Private student loans are loans taken out to help pay for college. Many people opt for private student loans after their federal student loans are maxed out and because you can use them for things that are not covered by your federal student loans, which typically only cover tuition. Private student loans can be helpful to cover extra costs that may accrue while you’re in school or to help with things like housing, which you may have to pay out of pocket.
These types of loans are given out by private organizations and individuals, including credit unions, banks, and state-linked organizations. Private student loans often have strict terms and conditions for the loan, and may not allow for any relaxation or wiggle room in loan payback terms.
While most private student loans require the loan is paid back after the completion of studies, some may insist on payment during your studies as well.
More often than not, private student loans wind up being more costly than federal loans, simply due to their higher interest rates but offer increased flexibility.
Eligibility criteria for private student loans without a cosigner depends on the credit score of the individual, which usually needs to be 670 or above; otherwise, you might need a cosigner with a higher credit score. You might also need a private student loan cosigner if you do not qualify for the amount of loan you want to take out.
A cosigner is a person who will, quite literally, cosign your application for a private student loan and assume shared responsibility for the repayment of the loan.
Also, if an applicant does not have a good enough credit score, they might require a private student loan cosigner so that if the applicant (you) are unable to pay back the loan, or fail to do so for any reason, the cosigner is legally bound to pay back the entire loan amount, including interest on your behalf.
This means that cosigning on a private student loan for someone is a big responsibility and shouldn’t be undertaken lightly. Someone should only consider doing it for people they truly trust to fulfill their financial obligations.
The good news is that if there is someone willing to be a private student loan cosigner for you, they would be doing you a huge favor!
For instance:
Remember that the name of the game in building good credit is consistency. If you keep making consistent payments, your credit score will go up.
In many cases, if you make at least 12-48 loan payback payments without missing one (depending on your lender), you can then opt to release your cosigner from the legal obligation of paying back your student loans. This is referred to as a cosigner release.
Essentially, you become a sole borrower that is 100% responsible for the loan. However, keep in mind that those 12-48 payments must include both principal and interest payments.
You can get a student loan without a cosigner, but it may be difficult for students, especially those right out of high school that has not yet established a credit history.
Even if that student does have a good credit score, they still might not qualify to take on the whole responsibility of paying back the private student loan, plus interest, without a cosigner to guarantee the loan.
However, don’t lose heart. Just because it may be challenging, doesn’t mean it’s not possible. You might be able to qualify for a private student loan without a cosigner if you meet the minimum credit requirements, and meet the income requirements of the private student loan application.
Other factors can affect the chance of you getting a private student loan without a cosigner, including:
Ultimately, if someone has agreed to be a private student loan cosigner for you, they are taking on risk on your behalf. Honor that risk by making your payments faithfully and on time, and if it’s an option, release them as a cosigner as soon as feasible. Oh, and don’t forget to say thank you!
If you’re considering being a private student loan cosigner, we have tools to help you weigh your options. BestStudentLoan.com also allows you to compare all the best programs. Contact us today and let us know how we can be of service.
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