Do I Need a Co-Signer for My Student Loan?
How a Co-Signer Can Help You Qualify
It's time to start thinking about how you're going to pay for college. Higher education isn't cheap, but it's an investment that pays off in the long run. There are plenty of options that you should look into when it comes to paying for school. Always make sure to take advantage of free money first. Beyond free money, there are private student loans, but you might need a co-signer to qualify for those.
Student Loans Bridge the Gap in Paying for CollegeOne of the first things every student and parent should do when applying for financial aid is to fill out the Free Application for Federal Student Aid (FAFSA). You should complete it after October 1st of your student's senior year of high school, and it needs to be done each year. The FAFSA will help to determine the financial aid you are eligible for, and give you a better idea as to your financial situation going into college. When you complete the FAFSA, you are applying for federal and state grants, federal student loans, and federal work study. Remember that grants and scholarships are free money for college. Still, even with a strong financial aid offer, many students could use a little extra help in bridging the gap.
This is where private student loans come in. For students to qualify for the most competitive private student loans, they may need a co-signer. That may lead you to ask these questions: What is a co-signer? How does someone become a co-signer? How can a co-signer help me qualify for a private student loan?
Who Can I Get to Co-sign My Student LoanAs you look into a private student loan for college, like the NC Assist Loan, there's a good chance you may need a co-signer. The NC Assist Loan is an alternative education loan offered by College Foundation, Inc., a non-profit organization committed to making the dream of higher education come true for North Carolinians.
Competitive loans frequently require higher credit scores for borrowers to qualify. Many students simply don't have the credit history necessary to have these credit scores. A co-signer is someone with a higher credit score that agrees to share responsibility for your loan.
Your co-signer is doing you a big favor. They should be someone close to you that also trusts you and is invested in your education. In order for someone to co-sign your NC Assist Loan, that person must be a qualified relative. Parents, stepparents, grandparents, siblings, spouses, sons, or daughters of a student loan applicant all count as qualified relatives.
How Does a Student Loan Co-signer Help Me?There are all kinds of benefits to getting someone to co-sign your student loan. Chief among these is that a co-signer can help you qualify. For a competitive student loan like those from NC Assist, this can make a big difference. Interest rates from the NC Assist Loan can end up being lower than Federal Direct Loans. On top of that, the NC Assist Loan has no fees. That means you never have to deal with an application, origination, or prepayment fee for your student loan.
While these differences may seem small at first, an interest rate that is just a point or two lower than a Federal Direct Loan could end up saving you thousands of dollars over the course of the life of your loan.
What Does My Student Loan Co-Signer Need to Know?If you're going to ask someone to share such a big financial responsibility with you, it's only fair that they understand what they're signing up for. That's why there are specific criteria that your co-signer must meet.
In addition to being a qualified relative, your co-signer must also be at least 21 years old and a U.S. citizen. They'll need to have the right credit score to qualify, and when they sign, they'll be guaranteeing that the borrower's debt will be repaid and accept equal responsibility for the loan. It's also important that they know the loan may appear on their credit record.