Cosigning Student Loans?

[redduck]

Quote:

Originally Posted by erkevin There are limits to government loans; I am not sure of the exact numbers but it is something like $5k for freshmen, $6k for sophs, $7k for juniors, etc. There is also a total limit on loans in the first 4 (5?) years or so. This is for both subsidized and un-subsidized loans

The below information is from the U.S. Dep't. of Education:

How much money can I borrow in federal student loans?
It depends on whether you’re an undergraduate student, a graduate or professional student, or a parent.

• If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status.
• If you are a graduate or professional student, you can borrow up to $20,500 each year in Direct Unsubsidized Loans. Direct PLUS Loans can also be used for the remainder of your college costs not covered by other financial aid.
• If you are a parent of a dependent undergraduate student, you can receive a Direct PLUS Loan for the remainder of your child’s college costs not covered by other financial aid.

[OldShooter]

Quote:

Originally Posted by ivinsfan You forgot to add "And get off my lawn"....

[brucethebroker]

Quote:

Originally Posted by OldShooter My thoughts exactly. Lots of financial and relationship downside. I'm just trying to get smarter on the situation. Neither DW nor I consider this to be a good idea, but what we don't know is whether it is even necessary.

Ask for contact info and get in touch with the loan officer. Find out the real scoop.

Personally, I would rather write a check to help out and make it a gift-one time deal-help with the first year, etc. No expectations/no disappointments that way.

[youbet]

Quote:

Originally Posted by OldShooter Granddaughter is off to an expensive school this fall. DIL asked DW if we would consider cosigning her student loans as DS/DIL credit is poor. A a general principal I consider cosigning loans to be a bad idea. No need to discuss that here. But ... I didn't think cosigning was necessary for student loans. A little poking around the internet tells me that it is not for government loans but possibly is for private loans. Has anyone run into this? If there are government loans, why are private loans even in the picture?

We avoided this uncomfortable situation by simply letting our son know we'd be paying for the grandkid's college educations wherever they wanted to go. That's why we lived LBYM and invested thoughtfully all those years, right? It just comes out of our son's inheritance so no big deal to us one way or the other.

[pb4uski]

Quote:

Originally Posted by OldShooter Granddaughter is off to an expensive school this fall. DIL asked DW if we would consider cosigning her student loans as DS/DIL credit is poor. ....

Is the lender refusing to have DS/DIL cosign so they are turning to you? Or are DS/DIL unwilling to cosign?

Is there anything to be read into DIL asking you rather than DS? Is DS on board with asking you to be co-signers?

[Teacher Terry]

Then say no advice and I don’t want to hear the truth about how rare it is to have loan forgiveness and it would be understood.

[stephenson]

1. No.
2. If you have the money and want to help, help after considering the factors.
3. What were her high school grades? Does she work hard? What is her major? Did she get into a great school, or just an expensive one because really wanted to go out of state and it will be fun?

If the answers to 3 paint a picture of an amazing young woman who works and excels and has a passion, 2 is the right answer.

[Cayman]

Your GD may be able to take the loan out without a co-signer for a slightly higher rate. She should look into this.

[ivinsfan]

Since we've been warned off giving an opinion I'll just thrown in how many GK do you have and have you/are you willing to do the same for one and all. What happens if you co-sign for one and she defaults and they then all follow that path? Can you afford that?

If you can't afford it might be better to sign for the third and/or final year in school, when you have a clear picture of if they will graduate and be employable. IMO loan money is a bigger risk in the first/second year if they drop out or flunk out.

[workmyfingerstothebone]

I've heard many bad stories concerning co-signing, never heard a good one. On that note, we previously told our GK's the amount we would pay for college/trade school. Anymore than that amount is up to them on how to pay.

[RunningBum]

Quote:

Originally Posted by workmyfingerstothebone I've heard many bad stories concerning co-signing, never heard a good one.

That's probably because "I co-signed on a loan, and the kid paid it back after getting out of school and I never had to even think about it again" isn't really much of a story to tell, is it?

I'm on the hook for a couple small co-signed loans with my son's now ex-wife. After a couple semesters of that I gave a couple of personal no-interest loans, with a promissory note signed. One of the loans is being slowly paid off, while the other is deferred until after graduation as agreed. It won't surprise me if I have to eat those loans, but it also won't surprise me if I'm eventually paid back in full. I don't regret taking the chance on a hard-working person who had a tough upbringing. I'm not going to get into the whole story but she really had very few options.

Back to the OP's questions, I would hope you and your wife actually look at the paperwork before signing so you know what it is. That's your best clue, rather than asking us what it is you are getting yourselves into. I'll admit it is kind of confusing, because I think a lot of it is private loans with government backing. That's what Sallie Mae is.

