How many of your children do you still have to put through school? It’s difficult being in that too wealthy for aid but not rich enough to pay full price bracket, especially when you have multiple children. If you tie up money for a relative for the next 3-5 years (or more if you end up having to repay them), how will that impact the college choices for your own children? Would repaying the loans impact your retirement?
I wouldn’t commit to repaying loans for someone else. I’d also be careful about offering a large gift unless you can do it every year until this relative graduates. How many relatives do you intend to sponsor in this way? Is it likely to cause hurt feelings if you help one but can’t afford to do the same for others?
If you/husband decide to sign, arrange for the payment notices to come to you. If not, the relative could be in default for months before you, as the co-signer, are notified.
Also, find out what the deal is with consolidating loans with different co-signers. If they can’t be consolidated, the student might be able to consolidate all other loans and yours is left out. The relative may make the other payments and yours is paid last, or never.
I have long had the principle that if we pay for one daughter to do something, we have implicitly decided to pay for the other daughter to do something equivalent. However, we only have two children. If we paid for a cousin’s child to do something, we have a lot more cousin’s children if we count all cousins on both sides. Even just sibling’s children becomes significantly more numerous compared to our own.
That being said not all cousins’children will need, or deserve, help. The reasoning you expose (there are several kids, we can’t do it for all so we’ll do it for none) was used among relatives who couldn’t see why one 17 year old should go to college when none of the others did. The fact none of the others had any wish to go college and were content working for the local factory (save for those in jail) didn’t factor in and this created incredible bitterness and rifts in the family.
Imo the mere fact of being asked to do this - especially in sophomore year - is the biggest red flag of all about the underlying financial situation of the requesting relative. Any family rumblings that might arise from saying no are likely to be less than those that erupt when OP’s husband is on the hook for payment. Especially if the niece drops out or down to CC because they can’t afford any more college after this year.
Another potential fear is that the student/parent can’t make the payments but don’t tell you out of embarrassment. Now the loan starts to go into default, your credit gets ruined and the collection calls start. Not sure how everything works but you could find you wages being garnished for repayment.
My parent’s rule was and now mine is that they would never co-sign a loan even for their children. My parent would do anything for their kids but that. Once you do, someone else now can determine your credit rating.
Really excellent points made here. I just assumed that the original poster had no children, because anyone who has children of their own to put through college would never think of cosigning someone else’s college loans. But the point of, if you do it for one relative, will you be expected to do it for all, is a very good one.
Hopefully, the original poster will have been able to dissuade spouse from doing this.