June 25, 2018
I have twins going to college next year and another set of twins going in two years. I have a part time job, my husband works full time. I pre applied with Sallie mae and College Avenue in my daughters name with me as a cosigner and the interest rates on both are 11% or higher. would I get a lower rate if I changed the cosigner to my husband or added him? How do I get this rate lower? For my daughter, it’s a cost of $20k per year, I don’t even know what my son’s tuition will be yet.
May 3, 2014
You are definitely right that those interest rates are incredibly high.
There are several options.
First, I would try getting into contact while your kids respective financial aid offices. See if the school can provide any more grant or scholarship assistance. To borrow 20k a year is a huge financial burden for both you and your child. This high level of borrowing can be dangerous. I encourage all parents to have a sit down meeting with their kids to discuss the investment, loan burden, and what life will be like with all of that debt. Many students regret that level of borrowing.
If you decide that borrowing is a must, the first student loans should definitely be the federal loans in your child’s name. The financial aid office can go over those details.
Next comes either private loans or a Parent PLUS loan through the federal government. Given that the best interest rate you have been able to find is 11%, a parent PLUS loan might be the best option. However, these loans are borrowed in YOUR name, not your childs. If you go this route, be sure to discuss who is responsible for the debt and what your expectations are. In the eyes of the government and the loan collectors, it will be your sole responsibility.
For private loans, you can check with more lenders. Credible has a nice system that will allow you to check 5 or 6 lenders at once: https://studentloansherpa.com/credible-student-loans-review/
With regards to your husband, it is very possible that using him as the cosigner instead of yourself will result in better interest rates.
Finally, I should point out that if you go the private loans route, it is quite possible that each passing year will get progressively more difficult to find student loans. As the balances grow, lenders will be increasingly weary to send more money your way. Keep that in mind when you do your planning.
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