Latest news with #HowtoAppealforMoreCollegeFinancialAid
Yahoo
31-07-2025
- Business
- Yahoo
Do you need a cosigner for student loans?
Key takeaways You may need a cosigner for your private student loans if you have bad credit or little credit history. Most federal student loans won't require a cosigner, but there are exceptions. The cosigner assumes legal responsibility for your debt and must fulfill payment obligations if you cannot. You may be able to release your cosigner from the loan if you are more financially stable in the future. Depending on your financial history and student loan type, you may need a cosigner to qualify for a student loan. When you apply for a loan with a cosigner, the lender considers their credit and financial history in addition to your own. Even if you don't need one to qualify, having a cosigner could help you secure better interest rates and loan terms. Federal student loan changes making you eye private lenders? Here are 7 with federal loan-like perks Upcoming changes to federal student aid with the passage of the Trump administration's One Big Beautiful Bill may have borrowers looking to private lenders for more assistance. Learn more When do you need a cosigner? A cosigner with a good to excellent credit score can help you get a private student loan if you can't qualify on your own. For federal student loans, you don't need a cosigner unless you plan to apply for a PLUS loan. These loans may require an endorser if you have a poor credit history. An endorser is the federal government's version of a cosigner. Endorsers don't need to apply with you, but they will need to submit an endorser addendum, which basically states the endorser agrees to pay the loan if the borrower fails to repay. Learn more: Private vs. federal student loans: Which is better for 2025? Federal vs private student loans Federal student loans Private student loans Most federal student loans don't require a cosigner Private student loans are administered by banks, credit unions and other private lenders You may need a cosigner, also known as an endorser, for PLUS loans If you have bad credit or no credit, you'll need a cosigner to qualify Keep in mind big changes are coming in 2026 through the One Big Beautiful Bill Choose a trusted adult with healthy credit history to be your cosigner Federal student loans According to student loan expert Mark Kantrowitz, author of How to Appeal for More College Financial Aid, borrowers who have 'adverse credit history' such as bankruptcy discharge, serious delinquency or wage garnishment within the past five years, 'can obtain the loan with an endorser who [has a good credit history].' The passage of the Trump administration's One Big Beautiful Bill Act means the landscape for federal student loans will change significantly. The new legislation will get rid of grad PLUS loans, and parent PLUS loans will have annual and aggregate loan limits. These changes will be official starting July 1, 2026. According to Kantrowitz, these changes may have more borrowers seeking loans from private lenders. Private student loans Private student loans require a cosigner if you don't have much credit history or if your credit score is low. Cosigners with a good credit history can help you get a more competitive interest rate even if you qualify for the loan on your own. If you have good credit (generally a score of 670 or higher), you might be able to get a private student loan without a cosigner. You'll need to have a consistent payment history with no late payments to qualify on your own, among other financial fitness characteristics. Lenders typically consider these financial factors when deciding if borrowers need a cosigner: Borrower's age Credit history Employment history and current income Debt-to-income ratio (DTI) Unlike federal student loans, private student loans are administered by banks, credit unions or online lenders. You'll need to provide your financial information and loan needs through the lender's loan application. How to choose a cosigner According to Kantrowitz, asking someone to cosign a loan is a big responsibility since cosigners are 'equally obligated to repay the debt.' You need to be mindful of the fact that late payments can have serious consequences on your cosigner's credit. Learn more: Co-Borrower vs. cosigner: What's the difference? When you look for a cosigner, look for people you know and trust with a good credit history. According to Katarina Ellison, director of Sallie Mae, you want someone who can help you get a good interest rate, but the person should also be someone you can be honest with if things are not going well, be it a guardian, friend, spouse or relative. It's important to approach someone to be a cosigner in the right way. Make it clear that you know this is a weighty task. It could be a good idea to discuss details and form an official agreement with the cosigner before you apply for a loan. How to get a student loan without a cosigner Sometimes you can't find someone to cosign your student loan. If you must apply for a private student loan, make sure you're in good financial health to qualify so you do not need a cosigner. To get a private student loan on your own, you typically need a credit score of 640, although some lenders may have different requirements. Bankrate's take: Your best option for getting a student loan without a cosigner is to apply for a federal student loan. To increase your chances of being approved: Make timely payments on existing credit: This shows that you are trustworthy and