Student Loan Consolidation Info - Cosigner Loans for Students and Loans with No Co-signer

By: Ian T Wilkie

The individual who guarantees a loan will be repaid if the original borrower has bad credit is called a co-signer.

Students often leave home without a credit card and they have never had a reason to have a home loan or an automobile loan. Due to these facts, most students do not even have a credit score. Many times our students have made poor choices. Often times, students have bought more than they can pay for on a credit card making it difficult for them to make their payments.

Having no credit score at all is better than a credit score full of late or never made payments , and both situations will put the potential borrow into what lenders consider a high risk category. Federal student aid program lenders, or any loan officer will be looking at this with a cautious eye. If these examples apply to you, your loan may be denied or in certain cases be approved but with a higher interest amount applied to the loan incase you default.

Applicants with little credit history or bad credit can and should obtain a co-signer. Many times, this will be your parents. Lenders will decide whether or not to lend you money based on your parent’s credit history, credit score and debt to income ratio. At the same time, the credit quality of the parents becomes the original factor for deciding the interest rate assigned. Parents and students with good FICO scores will do better on interest rates than someone with a bad credit score.

Interest rates of 4% will cost over 5 thousand dollars and at 6% it rises to over ten thousand dollars. A 2% variation does not sound like much, but given contemporary borrowing levels and compounding, such a scenario is not unrealistic.

More and more students and parents are getting student loans for up to $100,000 to finance their education. At an interest amount of 6.8% the amount due per month will be over $550 every month just to keep it from adding to your balance during the time the student is in school. The annual interest amount is almost $6,600.

The official amount for a Perkins need based loan, which is currently 5%, brings those totals to just about 400 dollars every month and just about $4800 annually. Remember the example is assuming repayment will begin immediately while the student is in college. By waiting until you are out of college for six months to make payments, which is common practice, will cause your amounts to be much higher if the interest rate was not deferred or subsidized.

When using a co-signer who has a great credit score, you are more likely to get lower interest rates and pay less over the life of the loan. At the popular lending sites, you can see the numbers on different interest rates with their loan calculator to figure your savings. Keep this information in mind when considering any student loan consolidation info.

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Ian T Wilkie has also written other well-written student consolidation loan information articles on Consolidation Direct Loan Student, Consolidation Department Education Loan Student, Consolidation Loan Online Student, Consolidation Loan National Student and other insightful Student Loan Consolidation Info articles and is the director of - My Student Loan Consolidation Information your number one student resource website for Student Consolidation Loan Information including Private Alternative Student Loan, Student Loan Consolidation, Student Loan For College California, Program Student Loan College Education Loan.

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