Need Advice: My sister wants me to cosign for a Sallie Mae student loan

[Anonymous]

Need advice.

My sister wants me to cosign for a student loan. She is finishing up her masters degree this year. She need to do finish up her PsyD by doing a "dissertation".This loan is to cover her living expenses for 2 years.

For reference, I have very good credit. The last time I checked (1.5 years ago) my score was 820. My home and car are paid off. No CC debt. Zero Debt.

The loan amount she gave me is $60K before interest and fees.

If I co-sign, what effect will this have on me?

1. How will my credit score be affected?

2. Will this affect my DTI ratio? Will this co-signed loan affect my ability to buy another home?

3. She also said I could be removed from the loan after she made 12 consecutive payments, is this true?

4. What other effects or consequences will this have on me or my credit?

Her credit is OK. She told me that her credit score is 689, which is too low to qualify on her own.

Thanks for the advice.

[MarineVietVet]

Hello and welcome to myFICO.

My advice is to never co-sign for anyone for any reason.

It's not worth the risk of your credit being ruined if the loan goes south.

[Anonymous]

JR_Bob_Dobbs - read many threads that co-signers went south due to the original note makers. Family is the worst. Never never never co-sign. If the loan goes south you may be swept away in the flood!

[Anonymous]

Yeah, I would never co-sign for anybody, especially family.

[Gunnar419]

---

@Anonymous wrote:

Need advice.

My sister wants me to cosign for a student loan. She is finishing up her masters degree this year. She need to do finish up her PsyD by doing a "dissertation".This loan is to cover her living expenses for 2 years.

For reference, I have very good credit. The last time I checked (1.5 years ago) my score was 820. My home and car are paid off. No CC debt. Zero Debt.

The loan amount she gave me is $60K before interest and fees.

If I co-sign, what effect will this have on me?

1. How will my credit score be affected?

2. Will this affect my DTI ratio? Will this co-signed loan affect my ability to buy another home?

3. She also said I could be removed from the loan after she made 12 consecutive payments, is this true?

4. What other effects or consequences will this have on me or my credit?

Her credit is OK. She told me that her credit score is 689, which is too low to qualify on her own.

Thanks for the advice.

---

I agree with what everyone else is saying: never cosign for anybody. Although you ask good questions about the impact this will have on you, the biggest impact is that as a cosigner you are 100% responsible for repaying that loan. 100% of the amount due will show up on your credit reports. If your sister gets hit by a bus or just flakes out, you'll pay and pay and pay. Furthermore, if she quits making payments and doesn't tell you about it (so you can start paying as soon as she stops), all those late payments will go on YOUR credit.

I also see red flags in this particular situation. She wants a $60k loan to pay for her living expenses? Why does she not work for her living instead? Many people manage to work and complete their doctorate degrees at the same time. Also her claim that a 689 score is too low to qualify on her own seems questionable.

Without knowing your sister it sounds as if she wants to take a free ride on her much better established sibling's credit, which does not sound good for her long term reliability.

[FocusedAndDetermined]

As much as I believe in helping family and friends whenever possible, I have to go along with the crowd on this one.   The answer to most of your questions is, yes - it will impact your scores and report.  I have no info on the removal after 1 year question.

Has she checked into work/study or applied for any scholarships/grants? There are tons of them out there for every age group, ethnicity, occupation, organization affiliation, etc.

[SCF]

---

@Anonymous wrote:

If I co-sign, what effect will this have on me?

1. How will my credit score be affected? This loan will be reported on your reports, so you will have an inquiry, new account ding, and any positive or late payment remarks on your report affecting your score.

2. Will this affect my DTI ratio? Will this co-signed loan affect my ability to buy another home? Yes, this debt will be on your report, and you are responsible to pay it if the original borrower is unable to, it may very well limit the amount you are able to borrow for a mortgage.

3. She also said I could be removed from the loan after she made 12 consecutive payments, is this true? This depends on the specific terms of the loan.  You should read them carefully and see what the conditions for a "co-signer release" are.  They may require more payments, or evidence that the borrower is less likely to default, like increased income or credit score since the time the loan was made.

4. What other effects or consequences will this have on me or my credit? This has the real potential to sour your relationship with your sister.  Unless you can freely afford to give her this money as a gift, and never need or want those payments back, this loan has the ability to cause very serious issues between you if she can't pay for any reason.

Her credit is OK. She told me that her credit score is 689, which is too low to qualify on her own. It can be difficult to qualify for private student loans on your own.  Generally, credit is one factor, but existing income is another factor.  Does your sister expect her income to increase $60k/year once she completes her degree?  A good rule of thumb is to try not to borrow more than you will make in your first year of salary after you graduate.  For some situations or professions (especially medical or legal), this can be different.

Thanks for the advice. No problem.

---

[cjane1]

Don't do it. If something was to go wrong and she couldn't pay you would be responsible and would cause a lot of family problems. If she wants to go back to school she needs to figure out how to do it on her own.

[Pway]

I agree with all the others here, do not co-sign for that loan.  I am sure she could qualify for the stafford loans sub and unsub loans as well as the Perkins loan.  Has she exhausted all her options.  

[Anonymous]

As someone who has gotten burned big time for cosigning SLs for family...don't do it. 

It's a harsh mindset, but remember that not everyone needs to go to college. If she can't afford it on her own, it might just not be her time yet.