will help boost your credit score. Don't max out your credit card: Every credit card has a maximum credit limit. If you are constantly using all of your credit, it will impact your credit score negatively. Establish a steady income: Many lenders have a minimum annual income requirement, but they also typically look for borrowers with a steady source of income. Find a lender with fewer requirements: There are some student loan lenders that want to make it easier for borrowers with bad or little credit to access student loans. These lenders may look at your school information, major and future earnings potential to qualify you for a loan. How can I get student loans if my parents won't cosign? Some parents are unable or unwilling to cosign your student loans. If you still need to find a way to pay for student loans, consider all your options. After you do this, evaluate if you still need to borrow money. You may still need a cosigner to help you get a private student loan. 'If you need a cosigner, consider whether another trusted adult, like a grandparent, relative, or mentor, might be willing to help,' says Ellison. Releasing a cosigner from your loan Private lenders commonly require cosigners, but some lenders may release cosigners from student loans once the primary borrower can meet certain requirements, such as making a set number of on-time payments. For example, College Ave allows borrowers to apply for cosigner release after half of the original payment term has passed, but the borrower must also have an annual income that is at least twice the remaining balance on the loan. SoFi offers cosigner release on private student loans after 12 consecutive payments have been made on the loan. The cosigner usually needs to apply for the release. You'll likely need to fill out a form and submit it to your lender. Some lenders may also require the primary borrower to go through a credit check. To plan for cosigner release, look for lenders that are upfront about their cosigner release policy. From there, be sure to make timely payments and take steps to build your credit score to prepare for cosigner release. Some lenders allow you to apply for cosigner release after 12 to 36 months of consecutive, on-time payments. Frequently asked questions Can I take out student loans by myself? Yes, you can take out student loans by yourself. To take out federal student loans on your own, you'll need to fill out the FAFSA. This will require details about your parents' financial history. You don't need a cosigner for federal student loans unless they are PLUS loans. For private student loans, you will need to have a good credit history to qualify on your own. If you have no credit history or poor credit history, a cosigner may be required to get a private student loan. Are there any loans that don't need a cosigner? There are multiple student loan options that don't require a cosigner. All federal student loans (besides PLUS loans) can be acquired without a cosigner. For private student loans, you'll need to have a credit score in the mid-600s to qualify without a cosigner. Sign in to access your portfolio
Yahoo
25-07-2025
- Business
- Yahoo
Student loan 'SAVE plan' interest to resume: What to know
Student-loan borrowers who are on the Saving on a Valuable Education (SAVE) plan will begin seeing interest accruing on their loans again, starting on August 1. Mark Kantrowitz, student loan expert and author of "How to Appeal for More College Financial Aid," joins Mind Your Money with Allie Canal to break down the details. To watch more expert insights and analysis on the latest market action, check out more Mind Your Money here. So Mark, if you're in the SAVE plan right now, what is going to happen to your loans? Well, starting August 1st, they will start accruing interest and that interest will be added to your loan balance. Uh, it won't be capitalized just yet, but, uh, you'll be in a general forbearance for at least another month, but you should consider switching into the income-based repayment plan so that those monthly payments count towards eventual forgiveness. So you you said you should expect to be in the forbearance period for at least another month. When should borrowers expect to start making payments again? Well, the Trump administration has not yet said when that forbearance will end. Based on previous announcements from the Biden administration, it suggests that they'll restart in September, but we haven't had any information one way or another from the US Department of Education. Is there anything borrowers with loans outside of the SAVE plan need to be doing right now? Well, uh, there's several different income driven repayment plans that are ending. It's not just the SAVE repayment plan, but any uh, repayment plan that was based on income contingent repayment such as the PAYE, the pay plan, and the repay plan, those will be ending. Uh, the income contingent repayment plan, they're going to start phasing that out because of the budget reconciliation bill. Um, and in general those don't count towards forgiveness of their own, the payments you make will count towards forgiveness under income-based repayment. So if you want to eventually receive forgiveness after 20 or 25 years, you need to switch into one of those repayment plans. You mentioned No, no, continue. Okay. There's a new income driven repayment plan called the RAP plan that was introduced by this new legislation. Uh, we expect that it will become available sometime, uh, this fall. So how does RAP stand up against some