30
Oct
2020

How to Recover Borrowed Funds if You Lose Your Cosigner

What happens if your plan, does not go according to plan? Paying for college is a huge undertaking and it is increasingly uncommon that students can pay for this out of pocket or have parents’ foot the entire bill for their education. So, the next best thing is taking out a loan and using outside help in the form of a cosigner, however sometimes that option can also disappear, so then what? You can still take out student loans to pay for your education without the need for a cosigner. Act fast but don’t panic, use your resources to figure out a plan of action so that your entry into college is not interrupted or postponed all together.

Reconsider Federal Loan Options

Using a private lender to take out student loans to pay for college might have been a solid Plan A, but if you do not have an income and a good credit score, you might have to put it on the back burner now that you no longer have your cosigner. The federal government is a place to look to learn about student loans without the need for a cosigner. These loans will come with features that a private lender likely cannot match, so make sure you are clear on how this option will differ from a private loan. One significant perk of this option is that you can switch your repayment plan for a federal loan to an income driven repayment plan which will limit your monthly payments to a percentage of your income once you graduate. If you had a private loan with a cosigner attached, then repayment terms are based off both individuals and typically do not have as much flex.



Investigate Private Options

It is possible to still pursue the private loan option without a cosigner. If you are in the minority of college students that actually has established credit that is in good standing and earn a regular paycheck, you may qualify to earn approval without the need for a cosigner. This is something to consider if you are a nontraditional student or plan to earn your education part time while also holding down a job, these are factors that are going to determine if a lender does or does not feel comfortable putting you through the approval process. Understand the pros and cons associated with this choice however, since you will be solely responsible for the full repayment, so do not borrow more money than you alone can repay once you leave school.

Mix it Up

College does not have to be paid for as a one stop shop. Taking out student loans without a cosigner will encourage you to get creative with your resources out of necessity, but that could end up being highly beneficial to you. Exhaust your federal student loan options first, then research ways to nickel and dime your tuition payments away in the form of scholarships, grants, summer jobs to earn cash while school is not in session, and work study programs that trade credits for labor. All these options combined can add up quick and prevent you from having to request as big of a loan amount from a private lender, and the less money you have to pay back after graduation the better.

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