Question about student loans

[disneysteve]

I always hear Suze Orman and others say that you should never, ever co-sign a loan for anyone including your children. When I went to college and med school, my parents co-signed my loans. Without them, I doubt I would have qualified for the loans on my own. So my question is this. If my wife and I are not supposed to co-sign for our daughter when she starts college next year, how is she supposed to get any loans? Will she qualify on her own?

[bjl584]

http://abclocal.go.com/kabc/story?section=news/consumer&id=9081715

According to this article, more than 90% of new students have a cosigner on their loans. So, I guess it's possible to apply on your own. 10% of college students do it apparently, but who knows what their situations might be.

[thomasdan]

my mother co sign my loans for Nursing school.

Without my beautiful Mother, I wouldn't be able to be where I'm at today. THANK YOU MOM!!!!

since then, I've paid off my loan and now my mom is off the hook. lol

[hamchan]

I qualified for all of my loans myself. The federal ones didn't have a credit check, but the private ones mostly did. The private loans I got were when I went back to school last year. I recall the financial aid person at the school saying that the minimum score was 500.

[FireBal989]

Cosigning for student loans can be a very bad idea for a wide variety of reasons. As the demand for people who have college degrees continues to decrease, the supply of people who have college degrees is very swiftly increasing. If you do decide to cosign for student loans, you should be financially prepared to pay back the loan in the future. Best of luck :-)

[humandraydel]

Steve, can you have your daughter try to qualify without you first? If that doesn't work, then maybe you co-sign. Also, there is a very big difference between you co-signing if you WANT and are ABLE to help your daughter versus if you can't afford to help - I would very much treat it like a "loan" to a family member - that is, a gift.

[disneysteve]

Also, there is a very big difference between you co-signing if you WANT and are ABLE to help your daughter versus if you can't afford to help - I would very much treat it like a "loan" to a family member - that is, a gift.

We aren't able to provide what college is likely to cost. We may be able to help with repayment but I wouldn't want to be on the hook for the loans if she were to default.

[snafu]

Happy Belated Birthday

As co signers, I presume you and DW would be responsible for the loan if it fell to default but it would be hard to imagine DD leaving you in the lurch. It's important to read to the terms and conditions of any loan and understand your obligations before you sign.

[dczech09]

Suze Orman and Dave Ramsey always so not to co-sign a loan.

To me, what they are really saying is "do not co-sign a loan without understanding the risks." A lot people do not understand that if you co-sign a loan, then you are just as responsible for the loans as the person who actually borrowed the money. You are essentially insuring someone else's debt.

My parents co-signed for my student loans, for example. My dad knows that if I fail to pay, he will be responsible. Of course, my dad also knows that will not happen. I fill my dad in on my loan situation quarterly so that he knows what is going on. Maybe that is something people should do with their co-signers; fill them in periodically.

[bjl584]

I wouldn't want to be on the hook for the loans if she were to default.

Knowing you and how I'm sure that you raised your daughter, I'd think that there is almost a 0% chance that that will happen.

[disneysteve]

Happy Belated Birthday

Thanks!

As co signers, I presume you and DW would be responsible for the loan if it fell to default but it would be hard to imagine DD leaving you in the lurch.

Exactly. If she didn't, or couldn't, pay for some reason, we would be responsible for the bill. I'm not saying she would do this intentionally but what if she has trouble getting a job? What if she doesn't finish school for some reason? You never really know what will happen. And I love my daughter dearly but I will be the first to admit that she doesn't share my work ethic.

Knowing you and how I'm sure that you raised your daughter, I'd think that there is almost a 0% chance that that will happen.

I don't think it's likely. I was just really curious how Suze and others expect all these 18-year-olds to get substantial loans with no income and no credit history. I know med school loans were easy to come by because they really looked at future earning potential but I don't think that is so true for teens starting college.

[breathemusic]

Does your daughter have a credit card yet? Has she already started to establish some sort of credit? I had about $30k in student loans, half of which were private loans from citibank. I qualified for them all on my own with no cosigner and actually got really good rates because I started establishing credit as early as possible knowing that I was going to have to apply for student loans.

If your daughter has already started building some credit, then she should be able to qualify. If she hasn't, have her get a credit card asap to start building. If you're not comfortable signing for all her loans, you could just cosign for the first year while she works to build her credit until she doesn't need a cosigner.... but that's assuming you're willing to take on that risk.

[disneysteve]

Does your daughter have a credit card yet? Has she already started to establish some sort of credit? I had about $30k in student loans, half of which were private loans from citibank. I qualified for them all on my own with no cosigner and actually got really good rates because I started establishing credit as early as possible knowing that I was going to have to apply for student loans.

If your daughter has already started building some credit, then she should be able to qualify. If she hasn't, have her get a credit card asap to start building. If you're not comfortable signing for all her loans, you could just cosign for the first year while she works to build her credit until she doesn't need a cosigner.... but that's assuming you're willing to take on that risk.

This is good info. We have talked about getting her a credit card. I was waiting until she turned 18 next month. That will still give her time to build a credit history. We have enough saved to cover all of year one of college and probably most or all of year 2 and that's if she gets zero in aid or scholarships. So she probably won't need to take out any loans until year 3 which is 4 years away.

[riverwed070707]

I've been out of college 5 years. I "qualified" for all of the federal loans with no cosigner but I don't believe they do a credit check for those. That was enough to cover my tuition and books, etc. My first year I was dumb and took out more than I needed and I had to have my mom cosign for that -- it was a plus loan through Sallie May and they only take students with a parent willing to co-sign. I didn't explore other options so I'm not sure if there would have been somethign I could have done without her. Other 3 years I worked FT to cover the rest of my expenses and some of my tuition.

[snafu]

I think 'work ethic' is a generational thing. I'm certain my parents thought my motivation was 'limited' compared to their expectations or their life experiences. Has DD begun researching scholarships, grants, awards and prizes which can combine to pay tuition and some expenses? Did she have a summer job? What part time work can she do during these upcoming semesters to help defray university expenses? Would DD be willing to tutor kids struggling with middle school math for example?

Would she consider taking 1st year at a Community College having verified the coursework was transferable to her chosen university? What is the cost differential between local and out-of-state costs? [2 yrs State, final 2 yrs @ Rochester, NY] I know the transition to university is tough for most students but a small minority manage working on campus or nearby [dinner] restaurants and stores. While some students have funds for a travel 'gap' year, I suspect many take off a year to work to fund 4th year. It sounds like heresy but the research confirms most employers don't really care which accredited university granted the degree.

...just some thoughts