of the existing plans like SAVE and I know you mentioned IBR, that's the uh, interest um, or income-based repayment plan as well. Right. So comparing RAP with IBR, the monthly payments under RAP are a little bit lower than under IBR if your income is lower than about $80,000. So if you're lower modern income, uh, you'll have lower payments, but the number of payments you have to make until the remaining debt is forgiven is 30 years whereas IBR is 20 or 25 years depending on whether you have loans from uh, before July 1, 2014 or just afterwards. And let's talk policy too. How does President Trump's bill change the student loan repayment system at this point? Right. So for new borrowers as of July 1, 2026, they will have only two repayment plans available. A standard repayment plan, which is more like an extended repayment plan. The higher your debt, the longer the repayment term that's available to you. If your debt's under $25,000, you'll have a 10-year repayment term, and it goes all the way up to a 25-year repayment term. The other repayment plan is the RAP plan which bases the payments on a percentage of your adjusted gross income ranging from 1% to 10% uh, as your income grows. If your income is over $100,000, you'll pay 10% of income, uh, towards payments on that debt, and the remaining debt will be forgiven after 30 years in repayment. And when do these go into effect these new plans under the Trump administration? Um, for new borrowers as of July 1, 2026, uh, they will be in those repayment plans. Uh, they will also be phasing out the income contingent repayment plan uh, through July 1 of 2028. And then when you're talking to borrowers, what are some general tips when it comes to them paying back their student loans and and other resources that people can turn to to try and make this an easier process because it can be very complicated. Well, they can talk to the college financial aid administrator at their college, uh, who can provide them with some insights into these plans. Um, it is going to be simpler in a way because currently there are a dozen different repayment plans, including as many as four different income driven repayment plans, two extended repayment, two graduated repayment and one standard repayment. Uh, so it is going to get simpler. Um, but the only way to tell whether you're better off with the standard repayment plan or the RAP plan is to model it out for your own particular circumstances. There are very few rules of thumb that say which is better for you when. Related Videos 4 tips to save money on back-to-school shopping US Core Capital Goods Orders Slide Amid Tariff Uncertainty India's Goyal Sees UK Trade Deal as Win-Win German Exporters Can Live With 15% Tariff, Ifo Says 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
Yahoo
17-06-2025
- Business
- Yahoo
Brace yourself: This is exactly how much you should have saved for your kid's college by the time they're 5, 13 and 18
American families face ongoing college-affordability and student-debt crises as new technologies like artificial intelligence transform the workplace, casting doubt on the value of higher education in the future. Despite these challenges, financial planners say it remains wise for parents to prepare for the rising costs of education by saving — a lot — for college, and talking to their children about their options. Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make. These defense stocks offer the best growth prospects, as the Israel-Iran conflict fuels new interest in the sector 'I prepaid our mom's rent for a year': My sister is a millionaire and never helps our mother. How do I cut her out of her will? 'He failed in his fiduciary duty': My brother liquidated our mother's 401(k) for her nursing home. He claimed the rest. My friend is getting divorced. Her husband offered to sign over their house. What's he hiding? If your newborn today plans to attend college, you should plan to save roughly $105,000 in a college fund by the time they turn 18, which would cover nearly 50% of their total college expenses — tuition, fees, housing and food — at a four-year, public in-state university. That's the latest advice for parents from T. Rowe Price TROW, an investment firm that offers college-savings plans. In order to achieve this staggering figure, parents today could invest $280 each month per child from the time they are born into a 529 college-savings account that earns 6% annually, which could grow to more than $19,000 by age 5, almost $45,000 by age 10, about $64,000 by age 13, and nearly $105,000 by the time they turn 18. That six-figure total is approximately 1.75 times the $59,972 estimated annual cost of college by that time. To fully cover 50%, parents would continue saving through the four years their child is enrolled in school. The analysis assumes the other half would be covered by student loans, scholarships and grants. Almost 30% of undergraduates receive federal student loans. Setting aside $280 per month for two children would add up to $6,720 per year. For a family of four making the average gross income of about $146,000, according to the Bureau of Labor Statistics, that would translate to 4.6% of gross income. 