Dear Student Loan Hero,
I’d like to refinance my girlfriend’s student loans. If I have to cosign, I will. She currently pays about 10% interest on $75,000 in loans. She makes her payments on time but was denied refinancing last year because of her debt-to-income (DTI) ratio. How can I best go about this?
Dear Student Loan Borrower’s Boyfriend,
Although your girlfriend’s in an unfortunate debt situation, at least she’s lucky in love. It’s quite an ambition to help her refinance student loans.
Unless she has improved her DTI — that is, repaid some debt and increased her income — it’s unlikely she could qualify for refinancing on her own. That’s where you come in.
You mentioned your willingness to cosign the new, refinanced loan. If you have strong credit, plus a DTI that leans in the right direction, you could help your girlfriend reduce her interest rate to single digits. Laurel Road is one of many top-rated lenders accepting significant others as cosigners.
Other lenders, including Splash Financial and CommonBond, would allow you to take the more dramatic step of refinancing the loans in your name. It would be difficult to justify assuming $75,000 of someone else’s debt, however, even if that someone else is a loved one.
Even becoming a cosigner comes with significant responsibility — you’ll be on the hook if your girlfriend struggles in repayment, putting your own credit at risk.
Before joining your girlfriend’s next refinancing application, also consider that cosigning might limit your finances. Until the refinanced loan is paid off, for example, you might be less able to access credit in the form of a personal loan or home mortgage.
As you weigh the pros and cons of cosigning, take a look at these three posts and try to answer the questions they pose:
If cosigning isn’t right for you, remember that you can still be your girlfriend’s loan hero. You might pitch in on budgeting for her current debt obligations, for example, or assisting her job search to find a higher-paying position.
She’d be lucky to have you as a cosigner, for sure, but just as fortunate if you help her qualify on her own.
Hope this helps!
Student Loan Hero
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