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Going to need to cosign Student Loans for my son....HELP!

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New Contributor

Going to need to cosign Student Loans for my son....HELP!

Hey everyone, 

I am new to this student loan stuff. My ex-wife handled it all for my oldest and never discussed it with me. Now that my son is going off to college, she dropped it all in my lap and said "It's all on you."

 

A Few Questions I have: 

  1. What Credit Reports do they pull for Loan Apps?
  2. What Credit Score will be needed to successfully get a loan?
  3. As a cosigner, will a really old collection (not paid) ruin my chances of cosigning?
  4. He will be living off campus, Will we be able to use student loans for off campus housing?
  5. Are there more options available than Sallie Mae? 
  6. If so, How do we choose who to go with?

I am sure there are many more questions that I am not thinking of but this is a start.

 

Thanks in advance,

-Solo



7/1/2017 FAKO Score by: CreditWise (Cap1) 645.

7/22/2016 Scores by MyFICO: Exp - 595 TU - 607 EQ - 621
7/20/2016 Scores by CCT: Exp - 595 TU - 597 EQ - 613 (SOME ITEMS DIDN'T UPDATE)
6/20/2016 Scores by CCT: Exp - 586 TU - 592 EQ - 603
Starting FAKO Scores were all low 500's Aug 2015.
Message 1 of 9
8 REPLIES 8
Frequent Contributor

Re: Going to need to cosign Student Loans for my son....HELP!

We'll need to know more about your income to point out what other loan options are out there for you.  Sallie Mae has better interest rates if you start paying at least the interest as soon as the loan is dispersed via automatic deductions.  I'm not sure about how stringent the loan requirements are, and I'll leave that to others in this thread.  

 

I would ask you this though, do you plan on paying the loan back yourself?  If not, and you expect your son to pay it back, please think very carefully about cosigning on this as it can have long term negative consequences to your financial future.




Message 2 of 9
New Contributor

Re: Going to need to cosign Student Loans for my son....HELP!

Thanks for the response Robert.

Yes, my son and I have talked about it. I just paid for his first 2 years myself. He is willing to take on the loans. He is an Accounting Major with a 3.7gpa. I do not think there will be any issues with him getting a job and paying it back after graduation.

We have also discussed if it ever looks like he will not be able to make a payment. Don't be too proud to admit it and ask for help.

My income is just over 6 figures. I just have a high UTIL and that one collection from 6.5 years ago. It is move out fees from a small 475 sq apt that they claimed over 1500 in cleanup and painting fees. I had asked for an itemized list and I got a one line item painting/clean up: $1500. (Plus they kept my security deposit)


7/1/2017 FAKO Score by: CreditWise (Cap1) 645.

7/22/2016 Scores by MyFICO: Exp - 595 TU - 607 EQ - 621
7/20/2016 Scores by CCT: Exp - 595 TU - 597 EQ - 613 (SOME ITEMS DIDN'T UPDATE)
6/20/2016 Scores by CCT: Exp - 586 TU - 592 EQ - 603
Starting FAKO Scores were all low 500's Aug 2015.
Message 3 of 9
Established Contributor

Re: Going to need to cosign Student Loans for my son....HELP!

My opinion, federal loans are better than private (many more options available for paying it back). Make sure he goes that route first (and you shouldn't have to cosign). Then if you need to borrow a little more via private loans, just shop around for best interest rates. Many will pre-qual you without a hp.
Message 4 of 9
Frequent Contributor

Re: Going to need to cosign Student Loans for my son....HELP!

With your income OP, Sallie Mae is likely your best option.  As I stated earlier, you can get an interest rate discount by beginning to pay the interest via auto-pay as soon as the loan is dispersed.  This will help him stay ahead of the interest on the loan and keep the principle the same as when he takes the loan.  

 

He's in a good field and should be fine.  It's good he'll have some skin in his education.   Good luck.

 




Message 5 of 9
New Contributor

Re: Going to need to cosign Student Loans for my son....HELP!

He is going to come out with some experience in his field too. I write some software as a side gig for a friend's company. She mentioned she needed accounting/bookkeeping/invoicing and some payroll/HR functions. She hired my son. He did it full time last summer and this summer and 15 hours/week during school.


Thanks for the advice,
-Solo


7/1/2017 FAKO Score by: CreditWise (Cap1) 645.

