Cosigner on Student Loan- Requirements and Responsibilities
Are you a student and seeking financial aid to complete your education? Are you interested in applying for an international loan? Well, you need to plan wisely before applying for it. For all the international and abroad student loans, there is an approval process in which the lender evaluates whether you are financially capable of paying the loan or not. Also, they calculate the probability of getting the principal amount along with the interest.
Being a student, you may not have any financial history. This is what makes it difficult for the lenders to evaluate your financial soundness. Thus, all the international loan lenders need a cosigner for the students to accept the loan. In this article, we will cover all the aspects of cosigning an international student loan.
Who is a Cosigner?
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A cosigner is a creditworthy individual who understands and accepts that s/he will be responsible for paying back the loan if the borrower is not able to do so. A cosigner might be your
- Or anyone who supports your education goals
How to Ask Someone to be a Cosigner?
It is not an easy task to ask someone to be a cosigner for you. For this, you need to explain your education goals to your potential cosigner so as to develop a trust in you. Tell them that you can achieve the goals of your life if they help you. You should also say that cosigner can be released once you have graduated and have made 12 consecutive interest and principal payments on time.
Thus, to garner maximum benefits, choose your cosigner wisely.
Following are the benefits of applying with a creditworthy cosigner:
1) It becomes easier for you to get a loan approved. If your cosigner has a long good credit history, it would be helpful for you when you don’t have any credit history and are unable to pay the loan.
2) With the more creditworthy cosigner, it is more probable that you will get a loan on the lower interest rate. The rate of interest is the cost of borrowing money. It can fluctuate within a range according to the creditworthiness of the borrower and cosigner. Someone having a good credit history is more probable to get a lower interest rate as the lender is undertaking less risk.
3) By having a creditworthy cosigner, you establish a good credit history. It will help you in the future loans.
Requirements for Becoming a Cosigner
- A cosigner must have lived in the United States for the past 2 years and have a permanent address or US citizenship.
- An established credit history, a stable job, and regular income are must to become a cosigner.
- The lender evaluates the total debts (credit card debt, car payments, mortgage, etc.) and total income of the cosigner. So, s/he should have the ability and willingness to pay the loan in case you fail to do so.
During the loan process, a cosigner may be asked to provide the following things
- Employment and/or income information
- Social security number
- Contact number and current address
- Payment amounts of monthly rent and/or mortgage
Responsibilities of a Cosigner
The student borrower and cosigner share an equal responsibility to pay the loan. They need to fill an application form together while applying for the loan.
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Cosigner release is at the sole discretion of the borrower, i.e., only the borrower can apply for the release of cosigner. They must provide the proof of successful completion of the certification program or graduation. The borrower also needs to present the proof of citizenship (if there is any change in his/her citizenship status since applied for the loan) and income.
Requirements for Cosigner Release
To apply for the release of cosigner, you need to meet the following requirements:
- Present a proof of successful completion of the certification program or graduation, proof of citizenship (if there is any change in your citizenship status since applied for the loan) and income.
- Provide an evidence that you have made 12 consecutive payments of principal and interest immediately before applying. (The number of payments may vary according to the lender’s requirements.)
- The lender may increase the number of consecutive payments before applying for cosigner release if you did not pay the first required payment on time.
- During the consecutive monthly payments, no hardship forbearances or modified repayments were granted to the borrower.
- You have no in default student loans.
- You must be a US citizen at the time of the release of cosigner.
- You should be of legal age (i.e. 18 years)
- When you apply for a cosigner release, provide a credit review to demonstrate your satisfactory credit history and that you are able to assume full responsibility of the loan individually.
- You have no 90 days or more criminal history in the past 24 months.
Note: In a case of death or permanent and total inability of the borrower, the cosigner and borrower will not be responsible for repaying and the loan will be forgiven.
How to Apply for Cosigner Release?
- Download and take a printout of the “Cosigner Release Application/Form”.
- Complete the form and sign the required areas.
- Keep records of your documents.
- Send the completed form and required documents to the lender.