New loan to pay off law school debts with co-sign?

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newlawgrad
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Joined: Tue Jun 12, 2012 3:37 pm

New loan to pay off law school debts with co-sign?

Postby newlawgrad » Thu Jun 21, 2012 2:12 pm

As a recent grad, I have recently heard some stories of my friends taking out private loans and having their parents co-sign them in order to receive a drastically lower interest rate.

I've got about 250,000 in debt (big law to try and pay it off) - is there any credited methods of consolidation where a separate loan with a co-sign would be significantly better than paying the 7-8 percent average of all the grad plus and stafford loans?

Forgive my ignorance about this - wasn't sure where else to ask such a broad question but the law students forum. Thanks.

bingbang1025
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Joined: Tue Jan 31, 2012 3:19 pm

Re: New loan to pay off law school debts with co-sign?

Postby bingbang1025 » Thu Jun 21, 2012 2:15 pm

curious about this too. seems like a cash-out re-finance on a home or investment property might be a good bet with how low interest rates are...or even a standard re-fi.

finance/mortgage banking crew any insights into this?

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laxbrah420
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Re: New loan to pay off law school debts with co-sign?

Postby laxbrah420 » Thu Jun 21, 2012 2:16 pm

http://mortgage-x.com/general/indexes/p ... recast.asp
without doing any math at all, i'd say you're nice at prime + ≤2

Renzo
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Re: New loan to pay off law school debts with co-sign?

Postby Renzo » Fri Jun 22, 2012 12:20 am

My personal view is that if you are going to be as diligent as you should be about crushing your loans in the first few years, the rate reduction may not be worth putting your parents home at risk (or whatever else it would take), and giving up the safety net of flexibility that comes with gov't loans. Of course, if your parents could afford to pay the loans without giving up their home or retirement if--god forbid--you were disabled or something similar, that would be different.

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OperaSoprano
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Re: New loan to pay off law school debts with co-sign?

Postby OperaSoprano » Fri Jun 22, 2012 1:35 am

This seems incredibly risky. Do you have an absolute ironclad guarantee of employment that will allow you to make the full payments for the next ten years? If you lose your job, or go in house or to a smaller firm, you may need to fall back on IBR rate payments. Unless your private loan has something similar, you could be pushed into forbearance or even default.

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cinephile
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Re: New loan to pay off law school debts with co-sign?

Postby cinephile » Fri Jun 22, 2012 2:32 am

There's a story floating around the scamblogs about a young man who died after graduating college and his father is still responsible for the educational debt because he was a co-signer. It's such a huge risk for the parents and you never know what will happen.




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