If you’re struggling to qualify for a private student loan, you may have to get a little creative to get the money you need to pay for college. First, you can look for a student-friendly lender that is known for helping students get a loan without some of the more stringent requirements or a cosigner. The other way to get the money for school is to find someone who will be a cosigner on your loan. Millions of students every year have problems getting a loan and could benefit from a cosigner, but they don’t know how to get a cosigner to agree to take on the responsibility of paying the loan if you default. Here’s how to identify a good student loan cosigner.
Good Financial Standing
The main reasons why you can’t get a loan on your own are either you lack a credit history or you have a poor credit rating. Adding a cosigner gives lenders a bit more confidence that your loan will be paid in full, even if you stop making payments. As such, the person you choose to be a cosigner must be in good financial standing with a strong credit history. A lender will never approve two people who have no credit or poor credit ratings because this does nothing to lessen their risk. Parents are usually good choices for cosigners because they are old enough to have established a solid financial foundation.
Good Health
Many student loan lenders require the loan to be paid in full if a cosigner passes away before the loan comes due. Even if you’ve made all your payments on time, you could find yourself in a bit of a financial mess if your cosigner dies. This isn’t very pleasant to think about, but it’s important to consider the health of the person you select to cosign your loan because you need to protect your own financial future. You may be able to refinance your student loan in the event of your cosigner’s untimely death, but it can be a hassle and there’s no guarantee you’ll be able to qualify for the loan on your own even then.
Good Relationship
Money issues can be the cause of great strain among people, even those who love each other. For this reason, you must make sure your relationship with a potential cosigner can handle the potential stress that being your financial safety net can add to their lives. Of course, as long as you make the payments on time and in full, your relationship shouldn’t be damaged at all. But, if you fall on hard times and can no longer make the payments, this is where your relationship bond may be tested. Your cosigner should be aware that if you default on the loan or make late payments, their credit score will be negatively affected. If they’re not and you miss a payment or two, your relationship could be irreparably damaged.
Be sure to discuss the ramifications of cosigning a student loan with any potential cosigners before you enter into an agreement. It’s a big responsibility and one that not everyone is comfortable with. But, if your relationship is strong going into the cosign situation, and you’re both aware of the consequences of defaulting on the loan, you should be able to keep your relationship intact through the final payment.
Conclusion
It can be challenging to find someone to cosign your student loan, especially if you haven’t been great with money in the past. But, if you look for these three qualities and you fully understand your obligations, you should be able to secure the money you need to get your college education.