Student Loan Forgiveness

The responsibilities of a cosigner don’t end when the bank approves the student loan application and doles out the money. In truth, the responsiblity has only just gotten started.

As a cosigner, your first responsibility will be to counsel the person asking you cosign on their loan and advising them as to the best course of action. Make a gut decision if this amount is the right amount. Too much borrowed could allow for excess spending, and a tough financial burden if the student drops out of school. Too little borrowed, and the student may not be able to complete studies due to a lack of funding. Either way, the student loses. And the cosigner could get stuck with the bill.

Moreover, ask all the “what if” questions: What if you quit school? How will you pay off this loan? What if you move out of state? How will I reach you? What if you worked part-time and only took out a smaller, more affordable student loan to get your through school? What if you sought out loan forgiveness programs available in certain professions like nursing, teaching, and the military?”

In non-legal terms, a cosigner agrees, with the simple stroke of pen adding their name to the college student loan contract, to assume equal responsibility for loan repayment. The cosigner then has assumed a loan obligation which could negatively impact their credit history and lower their credit score.

As a student loan cosigner, you must be responsible to retain copies of all important papers related to the loan, and develop leverage of the borrower to ensure that this loan gets repaid on time.

Entering into a loan agreement means that the cosigner is pledging to pay off the loan if the student

borrower fails to live up to the terms of the loan. If the loan goes into default, the cosigner will be equally liable. And, since a cosigner will probably have more tangible assets, a lender will be able to file a lien on the cosigner’s property to recover on the loan.

So, say if the borrower stops making payments, the cosigner will have to take over the payments. You may even be responsible for the full payment of the loan in the event that the borrower dies or is disabled, though oftentimes a student loan can be forgiven if the right type of loan has been taken out.

Some banks will relieve the cosigner of his or her obligation after the first two years of loan repayments. After the student has made his or her first 24 consecutive monthly payments on time and meets certain credit requirements, he or she often has the opportunity to request to remove the cosigner from the loan.

A cosigner should have a good credit history and steady income, plus full trust in the person he is helping get a loan that he or she will honestly do eveything they can do to repay the loan when the note comes due.

What does a cosigner need to sign on the dotted line and make the loan go through? All lenders require different documentation to approve a student loan. During the application process, cosigners will generally be asked to supply some or all of the following information:

• Current address, phone numbers, and alternate contact information

• Personal reference information, including full names and phone numbers
• Employment information: employers, address, phone numbers, supervisors, time worked at each job, and gross income
• Your monthly rent or mortgage payment
• Social Security number (some will require you produce the actual Social Security card so they can photocopy it and keep it with the loan application).

When you cosign, your credit history will be examined by the lender. A higher credit score, stable work history and a long-term successful use and repayment of previous credit should help you and the borrower get approved for the loan.

There are two rights that most co-signers should request from the lender. One, demand that the lender give them proper notification of any and all late payments. And, two, writing into the loan agreement a clause limiting the cosigner’s financial responsibility only to the loan’s principle, and excluding late fees and attorney costs. Such rights, properly exercised, could limit the financial liability to the cosigner in the end, should the student loan go into default.

If you are a Sallie Mae cosigner, then there are new protections available. Under the Sallie Mae’s ‘Smart Option Student Loan’, if the primary borrower dies, becomes permanently and totally disabled, whatever balance remains of the loan is forgiven. Thus, the cosigner is not expected to continue making those monthly loan payments. (or permanent and total disability), the remaining balance would be forgiven. However, for other loans such as a Perkins student loan or a Stafford student loan you need to read over the promissory note carefully to see if similar protections apply.

As was stated earlier, the responsibilities of a cosigner don’t end when the application is approved and the loan is funded. The responsibility bestowed on a cosigner after all the money has been spent, the classes taken, and the loan payments begin could last for many years. Thoughtful analysis of all the factors surrounding such a loan request should be carefully considered before one agrees to cosign a college loan.

The Teacher Student Loan Forgiveness Scheme allows teachers to have debt remaining on Stafford Loans they took out to help them through college canceled. It is designed as an incentive to encourage people into the teaching profession, and particularly into the schools and areas that need the most help from professional educators.

The dollar amount you can have canceled under the Teacher Student Loan Forgiveness Scheme varies depending on what you teach and the level to which you are qualified. Highly qualified teachers in math and science fields in elementary or secondary schools that qualify for the program, and teachers that work with children with disabilities or other special needs can get the highest value loan forgiveness, at up to ,500. Teachers of other subjects in eligible schools can get up to 00 off of their student loans.

To get your request for the Teacher Student Loan Forgiveness approved you have to have worked as a full time teacher for five consecutive school years, in one of the schools that qualify for the scheme. You don’t have to serve these full five years at the same elementary or secondary school, however all schools you work at during this period do have to be on the list that are approved as eligible for the loan forgiveness program.

Schools that are accepted onto the scheme are those that qualify for Title 1 funding because they are in deprived areas, schools that have over 30% enrolled children who are entitled to Title 1 funding and services, and any schools under the Bureau of Indian Education (BIE) or those under contract with the BIE that are run on Indian reservations by tribal groups.

The list of schools is called the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits. This list is maintained on a yearly basis, therefore new schools can be added and schools can drop off the list too. If the school you are working at comes off the list after a year or more of your continued service there, any years you work there that follow may still count towards the five consecutive years you need to be able to get your loan cancellation.

Once you have completed five consecutive qualifying years, you can apply for your loan forgiveness benefit. This will apply to the aggregate amount that you have left outstanding on your Stafford Loans, which is made up of the original amount you borrowed plus any interest you have accrued over time. You can apply for 60 days forbearance while you complete and file your request and a decision is made on your application. The scheme only applies to outstanding debt after your five years of full time teaching. You cannot receive any rebates on repayments you have already made.

If teaching is a career you are interested in, then considering starting your career in a school in a low income area could not only give you valuable experience that will make you a better educator, but can also help you get out of your student debt early.