Cosigner Loans Help You Pay for College
When you apply for financial aid you should be able to get almost any type of federal student loan without the help of a cosigner, including a Subsidized Stafford Loan, Unsubsidized Stafford Loan or Federal Perkins Loan. But not all student loans can be awarded to you without the help of a cosigner.
If you are applying for a private college student loan then you will need a cosigner because it is not likely that you have an established credit score or report.
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What is a student loan cosigner?
A cosigner is someone (typically a parent) who extends his or her credit to a student so they can acquire a student loan. A cosigner jointly signs a promissory note with a student for a student loan, and he or she is responsible for repayment of the cosigner's loan if the primary student borrow fails to make payments.
What is a credit-worthy cosigner?
Since many college students enter college without a credit score and credit report, they may need a credit-worthy cosigner to help them with their payments. A credit-worthy cosigner is someone that has a strong credit score (preferable above 750
Other characteristics of a credit-worthy cosigner include:
- Having at least 27 months of credit history
- Having proof of satisfactory income for the past 2 years
- Is a U.S. citizen or permanent resident
Who can be a cosigner?
Any relative, spouse or friend can be a student loans cosigner as long as they are an adult and pass the above minimum requirements.
How do you ask someone to be your cosigner?
You might be intimidated or embarrassed to ask someone to be your cosigner, but there are literally millions of other students who are in your same situation.
Besides promising to make your payments on time, you can give them a few benefits of cosigning on your loan, such as:
- They won't have to make payments as long as you pay every month
- They can released from their cosigning responsibilities if you establish a good credit score and make on-time payments for at least 36-48 months
What are the benefits of having a cosigner?
Besides receiving their good credit history, some other benefits of having a cosigner are:
- You can get lower interest rates on other types of loans or credit cards
- Cosigners can help build your credit history
It is important to convey to your cosigner that you can be trusted with your payments. Remember that they are doing you a favor by extending their good credit history to you, so be responsible and don't miss any payments.