Student Loan Cosigning FAQ
When it comes to paying for college tuition and other expenses that come with seeking higher education, many students turn to federal student loans or other aid such as those awarded by filling out your FAFSA. However, there may come a time when you’ll need to look into private student loans which require an existing credit history. The helpful advisors at College Funding of Tampa Bay have compiled the most common questions regarding finding a cosigner for your private student loan application.
Why seek out a private student loan in the first place?
While federal student aid is usually quite generous in how much they’ll approve, there are situations where that amount is still not enough to cover all your expenses. Private student loans are available for individuals who need extra help to cover any leftover costs.
When is a cosigner needed?
Because private student loans are credit-based (unlike federal student loans), most students are encouraged to seek out a cosigner since it’s unlikely for them to have a decent credit history, if any history at all.
Does the cosigner need to be a parent?
As long as the cosigner has a passing credit score, the relationship with the borrower does not matter. Students can bring in another family member, their spouse, or even a close friend.
What is the responsibility of the cosigner?
If the student is unable to make a payment on the loan, the task then falls on the cosigner. The existence of a cosigner is to ensure that the loan is likely to be paid since it is difficult for students to procure the means to make payments especially if they don’t have the time to acquire a job in between studies.
What are the risks that come with cosigning?
Both parties, the student and the cosigner, are at risk of damaging their credit history if a payment is missed. Even more worrisome is if the cosigner is unable to make payments due to losing their job or even death, at which point the responsibility lies solely on the borrower.
How do you release a cosigner from a contract?
If the borrower builds enough credit history, they are able to prove to the lender that they are capable of handling the payments on their own. Each lender has their own stipulations ranging from a single year of payment history to up to four years.
What if your potential cosigner has poor credit?
If the person you want to use as your cosigner is denied for their poor credit, that outcome can actually be used to your advantage elsewhere. There are certain programs that offer the student an extra few thousand dollars on their loan amount if their cosigner is denied as a sign of generosity since many people who work in the higher education industry want to see people earn their degree first and foremost.
Can the borrower’s credit benefit from a cosigner?
Since both the borrower and cosigner are responsible for the loan, the borrower will notice an improvement in their credit score even if they’re not the one making the actual payments. This is why finding a cosigner is a great way to set yourself up for the future.
Get Help Finding a Student Loan!
Not sure where to turn to? Let the experts at College Funding of Tampa Bay help you out! We are trained in handling financial matters so we can find the best solutions for your situation and guide you down the right path. Call us today at 813-755-6834 for a free consultation and get started on earning a higher education!
