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Co-Signing a Student Loan
Posted on 8/5/14 at 12:45 pm
Posted on 8/5/14 at 12:45 pm
I did this last year for my niece's daughter because they've got two other kids in college. It's Sallie Mae with an interest rate of 9.25%. First, this seems kind of high to me given my credit score of 800+ and second, I'm concerned about getting on the hook for $120K before this is over. Should we be looking for a lower rate? And should I take out an insurance policy on the student? I saw something on the news just the other day about a parent having to repay a huge loan after her daughter was killed in a car accident.
12
Posted on 8/5/14 at 12:49 pm to Layabout
quote:
Co-Signing a Student Loan
Why is she getting a private loan?
Posted on 8/5/14 at 12:50 pm to Layabout
If you co-sign for a student loan, then you will definitely be responsible if the student dies before it's paid off.
Student loans very, very commonly run over $100,000 even for some state schools so I wouldn't have done this. Now that you already have, I'd take out a 20-year $150,000 - $200,000 life insurance policy out on the student just to protect yourself.
Also, I'm pretty sure that if your niece's daughter defaults on the loan, you're still responsible. You probably want to make your great-niece pay you each month for the policy as well. This will ensure she gets used to paying a monthly bill long before she is forced to pay back that loan. This way she'll learn the value of a dollar and perhaps ensure that she takes her education seriously which will lead to a good job after.
Good job = no payments that you have to make.
Good luck!
Student loans very, very commonly run over $100,000 even for some state schools so I wouldn't have done this. Now that you already have, I'd take out a 20-year $150,000 - $200,000 life insurance policy out on the student just to protect yourself.
Also, I'm pretty sure that if your niece's daughter defaults on the loan, you're still responsible. You probably want to make your great-niece pay you each month for the policy as well. This will ensure she gets used to paying a monthly bill long before she is forced to pay back that loan. This way she'll learn the value of a dollar and perhaps ensure that she takes her education seriously which will lead to a good job after.
Good job = no payments that you have to make.
Good luck!
Posted on 8/5/14 at 12:50 pm to Layabout
quote:
Co-Signing a Student Loan
Prepare your anus
ETA: Just saw this
quote:
It's Sallie Mae with an interest rate of 9.25%.
You are fricked when this girl defaults.
This post was edited on 8/5/14 at 12:59 pm
Posted on 8/5/14 at 12:51 pm to Layabout
quote:Holy shite.
It's Sallie Mae with an interest rate of 9.25%
Posted on 8/5/14 at 12:58 pm to C
quote:
Why is she getting a private loan?
I'm not sure. Is Sallie Mae private? Good uncle that I am I just signed the papers last year. Now we're heading into year two and I'm having second thoughts about signing for another $30K.
Posted on 8/5/14 at 12:58 pm to Layabout
this seems like a really bad idea to me.
Posted on 8/5/14 at 12:59 pm to Layabout
quote:
I saw something on the news just the other day about a parent having to repay a huge loan after her daughter was killed in a car accident.
I saw something that was just the opposite. Kid's grandmother co-signed and when she died the full repayment amount was due immediately.
LINK
Posted on 8/5/14 at 12:59 pm to Layabout
You don't need to cosign a federal student loan and the rates are typically much lower.
Posted on 8/5/14 at 1:00 pm to C
quote:This. Students can get loans on their own with no need for a co-signer.
You don't need to cosign a federal student loan and the rates are typically much lower.
Posted on 8/5/14 at 1:06 pm to Layabout
At least one of my wife's loans is up in the 9% range, so that's not uncommon. It sucks, but it's not uncommon.
That's a tough thing to sign up for unless she's going to med school. Otherwise, that's a lot of debt for someone who doesn't have a job lined up. Common for a student, but a hard gamble for someone who is co-signing.
If you had the savings, I'd almost rather pay for it if I could and have her pay me back similar to a student loan, just at a lower interest rate to recover some money lost by taking it out of investments. I mean, you're on the hook for it if she isn't able to make payments anyway. At least this way you don't have your credit on the line and it's a small investment.
That's a tough thing to sign up for unless she's going to med school. Otherwise, that's a lot of debt for someone who doesn't have a job lined up. Common for a student, but a hard gamble for someone who is co-signing.
If you had the savings, I'd almost rather pay for it if I could and have her pay me back similar to a student loan, just at a lower interest rate to recover some money lost by taking it out of investments. I mean, you're on the hook for it if she isn't able to make payments anyway. At least this way you don't have your credit on the line and it's a small investment.
This post was edited on 8/5/14 at 1:21 pm
Posted on 8/5/14 at 1:10 pm to Layabout
What kind of school? And what is the loan for? I've never heard of needing private loans (>6.8%) for a four year degree program. You can take out a hell of a lot at that rate before moving into the territory of private loans. Sallie Mae services both, to answer one of your other questions but that rate, 9.25, is a private loan.
Posted on 8/5/14 at 1:18 pm to GaryMyMan
quote:
What kind of school? And what is the loan for?
It's LSU and includes out-of-state tuition and dormitory.
Posted on 8/5/14 at 1:22 pm to Layabout
So this is just undergrad? Ummm, this is an awful idea. Stop now.
Posted on 8/5/14 at 1:26 pm to Layabout
Terrible idea man
that 100k is also going to show on your credit report til it's paid off
that 100k is also going to show on your credit report til it's paid off
Posted on 8/5/14 at 1:29 pm to Costanza
Yeah, my wife racked up 100k+ between undergrad and getting her MBA. They'll give you all the money you want. Then she got a job making 30k per year and you realize quickly that you are a slave to those payments and can't afford anything. It's really easy to get in a position where you can't make those payments. I know they don't usually give out lump sums of 120k. It's usually going to be several loans before it's all said and done. So I'd take a second thought on signing up for any more. I don't see why she wouldn't be able to get them for herself. No college student has credit history, so that shouldn't stop her.
Posted on 8/5/14 at 1:30 pm to C
quote:
You don't need to cosign a federal student loan and the rates are typically much lower.
It's a private student loan (i.e. not backed by the feds). Have to credit qualify. Many college kids can't credit qualify.
30K to go to LSU undergrad including out of state fee and dormitory? Even if she is financing 100 percent of her education, that seems high. Especially since a few grand she can pick up with federal guarantee.
Interest rate is high, yeah. What would it be without a co-signer?
Private student loan market is a scary, scary minefield right now. I would do it as a last ditch effort. Personally, last year, I would have told her no, as she should be going in-state, and maybe junior college, if she can't afford the tuition.
Posted on 8/5/14 at 1:35 pm to KG6
quote:Yep. One or two loans per year... then you can roll it all together at the end. Works out better especially if you can pick up any scholarships on the way to graduating.
It's usually going to be several loans before it's all said and done
Posted on 8/5/14 at 1:40 pm to Layabout
Don't ever co-sign anything, and if you do, consider it your loan because no matter what, your name is on the dotted line. Student loans are not dismissable in bankruptcy, so in the end, this will be your responsibility.
She should be the one opening an insurance policy to protect you, but looks like you're stuck again.
She should be the one opening an insurance policy to protect you, but looks like you're stuck again.
Posted on 8/5/14 at 1:41 pm to Odinson
quote:
Student loans are not dismissable in bankruptcy,
People keep saying this but its no longer 100% true.
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