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Student Loan Consolidation Info - Co-signer's for Student Loans and Loans Without a Co-signer

By: Jacob Smith

As part of any research when looking at your student loan consolidation information alternatives you should look at co-signer and no co-signer loans. The responsible party who is involved with a loan when the original borrower has a poor credit score is called the co-signer.

Students often leave home without a credit card and they have never had a reason to have a home mortgage or an automobile loan. Because of this, students often have no credit history. And, as is the case with many of us in our youth, they may have made some unwise decisions. They may have gone beyond what they could repay on a credit card and even been irresponsible about making payments.

Not having a credit history or having one that is poor due to late payments will put the credit card holder in jeopardy of being in a high risk position. Any potential lender will be looking closely at your credit history, even those from federally assisted programs. Loan applications can be denied, or accepted, but with a higher interest rate to offset the probability that your loan will go into default.

To counteract that lack of credit history or bad record, borrowers can and usually should obtain a co-signer. Most generally the parents are considered to co-sign the loan. Different factors, like the parent’s FICO score, their debt to income ratio, and payment history are taken into evaluation when lenders are deciding to grant a loan. The credit history of the parents will now decide what type of interest rates will be assigned. Normally, those who have a very good credit rating will get the best interest rates, while bad credit applicants will get a higher interest rate on their student loans.

For example, a popular co-signer program indicates a 4% program paying $5,489 in interest over the life of the loan, rising to $10,647 at 6%. A 2% difference may not sound like a lot, but when you break it down and factor in the methods interest is compounded, it is realistic.

For example, it is not uncommon these days for students and parents to borrow as much as $100,000 to finance an undergraduate education. Even if interest is paid right away (so it doesn't accumulate while the student is in school, adding to the total to be repaid), interest at 6.8% is approximately $567 per month. $6,600 is about the amount to be paid yearly in interest payments.

5% is the official interest rate for Perkins loans (the need-based loans) which will cause those interest charges to be lowered to $417 and $4,820. Remember the example is assuming payments will begin immediately while the student is in college. Waiting to make payments until you are out of college for 6 months will result in much higher amounts being paid, if the interest is not deferred or subsidized in some way.

If you want to improve your chances of getting the best terms and paying the lowest amount of interest over the life of the loan, having a co-signer with very good credit will help. Run the numbers through a loan calculator which can be accessed online to see the differences for yourself. This information will form an important part of any student loan consolidation information.

Article Source: http://articles.directorygold.com

Jacob Smith has also written other well-read student consolidation loan information articles and helpful Student Loan Consolidation Info articles and is a part time student and freelance writer for - My Student Loan Consolidation Information your number one student resource site for Student Consolidation Loan Information.

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