DOES MY CHILD NEED A CO-BORROWER?
Applying with a co-borrower may be the right option if you're not sure that your child will qualify on their own for a private loan. Normally, a parent or close relative acts as a co-borrower for a student's private loan.
A co-borrower is required if the student:
- Has limited credit history or no credit history
- Is an undergraduate student who earns less than $1,500 per month
- Is not a citizen or permanent resident of the United States
- Does not meet the age required to enter into a legal contract
What does it mean to co-sign a loan? Keep these facts in mind:
- Both the student and co-borrower's credit profiles will be evaluated and the decision will be based on the better of the two credit scores. A co-borrower who has a better credit score than the student borrower may help the student to secure a lower interest rate.
- A co-borrower joins the student borrower in the responsibility for repaying the loan and will need to sign a credit agreement that obligates repayment of the loan should the student fail to do so.
- We offer flexible repayment options that help students successfully repay their loan. These options reduce the chance that the co-borrower will ever have to make payments on the loan:
- No payments required while enrolled in school.
- Grace period of six to nine months, depending on program of study, before payments begin.
- Interest-only and graduated repayment plans, as well as forbearance options that allow students to temporarily reduce or suspend monthly payments in the event of financial difficulties.
- We offer a co-borrower release option that releases the co-borrower from the loan obligation after the student makes 36 on-time payments, successfully passes a credit review, and requests the release as provided in the Credit Agreement.
- We provide the co-borrower the same access to loan information as the borrower, ensuring that the co-borrower monitors the loan and the repayment behavior of the student.
If you choose to act as a co-borrower for your child, please remember that the student must initiate the application process.