'That's achievable. They just have to control their spending,' Mark Kantrowitz, author of 'How to Appeal for More College Financial Aid,' told MarketWatch. Reaching this savings goal might require sacrificing wants, like vacations, but 'vacation is a luxury, not a necessity, so that should be the lowest priority,' he said. T. Rowe Price's guidelines suggest that by the time a child is 18, parents should have saved 1.75 times the current cost of one year of college. Over time, this means having 0.6 times the annual cost by age 5, when many children start elementary school; 1.1 times by age 10, as they prepare to enter middle school; and 1.35 times by age 13, before they begin high school. Average annual expenses at four-year, in-state public universities totaled $24,920 this year, and at private universities the average was $58,600. These benchmarks factor in average 5% annual college inflation, which would push up the mean annual cost of attending an in-state school to $59,972 in 18 years. Young said parents can monitor their progress each year using actual sticker prices at the time, as the $59,972 figure is just an estimate. For most parents, these are daunting figures. The median retirement savings, a more common savings goal, for a couple with children is just over $95,000, according to 2022 data from the Federal Reserve. But it is in parents' interest to come up with a plan for dealing with college costs, Larry Pon, a financial planner and accountant in California, told MarketWatch. Too many parents, determined to send their kids to their 'dream school,' say they will 'figure it out,' he said — and 'usually what 'figure it out' means is taking on student loans.' Related: Is going to college worth it? Ask these 5 questions to make sure it's a good investment for you. As they begin planning to save for college, parents must first establish where college expenses fit into family financial goals. In terms of priorities, an emergency fund comes first, Roger Young, a financial planner at T. Rowe Price, told MarketWatch. The next biggest priorities should be paying off high-interest debt and saving for retirement — which at the very least means maximizing an employer match, but preferably means saving at least 15% of income, which Young describes as 'adequate' for retirement. The planners MarketWatch spoke with all agreed that retirement savings were a higher priority than college savings. Unlike education, there is no loan product for retirement, they noted. After those more urgent goals are accounted for, parents can start saving for their children's education, and also should talk to their children about the plan. Parents who are not able to save $280 per month per child, as T. Rowe Price suggests, can establish different goals. Another framework is to aim to fund one-third of college costs from savings (rather than 50%), one-third from parent income while attending, and one-third from student loans or scholarships, said Kevin Brady, a financial planner at Wealthspire in New York. 'Those ratios can be adjusted as needed depending on total cost, age, income, number of kids and so on,' he said. Eventually, when children are old enough to work, they can also contribute to this $280 monthly target. 'I help clients reframe college savings as a shared responsibility: The family may cover part, and the student contributes through work, scholarships or modest loans,' said Nathan Sebesta, a financial planner at Access Wealth Strategies in New Mexico. Being realistic about a college budget might also mean thinking through the financial impacts of different options. Dave Ragen, who has three children and is a financial planner at Grunden Financial Advisory in Texas, said he was putting away about $350 total per month for college, which at times felt like 'a stretch.' He had originally aimed to save $20,000 to $30,000 for each of his children to attend community college and then a local university. When his son said he wanted to attend a school out of state, however, 'we started crunching the numbers, and there was a big difference from what the college cost actually was compared to what we had been talking about and planning with him.' Ragen tried to bump up the savings rate into their 529 college-savings account, but ultimately sat down with his son and 'ruled it out' based on the amount of debt he would likely have to take on to go out of state. The rule of thumb is not to borrow more than you think your annual starting salary will be. His son ultimately stayed in-state, got scholarships and contributed money from his summer jobs. For the typical American family, however, setting aside money for education is a stretch, especially with prices expected to rise due to changing U.S. tariff policy. 'For many families, fully funding college just isn't realistic,' said Liz Gillette, a financial planner at Curio Wealth in Maryland, who says the topic comes up often with clients in their 30s and 40s. 'I suggest having honest, age-appropriate conversations with your child early — about what types of programs make sense and how much the family can realistically contribute.' As it is, American parents are already less likely to have enough emergency savings to cover three months of expenses (49%) than adults in the U.S. overall (57%), according to 2024 data from the Federal Reserve. They are also more likely to have credit-card debt and higher credit-card balances than average, according to a 2023 PYMNTS survey. Read more: Parents are 'hunkering down financially' to brace for Trump tariff impact 'I've seen people who are very successful savers, saving at high percentages even though they don't have a ton of income,' Young said. Still, 'we need to give ourselves some grace.' To incentivize parents to save for college, Congress created 529 plans in the 1990s, offering tax-free earnings on investments used for higher education. (Many