topic Re: Student loans, and auto loans in General Credit Topics

Student loans, and auto loans

Anonymous — Wed, 13 May 2020 03:13:10 GMT

Hi all, I need some advice. I need to co-sign student loans for my child entering college in the fall, refinance my current auto loan (I am upside down because my credit was terrible when I bought the car- but is much better now) AND also need to buy a second family vehicle (used). Also, I have to begin paying my own student loans back from graduate school. Do I do this all at once? I don't want unnecessary derogatory marks on my credit, now that I have been building it back up. I have paid off all of my credit cards. I owe $800O on an auto loan for a vehicle worth about $5,000. I have about $35,000 of my own student loan debt. Any advice would be greatly appreciated! Thank you.

Re: Student loans, and auto loans

Anonymous — Wed, 13 May 2020 04:14:37 GMT

Hey! I was just wondering what the cost of tuition was looking like for your son? Also, do they have any money saved up for college? Are you looking to sign on private loans I am assuming to cover the difference between what their FAFSFA covers vs what tuition costs?
I just graduated myself a bit ago actually and I maxed out my federal loan options and requested a co-signer for some loans through discover. This would definitely be my advice because after I believe 24 on time payments you can request to be removed as a co-signer. I focused on building my credit my first two years of college to request any loans my parents co-signed they be removed once I hit the 24 month mark and actually ended up signing on my own loans my last two years(before my credit fell apart) I would recommend doing something like this but I am of the opinion the student should take as much responsibility as possible like maxing out their federal loans...etc assuming that money isn't infinite of course.

I would say definitely focus on paying all minimum payments at least on your debt to make sure you don't miss any payments. Luckily your son will be in deferment so you don't need to pay anything back however, in order to be released as a co-signer you should st least pay the minimum interest payments each month.
if you are talking about parent plus loans that technically is not co-signing since I understand the student has no obligation to pay back those loans and that falls entirely on your shoulders. I'd be more than happy to offer advice if you wanted to expand a bit!

thanks!

Re: Student loans, and auto loans

recoveringfrombk7 — Wed, 13 May 2020 04:18:43 GMT

@Anonymous wrote:
Hi all, I need some advice. I need to co-sign student loans for my child entering college in the fall, refinance my current auto loan (I am upside down because my credit was terrible when I bought the car- but is much better now) AND also need to buy a second family vehicle (used). Also, I have to begin paying my own student loans back from graduate school. Do I do this all at once? I don't want unnecessary derogatory marks on my credit, now that I have been building it back up. I have paid off all of my credit cards. I owe $800O on an auto loan for a vehicle worth about $5,000. I have about $35,000 of my own student loan debt. Any advice would be greatly appreciated! Thank you.

This is a lot to unpack.

You're going to have a hard time refinancing that vehicle, you're really upside down on it.

Is your student debt federal or private? If federal, if you cannot afford the payments you can do income driven repayment (or if you qualify for PSLF and plan to use it, you should do an IDR). If it's private, what is your %?

Why do you need to cosign loans? Typically this means private loans. Did you exhaust all grant options/financial aid/federal resources? Is there a state school/some other option? I just caution really hard on eating 4 years worth of debt. I have a PhD and graduated with 225k in debt. I'm doing alright and qualify for PSLF on most of it (175k), and trying to get my mom off my private loans, but it's a significant stress. For me in terms of $$ and knowing the 35k I have left to go on the private loans is harming my mom's DTI. And, I'm almost a best case scenario, graduating into 92k/yr. You'll do what you need to do, but just really be sure about all of it and know your exit plan.

What are your scores/income like?

Welcome to the forums!

Re: Student loans, and auto loans

Anonymous — Wed, 13 May 2020 04:30:34 GMT

@recoveringfrombk7 @I wanted to echo this. I know how expensive college can be and it is tough for a child to pay for all of it. I was lucky enough to get all my loans through lenders that allowed for removal of a co-signer after 24 on time payments. I would always go through all my federal options prior to asking parents for help. I did not get any assistance due to parental income but my parents were not in a position to help me with my loans minus the co-signing. I needed up taking out $32k in federal loans and $22k in private line that are entirely in my name now. I caution against co-signing because you never know what th future holds/what kind of job they will have or their ability to repay and having that burden is a hard one. I also was unlucky to have extremely expensive state school options. Again we cannot really tell you what to do on this because everyone values are different.

also I agree, getting that refinanced might be difficult. Once you give income metrics we can definitely help out more!

