If there's an important student in your life, one of the greatest ways you can help that student achieve the many advantages of higher education is to be a co-signer on his or her student loan. (Note: If your family’s income depends on the salaries of both spouses, both would be required as co-signers on the loan.)
Here’s why you should consider being a co-signer:
- As a creditworthy co-signer you can help that student qualify for the loan in the first place
- Your signature can help the student qualify for a larger loan amount
- You'll help the student borrow at a lower interest rate — decreasing his or her costs down the road
- When the student gets a loan and makes the payments on time, he or she will begin to establish a credit history
- By taking on and handling this obligation, the student will develop good financial habits early in life — for the rest of his or her life
And this is not a life-long commitment for you. As a co-signer, you can be released from the obligation after 48 consecutive on-time payments, subject to certain conditions.