Cosigner on a Student Loan

Student Loans are the best kind of loans to get these days because the interest rates are regulated and are currently not allowed to go above a certain rate. Sometimes in order to get a student loan one must find a cosigner on a student loan. If a student does not have any credit nor has bad credit most loans including student loans can be difficult to obtain. The bank or lender that is issuing the loans has to feel that the person is a good risk. A good risk is someone they feel who will pay back their loan payments on time and as scheduled. If you have established some credit such as paying off a car payment, paying on a gas card or a credit card, or have previously paid off a loan; then the bank or lender will consider you a lower risk. If you have had loans that you have not paid at all (defaulted on), or you are always late with payments, then that information is recorded on your credit report.

Then your credit report score becomes lower than the lender feels is a safe risk. They do not wish to loan out money that they are not going to get back. Educational loans take a long time to pay back usually and are easier for them to give if they know they will have consistent on-time payments. If you apply for a student loan and you are denied because of bad credit or no credit, you can reapply with a co-signer. A co-signer is someone who is willing to sign your loan and state that if you are not able to make the payments or start to pay off your loan late that they will be responsible for paying back your loan amounts that you haven’t. As a result being a cosigner on a student loan is not something that someone should do lightly. If a person cosigns someone’s loan, then a cosigner on a student loan must take over the loan when it goes into default.

Student Loans

If a cosigner on a student loan then does not pay the educational loan when it is in default, then they too will have a dark mark on their credit report. Nonpayment of a loan can really dump someone’s credit rating into the toilet. People strive to keep their credit numbers as high as they can, so one must carefully consider a few things before agreeing to be a cosigner on a student loan. First, what is your credit score, and is it high enough for the lender to accept your signature on the loan. In private loans the lower a person’s credit score is the higher the interest they pay. In an educational loan situation the bank or lender does not have this luxury. Checkout more detailed information at http://www.chronicle.com/blogs/ticker/new-jersey-will-forgive-student-loan-debt-of-dead-borrowers/115964

Secondly, seriously consider how well you know the person you would be cosigning for? This is not something that one should do for someone they barely know for sure or for someone you do not think will have the capacity to pay back a loan on time after they have finished school. You should check out what careers in that field pay and if there are jobs available in the area where the person lives. Lastly, if you have the money to add this payment to your monthly output of money for your bills, payments, and loans etc. and do not feel that you are taking an undue risk in helping this student get on his or her feet then by all means be a cosigner on a student loan. School loans are safe loans to receive, but sometimes students with no credit or bad credit need to ask a cosigner for help.