[Texas Proud]

From what I understand you cannot cosign for a federal loan... my son has gotten his without any signature from me...

[workmyfingerstothebone]

Actually RunningBum, that is a great story to tell.

Happy to hear stories of such responsible actions taken in this day an age.
Thanks for telling.

[EA-Sports]

Quote:

Originally Posted by OldShooter Hmm ... I didn't realize that. Those are pretty small numbers and may explain the request to us. So apparently these really big debts that we hear about are primarily private loans.

Not really..approximately 90% of student loans in the US are federal student loans. There’s a limit for undergrad but no limit for graduate and parent plus loans. So when you hear stories of someone with high student loans usually it’s because that borrower got the capped undergrad and uncapped grad loans...or it can also be parents of the students not the students itself.

[Jeffman52]

Some interesting statistics can be found here

https://studentloanhero.com/student-...bt-statistics/

From that site this:

48% of borrowers who attended for-profit colleges default within 12 years, compared to 12% of public college attendees, and 14% of nonprofit college attendees.

[HadEnuff]

WE had the opportunity to co-sign a student loan for what DW and I were convinced was a bad choice (expensive private school for a questionable student) and we said no.

She managed to get the loans (which are now long in default) without our co-signatures. Not sure of the mechanism for how this happened, if she went to a different source, but clearly there is a way. This was 20 years ago, so maybe things are tighter now that so many defaulted loans are out there.

[SecondCor521]

As others have said, the reason private loans might be in the picture is that the size of federal loans for undergrad are capped.

The school starts with their sticker price, subtracts any merit scholarships, subtracts any financial aid, subtracts any federal grants, and subtracts any federal loans. What's left is what the family is expected to pay.

That amount may or may not equal what the FAFSA formula says the family can afford. If the FAFSA comes up with, say, $10K, and the school's leftover amount is $15K, then the kid has been "gapped".

In any case, whether it's $10K that FAFSA says, or $15K that the school says, sometimes families don't think they can or are unwilling to come up with either amount. So private loans are generally the answer.

Since private lenders don't have the government's ability to enforce repayment, for 18 year old kids without a job they're going to want a co-signer.

...

Another thing you can do is just pay the school directly. Then that doesn't come out of your $15K annual gift exemption amount. I'm not sure, but I think that such a payment or gift is treated by the next year's FAFSA process as untaxed income to the kid (and results in lower aid).

[pb4uski]

Quote:

Originally Posted by OldShooter Granddaughter is off to an expensive school this fall. DIL asked DW if we would consider cosigning her student loans as DS/DIL credit is poor. A a general principal I consider cosigning loans to be a bad idea. No need to discuss that here. But ... I didn't think cosigning was necessary for student loans. A little poking around the internet tells me that it is not for government loans but possibly is for private loans. Has anyone run into this? If there are government loans, why are private loans even in the picture?

Any update on what you plan to do?

[Hicks3456]

Quote:

Originally Posted by OldShooter Granddaughter is off to an expensive school this fall. DIL asked DW if we would consider cosigning her student loans as DS/DIL credit is poor. A a general principal I consider cosigning loans to be a bad idea. No need to discuss that here. But ... I didn't think cosigning was necessary for student loans. A little poking around the internet tells me that it is not for government loans but possibly is for private loans. Has anyone run into this? If there are government loans, why are private loans even in the picture?

Unless you have unlimited money - don't! Tell granddaughter to go to cheaper school. In the end fancy private schools mean little. Student loans are a lifetime commitment. I believe that expectations should be set early especially in retirement.

[oscalulo]

Loan forgiveness is incredibly difficult to navigate, but if you thread the needle exactly correctly, it does exist. That said, one of the reason people think it's a joke right now is all of the rules surrounding it that they do not educate you about until you go to apply for forgiveness and find out you were never in the program like you thought you were. For example, to the poster above who cosigned a private loan and think it's going to be eligible for loan forgiveness, it's not. Private loans are not eligible. Also, make sure your daughter is on the right repayment plan for her specific loan forgiveness that she hopes to qualify for - there are several programs she may qualify for as a teacher and/or as a public servant, she needs to figure out exactly which one and then get on the right repayment plan for that plan. That's a huge reason people are getting denied - so much so that Congress appropriated extra money to help those people who were rightly getting denied per the program rules but arguably because they were misinformed. https://www.studentloanplanner.com/blog/ is a good place to start to get educated in the BEGINNING of your repayment journey and not after years have passed where you assumed you were eligible when in fact you may not have been.