Engineer Your Finances

A Systematic Approach To Money

  • About Us
    • Disclosure
    • Privacy Policy
  • Contact Us
  • Toolkit
  • Security
    • Credit & Debt
    • Banking & Saving
    • Psychology
    • Other
    • Optimization
    • Education
  • Self Discipline
  • Improve Returns

Think Twice Before Co-Signing For A Student Loan

Share

In a recent survey of college pricing, the College Board found that a “moderate” college budget for an in-state public college averaged $23,410 for the 2014–2015 academic year. A moderate budget at a private college averaged $46,272. The high cost of college is resulting in many parents and other family members co-signing for a student loan to help the student get the funding that they need. There are a number of things that you should keep in mind before deciding to co-sign for a student loan application.

You May Become Responsible For The Payments

Becoming a co-signer means taking responsibility for the payment of the student loan. If the borrower is unable to make payments on the student loan for any reason, the task falls onto your shoulders. If you do not make the payments, it will be reflected on your credit history, will damage your credit score, and debt collectors may come after you.

Student Loans Cannot Be Discharged In Bankruptcy

There are very few legal options available for getting out from under onerous student loan debt. Bankruptcy laws prohibit the modification of student loans by the court. In some cases, the loan payments can be delayed for a period of time, but the total amount will still be due to the lender once that time period ends.

Being Removed As A Co-Signer Is Difficult

About 90 percent of borrowers who request to have their co-signers released from their obligation are rejected. In many cases, it is difficult to even obtain information about the process for securing a co-signer’s release from a private student loan. Even though private lending companies advertise the ability to release a co-signer from the loan at a later date, review all of the information in the loan documents carefully to ensure there is actually a mechanism in place for removing a co-signer from the loan.

Co-Signer Actions Can Put The Loan In Default

If a co-signer dies or files for bankruptcy protection, there is a chance that the student loan will be automatically placed in default, or become due in full, regardless of the payment history on the loan. Primary borrowers have been surprised to find these types of actions taken against their accounts even though they are current on the payments for the loan. Such “automatic defaults” are common when loans are sold or securitized and are handled by a new servicer.

These difficulties should make you think twice about co-signing for a student loan. Government student loans rarely require a co-signer and have various payment protections in place, so a student should secure as much money in government loans as they can before turning to private loans. Students should also consider attending a college with lower tuition costs if they are having difficulty obtaining student loans on their own without a co-signer.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

FOLLOW US

Join Our Newsletter
  Thank you for Signing Up
Please correct the marked field(s) below.

1,true,6,Contact Email,21,false,1,First Name,21,false,1,Last Name,2





Our Favorite Posts

  • How Much Interest Does 1 Million Dollars Earn Per Year? by Trey LaRocca
  • 3-Month Performance Review by Fin Engr
  • Rooting Out The Devil: Kathy Kristof Interview by Fin Engr
  • Money Hackers Carnival #117: Wedding & Marriage Edition by Fin Engr
  • Interview: What’s it all about? More than Money! (Part I) by Fin Engr
  • How to Compare Rates for Mortgage Refinancing by Fin Engr
  • Want To Erase Bad Credit Instantly? 6 Hacks That Work Fast by Trey LaRocca
  • FinEngr Joins The Million Dollar Club by Fin Engr

Blogroll

  • Blonde and Balanced
  • Budget and the Bees
  • Cash Cow Couple
  • Cash the Checks
  • Clever Dude
  • Dinks Finance
  • Enemy of Debt
  • Get Rich Slowly

Categories

Our Friends



Great Investing, Simplified: Get Stock Advisor for Just $99/year!

Need to find a loan? Got a Car? Compare title loan offers near me and get the best rate.

private real estate investors

Order custom essay from professional essay writers.

Visit 123 Term Papers and you’ll receive help from the qualified writers.

Thesis writing help for all the students!


Deprecated: genesis_footer_creds_text is deprecated since version 3.1.0! Use genesis_pre_get_option_footer_text instead. This filter is no longer supported. You can now modify your footer text using the Theme Settings. in /home/engine16/public_html/wp-includes/functions.php on line 5234

Copyright © 2021 · Runway Pro on Genesis Framework