Many student debt borrowers need to secure a cosigner to guarantee their student loans. Students typically do not have a substantial credit history, and cosigners provide lenders an extra sense of security. A guest article (written by my brother) already teased out the issue of cosigners, but I also wanted to discuss a few considerations that come into play when picking a student loan cosigner based on my own experiences.
As previously mentioned in a few prior articles, I received generous financial aid to attend college. However, my financial aid package did not cover all of my educational costs, and I was forced to borrow a small private loan in order to pay for my undergraduate degree. Since I was in high school at the time, I did not have a substantial credit history, and my student loan lender required me to have a cosigner guarantee my loans.
Naturally, people often ask their parents to cosign their student loans before considering other people. However, my parents had personal and financial issues that prevented them from cosigning my loans. I next asked my older brother to cosign my student loans, since he had been working for years, and I was pretty sure that he would make a good cosigner.
However, I eventually settled on asking my grandmother to cosign my student loans. It turned out that she made enough money from social security to be eligible as a cosigner. Also, it felt more appropriate when picking a student loan cosigner to ask an older member of my family rather than my brother who was just beginning his career.
Of course, older individuals typically are not as comfortable with technology as younger people, so it was difficult to have my grandmother go through the process of cosigning my student loan. In fact, I think we had to fax the documents to her, since she was unable to receive them through email and print them out. Eventually, my grandmother cosigned this student loan, and I was able to use this money to pay for my educational expenses.
I did not think much about my decisions about picking a student loan cosigner until years after my grandmother cosigned my student loans. Several years after I graduated from college, and while I was attending law school, my grandmother passed away. She was over 80 years old when I asked her to cosign my student loans, so I should have imagined that this might occur while I was repaying the debt.
I soon regretted my decisions about picking a student loan cosigner when I realized that the passing of my grandmother could cause me some issues with my student loan lender. I reviewed all of the student loan documents that I signed when the debt was originated, and I discovered that the death of a borrower or cosigner was considered an event that could put a loan into default. I was nervous that if my student loan went into default, it could appear on my credit report, and this could impact my ability to borrow more student debt. I also thought that defaulting on a student loan might look bad when applying to become an attorney.
In order to prevent my loans from going into default, I made sure to inform my lender as soon as possible that my cosigner had passed away. I went online to my lender’s website, and I found a way to send an email to the manager who was responsible for my account. I informed the manager that my grandmother had passed away, and that she was the cosigner on my student loans. I also informed the lender that I would be willing to begin paying off the loan in order to keep the debt current.
The manager told me that if I began repaying the loan, my debt would remain current and in good standing. From that point on, I made the monthly payments on the loan during my final semester of law school and after I entered the workforce. The loan that my grandmother cosigned was never put into default, and I never had any issues with this debt.
My story illustrates a few things you should keep in mind when picking a student loan cosigner. I hate to sound morbid, but all things being equal, it might make sense to choose a younger cosigner. The death of a cosigner can have a huge impact on your debt and can create a number of headaches. Of course, if you are like me and you have little choice about who you choose to be a cosigner, you might have to simply select an older relative. However, if you can make a decision between a few cosigners, it might make sense to choose a younger cosigner.
Furthermore, if anything happens to a cosigner, communication is the key. If a lender thinks that a primary borrower is responsible and will continue paying debt on time, they will likely maintain the status quo. As a result, borrowers should reach out to lenders immediately if the status of their cosigner can influence their debt.
Cosigners are necessary for numerous student debt borrowers, since many lenders are unwilling to lend money to students who do not have a comprehensive credit history. However, there are a few things borrowers should keep in mind when picking a student loan cosigner. In addition, borrowers should contact their lenders as soon as possible if the situation of a cosigner can impact someone’s student loans.