By Sydney Shaw
While we often hear about students putting themselves through school, it’s a feat that is easier said than done.
Stephanie, a representative from education funding provider Sallie Mae who did not wish to have her full name disclosed, answered some questions I had about the likelihood of a student to be approved for a loan, sans a cosigner.
“While it is a case-by-case basis,” she emphasized, “in my experience, most students applying for a loan will need a cosigner in order to get that loan approved.”
Stephanie went on to explain that because most students haven’t established a good credit score, Sallie Mae has nothing to base the approval on if the student submits a solo application. That’s why a cosigner is so important.
But what if you don’t have a cosigner?
“Well … try to get one,” Stephanie suggested, as if it’s a piece of cake.
With one parent still financially recovering from a bankruptcy, the other deep in credit card debt and one pair of grandparents taking out loans themselves to move across the country, they weren’t solid candidates to cosign for my loans.
It was a stressful summer trying to figure it out, but luckily, my other grandparents received credit approval and I was able to take out loans in my own name to attend the College for two more semesters.
Unfortunately, I can’t celebrate just yet.
The College is unable to release the check that contains the overage from my loan until October, which means I am unable to purchase my books for class for another five weeks or so.
This whole ordeal got me thinking, though. What about the students who literally have nobody to cosign for them?
A student can slog through classwork in high school and get accepted into the university of their dreams, but if their parents make just too much money to get a substantial amount of financial aid and the family doesn’t have a savings account, the student needs to take out loans.
That same student can be willing to take out tens of thousands of dollars worth of loans in their own name, knowing the debt to come after graduation. And this still might not be enough to get into school if nobody in the family has a good credit score.
I understand the practicality of a cosigner — it ensures that if the student is unable to pay loans back, someone is on the hook for all that money. But the bottom line is it shouldn’t be so difficult for students to put themselves through school.
As if getting loans in the first place isn’t tricky enough, interest rates on many kinds of student loans have skyrocketed to almost nine percent, according to America’s Debt Help Organization.
That means for every $1,000 you borrow, you have to pay it back, plus $90 extra.
For College students using loans to pay for their tuition fees, room and board, meal plan and books (approximately $28,000 a year), it costs them $2,520 in interest alone.
If you can make scheduled monthly payments while you are enrolled in school, though, Sallie Mae reduces the interest rate by a quarter of a percent. How generous.
Big corporations should not use intelligent students as a moneymaking tool. It’s high time for major changes to come to the student loan system.