Re: Student loans, and auto loans

recoveringfrombk7 — Wed, 13 May 2020 04:34:49 GMT

@Anonymous I'm with Firstmark/Commonbond and can drop my mom at 24 too. I just did not realize the impact of her cosigning my undergrad and I had super predatory Sallie Mae loans with 13% rates. Ballooned 38k to 55k while finishing my PhD and then needed to file BK because my federal and private loans came out of Grace and I got rolled so hard. Mom helped out big, so now I'm at 6.25, and I'm able to pay 150% payments each month. I just feel really bad that she's kind of stuck until I can release her.

Re: Student loans, and auto loans

recoveringfrombk7 — Wed, 13 May 2020 04:37:42 GMT

Oh @Anonymous if your loans are federal and you're really in a tough place right now, you can go into forbearance for COVID-19 and interest is 0%. It's only delaying the inevitable, but if you can dig out from the upside down car it could be worth it maybe.

Re: Student loans, and auto loans

Anonymous — Wed, 13 May 2020 04:41:31 GMT

@recoveringfrombk7 @I am sorry to hear that! That is really tough. It definitely has an impact and I felt really bad for the two years I had them co-sign because I don't think I fully realized what it did to their DTI either. Student loans are hard because education is so important (IMO) but it is nearly impossible with current prices to go without assistance of some kind. It is a tough time with how big the gap is between tuition and private loans. It is scary because of the emerging reliance on parent plus loans where the parent takes the debt on behalf of the student to cover the difference and honestly co-signing is miles ahead of this type of borrowing based on it being strictly on the shoulders of the parents. It's tough times. Hopefully it all works out and that is a huge interest rate cut!

Re: Student loans, and auto loans

Anonymous — Wed, 13 May 2020 04:43:52 GMT

@Anonymous i also agree I would say take advantage of this time of forebarence (I believe it is up in September) to take care of that car loan as quickly as possible. Most lenders won't refi a loan over 1:1 loan to value. This also depends on income DTI and how old the car is since most lenders won't go past 10 years and usually like 7-8 years old as a max point.

Re: Student loans, and auto loans

Anonymous — Wed, 13 May 2020 10:37:51 GMT

Thank you! The difference after FAFSA, scholarships and grants is about $18,000 per year. We are not doing PLUS loans since I still have my own grad loans to pay back. Thinking of co-signing for her with Citizen's then having my name removed from loan after I think 3-4 yrs of payments (also not making payments until after she graduates).

Re: Student loans, and auto loans

Anonymous — Wed, 13 May 2020 10:45:48 GMT

Hi, thanks for responding. She has the maximum in federal loans through FAFSA ($5500), plus $10,000 in merit scholarships and grants per year, plus work study. The remaining balance for tuition each year is about $18,000. She is apparently not eligible for additional federal loans, so private it is. (Which means she needs a co-signer) All in all, with federal and private loans, she will probably finish her bachelor's with about $100,000-$130,000 in loan debt. The thought of this kills me, and it's a public university.
my current credit score is about 680 but it continues to increase. I will apply for loans at the beginning of July.

Re: Student loans, and auto loans

Anonymous — Wed, 13 May 2020 10:50:43 GMT

Right- car is a 2014 with 125,000 miles so it's definitely possible they won't refi at all. My income is about $63,000/yr, and I have about $35,000 of my own student debt from grad school to pay back but that has been put on hold until at least Sept.

Re: Student loans, and auto loans

Anonymous — Wed, 13 May 2020 15:48:24 GMT

You have quite a lot piling onto your plate, so I think at this time you should forgo the car refi. Simply because it's another HP you can do without at the moment. And it wouldn't really do much good unless you have the cash to makeup the difference. Which would also take away cash from your down payment on a second vehicle, one that you don't want to be in the same situation with later.

The best way to ride out being upside down is to just finish out the loan and use it as a secondary car, or just sell it outright.

Re: Student loans, and auto loans

Anonymous — Wed, 13 May 2020 18:13:59 GMT

@Anonymous i will echo this definitely ride out the car loan.

@Anonymous @Now to get to the student loan. My opinion is to utilize either citizens or discover (discover definitely does 2 years for removal) and have your son check for pre qualifications for credit cards and get one to use responsibly. The reason this is so important is because there are loans out there that require as little as $10k income 2 years credit history (revolving) and a 660 score or higher and if you hit all of those things they will allow your son to sign on his own loan.

this is kind of my thought process.... co-sign for your son have him get a credit card and make minimum payments ($50-$60 bucks a month) on his student loan balance whether that is made by him getting a job or by you this will start the clock on the release of co-signer requirements. I would recommend using some of the work study money to make 60 dollar a month payments for two years and then request to release you as a co-signer. Now at this point his credit should meet requirements for quite a few lenders because of 2 years of positive payments on student loans and 2 years of responsible credit card use and in two years you are off Scott free of all of the loans and future loans while still putting your son in a position to succeed.