sallie Mae have higher interest rates ranging from 5.75% to 14.65%.

One last note on student loans: if you plan to co-sign your child’s loan documents, make sure you understand exactly how much money you’ll be liable for. You should know your child’s exact income, assets, and liabilities before agreeing to sign anything. You don’t want to find yourself struggling to pay off a student loan at retirement age only to discover that your child never had a job!

Co Signing Student Loans

To be Co-Signer, you must have either signed, co-signed, or cosigned (or any combination thereof) at least $50K worth of credit card debt for a student loan borrower who is currently enrolled in school. Student loans can be discharged if they are paid off before the borrower graduates or drops out of school. If you do not qualify, we can refer you to our friends at Loan Pros, a nationwide network of finance companies willing to help students pay back their loans.

(Note: A majority of opinions expressed here are quite satirical.)

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Co Signing Student Loans

What do you think?

Do you agree with this statement?

Why or why not?

This video was inspired by my friend’s story about her first time being co-signer on a student loan. In my opinion, anyone who goes to college should have the option to be co-signed if they so choose. I know many people (myself included) have had their loans co-signed before, mainly due to financial issues. But now, many schools offer students the opportunity to co sign while getting a degree. So basically, instead of going into debt alone, they get to join someone else’s debt. Which is awesome! However, some people actually don’t enjoy doing this. And honestly, I understand where they’re coming from because it’s not fun to be forced into something you may not want to be apart of. At the end of the day, we all make our own choices whether or not we want to be co-signed on a certain type of loan.

I hope you enjoyed watching this video and thank you for watching 🙂

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Co Signing Student Loans

What?

This is a really good question! I am going to explain what co signing student loans means, and how it works.

There are two types of loans we have today – Federal Direct Loan(FDL) and Private Education Loans (PEL). FDL’s were created by the government, and PEL’s were made private, but both require cosigning, meaning someone else signs the loan paperwork before they can get their money.

The first type of loan, federal direct loans, are considered the same as any other unsecured debt you might take out, even credit cards. You cannot use them for anything else besides school tuition, room and board, books, and fees, unless you pay off the principal balance first.

The second type of loan, private education loans, are great for people who don’t qualify for federal loans, mainly because of income, however they aren’t the best option either. They do not need to be paid back until after graduation, but at that point, you may only be able to borrow $20,000-$30,000 and still have to pay 10% interest per year.

With a private education loan you can apply for the full amount you want, although you would be charged additional interest if you borrow less. If you borrow less than $150,000 you would have to pay 2% interest, whereas if you borrowed over $150,000 you’d have to pay 5%.

In general, if you borrow enough money to cover your cost of attendance, plus some extra to make sure you graduate with no outstanding debt, you will be much better off using federal loans. Private education loans are great for students who don’t need much money, or those who might have trouble getting financial aid.

How does it work?

It is pretty simple. Your parents sign the forms, but never actually borrow the money themselves. Instead, they agree to become cosigners if something goes wrong. So let’s say you defaulted on a federal loan, and your parents had to pay the bill. That means they now owe the lender money as well, which would put them in bad standing with the bank or credit card companies. In order to avoid this situation, they’ll just ask you to help them out.

Cosigning is different from being a guarantor. A guarantor pledges his/her creditworthiness to protect someone else from paying a bill. When you’re a cosigner, you promise to repay the loan if your friend/family member doesn’t. The big difference between these two situations is that a guarantor is liable for the entire amount regardless of how much he/she owes; while a cosigner is only responsible for whatever portion of the loan he/she signed off on.

If your parents want to learn more about co-signing, here are some sites they can check out:

Why should I care?

Co Signing Student Loans

How much does a co signer cost? How do I get out of my student loan debt? What if someone cosigns my loans? What happens if a co-signer defaults? These questions and more will be answered in this video.

Today’s question: Why would anyone want to co-sign for their child or friend who has bad credit?

Let’s talk about what co-signers really mean, and how they’re often times nothing more than an unsecured personal guarantor. Ladies, when should you consider not taking a co-signer, even though might be your relative? And for those of you looking to shop around, look at our website, we put together a free list of public and private lenders that you may use to find rates and terms.

Thanks for watching!

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