Lenders treat student loans as your own debt. This may inflate your debt to income ratio so that you will not qualify for better interest rates until the entire student loan is paid off. Do not agree to co-sign a student loan if you intend to refinance your mortgage or take out other loans in the near future.
In addition, if the student does not keep up the payments, those late payments will devastate the parent co-signer’s credit scores. Some student loans allow for the co-signer to be removed from the loan if the student proves she can make the payment herself.
You should also keep in mind that if the parent makes the payment instead of the student, the lender will take it as a sign that the student was unable to make that payment and may deny the co-signer’s release request.
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