7/22/2016 Scores by MyFICO: Exp - 595 TU - 607 EQ - 621
7/20/2016 Scores by CCT: Exp - 595 TU - 597 EQ - 613 (SOME ITEMS DIDN'T UPDATE)
6/20/2016 Scores by CCT: Exp - 586 TU - 592 EQ - 603
Starting FAKO Scores were all low 500's Aug 2015.
Message 6 of 9
Established Contributor

Re: Going to need to cosign Student Loans for my son....HELP!

I'm not too familiar with private loans, so take my advice with a grain of salt...

"What Credit Reports do they pull for Loan Apps?
What Credit Score will be needed to successfully get a loan?"

This is a question for each lender. It will be up to them, and if you speak with a representative they should be about to give you a better idea as to their requirements. You clearly meet the income aspect, but that high utilization probably won't look good to them. You can give your score a huge bump by paying them down lower (ideally below 8.9%, and AZEO). They should be able to tell you what lenders they typically pull from as it varies per lender (and possibly other circumstances including pulling them all at their discretion or different CBs based on geographical location?). You could also search the internet for creditpulls for each lender, though the results could be old or inaccurate for your circumstances.

"As a cosigner, will a really old collection (not paid) ruin my chances of cosigning?"

Yes, it could be possible that they would reject it. There is also a possibility they just may not accept you as a cosigner which might at least save you an inquiry. I'd suggest sitting down and talking with a representative before putting in the application. They might have some good advice. To my knowledge that collections won't matter of it's old, it's dinging your score and you might get turned away just for having it. You have to figure out if it's more worth it to okay it off or dispute it to raise your score or just go ahead and pay it (even though we both know it's a throne of lies).

"He will be living off campus, Will we be able to use student loans for off campus housing?"

Federal loans can be used to pay for housing. This is included in the cost of attendance estimate to determine what the above covered needs to be. This can also be negotiated with financial aid too (my University was able to reduce my mandatory meal plan to reduce my required expenses). They also offer things such as many school scholarships and work study that can only be offered through the FAFSA. The deadline is soon if not passed for the upcoming year.
Private student loans can usually cover housing too. How the loan can be used is covered in the fineprint and you can also ask them.

"Are there more options available than Sallie Mae?
If so, How do we choose who to go with?"
Absolutely. Besides federal student loans and federal parent loans, you can go with whichever private student loan lender you want. They will reach have their own rules, etc. There are also some that are more flexible if the lender runs into trouble (actual programs). and may work with you more but that is usually not the case. Another reason people try to get federal loans first, then private if needed. You can always refinance the federal loans later, especially if you only want to make one payment.
I've heard a lot of horror stories about Sallie Mae but also some good stories about their assistance programs (hard to find out about but I recall that they do have them). The same can be said for a lot of student loan lenders though. I've heard a lot of good things about getting student loans from a credit union, such as Navy Federal. They have great rates and more flexible lending requirements. They also often have a lower cap on maximum loan amount if that's an issue. Interest rate is important but I would shop around in terms of details and options, and definitely read up on each lender's reputation.
Who you go with will be up to what the two of you decide your needs are but if you don't like what you pick, you can always refinance the loan later if you're in a good place (DTI and credit report/ score?).
Good luck!



Message 7 of 9
Frequent Contributor

Re: Going to need to cosign Student Loans for my son....HELP!

I have experience with the private student loans. I would suggest that you exhaust all other options first before going with a private student loan (Pell Grant, Federal student loans: Sub. and Unsub.first). Those loans are guranteed. Many schools will let you take max payment on the student loans. When I was in school I was taking 8 credits per term, and would receive around $3000 in student refunds. The private student loans are going to be based on your credit. I do not see your current FICO scores, however, for the private student loans they are usually looking for 720+ FICO scores, and that old collection account more then likely will hurt you. They are looking for very very clean profiles when it comes to private student loans. The reason for this is because the interest rate is much higher then then federal student loans. So typically people turn to these once the federal side is used up. With that being said people typically will have $60k in student debt on a bachlors when the federal loans are all used up. So the really clean credit file gives assurance that the loan will be repaid. Hope this helps.

Message 8 of 9
New Member

Re: Going to need to cosign Student Loans for my son....HELP!

Solo, 


Depending on when that unpaid debt occurred it could hurt your chances of acquiring a private loan through a bank, and will most likely affect the interest rate you get approved for, which is a bummer.

 

I think that you would stand a better chance of getting a favorable rate through the federal student loan program. They have parent loans called PLUS Loans. Here is an article that will give you some helpful tips about applying for federal student aid.

Message 9 of 9
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