states also offer tax deductions on 529 contributions.) Sen. Mitch McConnell of Kentucky, the former Republican majority leader, and former Sen. Bob Graham, a Florida Democrat, led the effort to secure federal tax advantages. Starting in 2024, up to $35,000 left in 529 accounts also became eligible to be rolled over into Roth IRAs, giving parents more flexibility — and incentive — to save. For the 61% of high-school grads who go to college, 'the tax benefits are meaningful,' Young said of 529s. Earnings in regular savings accounts are taxed as ordinary income, and growth in taxable brokerage accounts are taxed as capital gains. Yet only 17.2 million families in the U.S., or roughly 15% of family households, use 529s, according to data from the research firm ISS Market Intelligence that was shared with MarketWatch. (One contributing factor is that about half of U.S. adults do not know what 529s are, a separate survey by Edward Jones found.) While high-income Americans have the greatest ability to take advantage of 529 benefits, ISS Market Intelligence data show others are also trying. The majority of households that have 529s — about 74% — earn less than $150,000 per year, roughly the threshold for the highest 20% of income earners in the U.S. The estimated median 529 account balance is $9,500, according to ISS, and among families that auto-deposit, the average contribution is about $200 per month. 'The most important point for anyone thinking about saving for college is to start now,' said David Mendels, principal of DBM Planning in New York. 'Time will either be your friend or your enemy, so make it your friend.' The earlier parents start saving, the more time can help their investments compound — meaning the amount they would have to contribute to meet that $105,000 target is hopefully lower than if they start later and have less time to let their investments grow. Parents who aren't able to start early — for example, if child-care costs consumed too much of the monthly budget — would have to save at a higher rate in order to meet the $105,000 benchmark, according to T. Rowe Price. Pon, the accountant in California, said his two children graduated college in 2021 and 2023. He deposited gifts from when his two children were born, as well as any monetary gifts for their birthdays, into their college savings. He regularly contributed to their 529s, and also took advantage when the markets were down by contributing more during those dips. When he looked at the tax form after withdrawing from his child's 529, the amount he had actually contributed on $10,000 was just $4,000; the other $6,000 'was tax-free growth,' he said. 'The most important message from a personal-finance perspective for families is that a dollar saved is more than a dollar earned,' said Paul Curley, a financial analyst and executive director of 529 & ABLE Solutions at ISS Market Intelligence. 'Saving automatically adds up, and 529s increasingly make sense for almost all families once an emergency fund is in place.' You may not reach your college-savings goal, but you and your children will benefit from doing what you can. The truth is that 'you can fund all your goals, but you may not be able to fund it to the degree that you want,' financial planner Marguerita Cheng, chief executive of Blue Ocean Global Wealth in Maryland, told MarketWatch. This may not be ideal, but parents should not be discouraged, she said: 'It's not all or none.' 'The reality is, college is inflating at a much faster rate than other goods and services,' said Cheng. 'If people can't do 100% of that goal, they can do a portion of that goal and start when their kids are little, with $50 or $100 [monthly]. … What's important here is the habit.' The amount that parents contribute can always increase as their income increases, she added. Cheng's children are ages 28, 26 and 20. When she was saving for their education, she was also caring for her father, who has Parkinson's disease. 'I, at that time, was worried about three things: the kids' college, my retirement, and making sure that I'm helping my parents,' she said. Cheng started with $50 contributions and gradually increased the amount over time. The most she was ever able to put away for the three of them was $1,000 per month total. She was able to use 529s to pay for about 50% of college expenses, with the rest funded by cash flow and federal student loans. Her son paid back his student loans by living at home while doing a fellowship that paid about $48,000 per year. Cheng said she made it clear to him that he couldn't just spend his salary on wants; he needed to set aside money for an emergency fund and a Roth IRA, and to pay off his student loans. Whatever your situation, 'do something,' Pon said. Even if you are only contributing a small amount each month, 'something is better than nothing,' he added. What personal-finance issues would you like to see covered in MarketWatch? We would like to hear from readers about their financial decisions and money-related questions. You can fill out or write to us at . A reporter may be in touch to learn more. MarketWatch will not attribute your answers to you by name without your permission. My husband is in hospice care. Friends say his children are lining up for his money. What can I do? My mother-in-law thought the world's richest man needed Apple gift cards. How on Earth could she fall for this scam? 'I'm not wildly wealthy, but I've done well': I'm 79 and have $3 million in assets. 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