Every year, thousands of high school students apply for college with the hope of enrolling at the institute of their choice once they graduate. Although there are certain things that can be done in order to make college attendance more affordable (such as applying for grants or scholarships, or taking on work-study or applying for a tax break), the rising cost of college attendance (the cost of which currently stands at roughly $20,000 and $43,000 for public and private four-year schools, respectively), has pushed student debt levels to record proportions: US student debt currently stands at $1.3 trillion, with an average debt of over $35,000 per person.
Despite the cost and challenges of college attendance, the fact remains that a college degree opens up doors of opportunity and is also seen as a rite of passage from childhood to adulthood. It has also gone from being a nice-to-have to a must-have in order to support even a lower-income lifestyle today. These are the main reasons that parents from lower and middle-income families who have college-bound children and who are unable to pay for a college education find themselves co-signing for private student loans for their children. When they do this, the question now becomes, how does this affect the credit rating of the parents? Is it a worthwhile investment? Are there any alternatives?
By co-signing a student loan, the parents, in essence, agree to take full responsibility for the debt, and the debt appears on the credit report of both the co-signer and the student. Parents who are thinking about buying a home or applying for a mortgage or other loans should keep this in mind before co-signing on a loan for their children because the total existing debt and important loan ratios of the parents will be affected, and this affects their overall credit rating.
A few smart strategies for minimizing any possible negative repercussions from co-signing on your child’s student loan are as below:
When taking on student loans, it would be wise to keep the following in mind as well:
Parents put their financial future on the line by co-signing private student loans to help their children achieve the dream of having a higher education. If they are unable to pay, their credit will be ruined, and they can face serious issues from debt collectors.
For over 12 years, BoostMyScore, as the pioneer in the credit improvement industry, has helped millions improve their credit scores and move on to higher and better standards of living. We focus on helping customers who are unable to help themselves in regard to their credit scores, and we also help customers with poor or good credit ratings make it to the great credit tier. We advise, educate and help push our customers toward their goals.
If you’re interested in learning more about how we can help you improve your credit score reach out to us today and one of our credit consultants will discuss your unique situation with you and walk you through everything you need to know about credit tradelines. Piggybacking tradelines is a quick way to add positive history to your credit report to overcome those student loan blues. We look forward to assisting you in improving your credit score and securing your financial future!