The topic of student loans is one that is usually filled with a variety of opinions, as there are some proponents of private loans who point out that there are benefits of this particular type of college loan borrowing, while others feel that private student loans should be avoided at all costs and, at best, be the last choice of any college student. Here in the month of June many students may have exhausted their scholarship or grant opportunities and, for some, the maximum amount of federal student loans they can borrow may also have hit its cap. It’s at this point that many students may begin considering private loans and, as a result, are finding that there are numerous options when it comes to selecting a loan from a private lender to help meet tuition costs.
The problem that some students have usually comes in the form of needing a cosigner, as private loans can be quite different from federal loans in terms of who qualifies for this type of assistance. Also, private loans can be variable in interest and may not offer as many repayment options, but there are some benefits that these loans have advertised from certain lenders, particularly when it comes to those with a cosigner.
Understandably, most students may have their parents as a cosigner, and this can be helpful for those who are struggling to meet their college tuition payment, but again, there are advisers who often ask that students explore alternatives to private student loans before resigning themselves to this type of borrowing. As an example, some students may attempt to make payments throughout the semester in the hopes of getting a job or using funds that they have saved to meet student loan payments over a period of months rather than before their classes begin, but for those who are going the route where a private student loan with a cosigner is needed, there may be good news for responsible borrowers.
One of the benefits that some parents are seeing, when cosigning a private student loan, comes from certain financial institutions that may allow cosigners to be discharged from their obligation on a student’s private loan if certain qualifications are met. As an example, cosigners may be released from a loan at the borrower’s request after a set amount of payments have been made in a timely manner.
While this does not necessarily offset any of the disadvantages that come with a private student loan, those who may be hesitant about cosigning for a private loan have often found that the potential option of being released from the cosigner obligation can be a bit of a relief, particularly when the ideal situation of a private student loan borrower who graduates and finds an employment opportunity that will allow them to repay this debt is in place. It’s no guarantee that a student will be able to easily pay their principal and interest payments on time, but cosigners in some cases may only be on the hook for these particular loans from certain lenders for a set period of time, which may make helping their child borrow this particular type of loan easier.