While many federal student loans do not require a cosigner, private student loans are different. Federal and private student loans have many differences amongst them, but cosigning is one of the most prevalent.
To qualify for most private student loans, a cosigner is often necessary, if not required by the lender. If you are considering becoming a cosigner for a friend or family member on their student loan, the experienced student loan debt lawyers of McCarthy Law PLC want you to consider some factors that may make you rethink that decision.
What Is Your Legal Responsibility for the Loan as a Cosigner?
About 90 percent of private student loans are cosigned, and many of those cosigners are surprised when they learn what the actual weight of their signature means for them. Many cosigners make the mistake of assuming that all they are doing when they sign their name as a cosigner to a student loan is helping someone pursue higher education. In reality, most terms for private student loans state that the cosigner is legally responsible for the entirety of the loan in addition to the borrower. While you are not the student using the money, as a cosigner, you legally owe the money as well.
What Happens if the Main Borrower Does Not Pay?
Since you, as the cosigner, are legally responsible for the total cost of the entire loan, you will need to open up your own wallet if the borrower cannot repay the loan. If you are considering cosigning for a student loan, this is a critical conversation to have. If you do not want to end up paying for a loan you never used, consider how much you trust the person you are cosigning for and whether or not you believe they will have the financial capability to repay the amount they are borrowing.
You May Suffer Financial or Legal Consequences
If the borrower does not submit payments for their student loans, the lender has a legal right to pursue you to make the payments. Any late or missed payments may be reported to credit bureaus, and as the cosigner, both you and the borrower may see this harm your credit. If the loan payments go into default, then you could be in legal trouble. If this happens, you may face the following legal consequences:
- Borrower and cosigner may be subjected to collections
- Borrower and cosigner may face a lawsuit in state court
- Borrower and cosigner may face wage garnishments, property liens, or asset seizures
If you are worried that you may find yourself in any of these situations, immediately contact an Arizona debt lawyer with knowledge on cases relating to student loan debt.
Arizona Student Debt Lawyers Can Help You
Choosing to be a cosigner for a friend or family member is a way to help someone achieve their educational goals. However, you must understand the true weight of cosigning on a student loan. Being fully educated on what you are signing up for can help you make an informed decision that is right for you, even if that means choosing not to be a cosigner.
McCarthy Law PLC is a team of qualified debt attorneys with vast experience working with clients facing student loan debt issues. We understand that any issue involving finances is a delicate and personal matter for our clients, which is why we are proud to provide personalized, one-on-one care to each case we work on. For a free consultation, fill out our contact form or call (855) 976-5777.