<p>...qualify for a private loan for my Sophomore year for ~30,000? That is, if I use my credit card and pay off all the bills properly, will a year be enough time to build the credit to take out that kind of student loan? The reason I ask is, my sister will cosign for my Freshman year at Stern, but only for my Freshman year and no further. After that, I'll either have to take out a loan on my own, or transfer to somewhere cheaper. So is this a possibility? I turn 18 in June, if I get a credit card then and start building up credit, can I get that kind of loan?</p>
<p>Probably not.</p>
<p>Building credit is a good idea, but it builds a lot more slowly than you are thinking. That is, the credit you've built might qualify you for a $5K or $10K loan, not a $30K loan. And lenders always look at current income and debt as part of their decision as to how much to lend, no matter how good your credit. The loan you sister is cosigning for the first year is essentially going to show up as a negative on any credit report -- you many end up getting denied for the reason that you already have too much debt.</p>
<p>What if I take out two or more different private loans?</p>
<p>Your loans are always weighed against income. Too much debt + not enough income will always lower your credit score. </p>
<p>People with very good credit have good credit histories over MANY years and also have low debt in comparision with their income. </p>
<p>If you are planning to borrow $30K a year to attend Stern, you're crazy and the credit agencies are not going to see you as very good risk. I realize that you are not the only kid crazy enough to do this, but it is nonetheless an insane idea.</p>
<p>What gets me is that kids do this for Stern. A kid with a head for business could borrow $30K and use it to set up their own business. Why waste capital that could be better invested in a money-making enterprise?</p>
<p>
[QUOTE]
I turn 18 in June, if I get a credit card then and start building up credit, can I get that kind of loan?
[quote]
</p>
<p>As a co-signer, you are a person who has added their credit strength to another persons application for credit and agrees to repay the loan in the event that the principal borrower does not. (unless you are sitting on a wad of money with a low income to debt ratio, you are not going to be in a position to cosign for your sister). </p>
<p>Do you have college plans of your own?</p>
<p>According to Citiassist:
<a href="http://studentloan.citibank.com/slcsite/fr_ccund.asp%5B/url%5D">http://studentloan.citibank.com/slcsite/fr_ccund.asp</a></p>
<p>As an undergraduate student, you can apply without a co-signer if you have a satisfactory credit history, verifiable income of $18,000/year or more and a debt to income ratio of 45% or less. </p>
<p>Your co-signer, if applicable, must be a U.S. citizen or permanent resident with a mailing address based in the U.S. and have a valid Social Security Number.</p>
<p>So then what should I do? I don't think I'll have a way to take out a loan for my second year. :/</p>
<p>does your sister have credit cards that are at least 3 years old, with little or no balance and no late payments?</p>
<p>if so, ask her to make you an authorized user. SOME companies will report authorized users to the credit agencies. Lets say your sister has a 7-year old credit card with a lender that reports authorized users --even though you're 18, your credit file will reflect a 7 year old satisfactory history (assuming your sister hasn't been late on payments).</p>
<p>At 19, I became an authorized user on my moms Bank of America platinum card which she had for 3 years. They reported to my credit file, and now I have no trouble obtaining credit on my own.</p>
<p>oh and I also wanna add....as the other guy said, be careful with loans. I know the feeling "I'm gonna make lotta money once I graduate, so let me just pull out loans and pay them off once i graduate and making six-figure salary!!"</p>
<p>problem with that picture is:</p>
<p>1) You end up spending WAY more this way. For example, lets say you you get a private unsubsidized loan for $30,000 sophomore year with defer interest and principal, and interest being capitalized every three months.</p>
<p>three years later (once you graduate), the new balance of the loan would be $39,181.50, thats $9,181.50 in accrued interest!! Not to mention, ever month that loan still carries a balance during repayment, it'll continue to accrue interest at high rates.</p>
<p>and.... 2) Assumption is the #1 ticket to financial disaster. This coming from me, a 21 year old who learned it the hard way, but fortunately with little lost.</p>
<p>...so just try to talk with the financial aid office, or get a job --pay as much for school with minimum loans. you'll thank yourself later in life.</p>
<p>
[quote]
So then what should I do?
[/quote]
Go to a college you can afford.</p>
<p>I see from another post that you have also been admitted to UGA & Georgia Tech. I assume those would be more affordable. </p>
<p>As I said above, if you want to make it in the business world, then you ought to be able to make good practical, financial decisions -- taking on massive debt for the first year of your college when you may not be able to continue to a second year is simply a bad decision all around. Your sister is crazy to cosign for you in any case -- she will be on the hook for the loan amount if you fall behind. Won't these loans require immediate payments? How are you going to make payments while you are in school?</p>
<p>Also, mynt2008 is correct that you can bootstrap yourself with someone else's good credit rating when you become an authorized user of an account-- my son's credit report shows him with a good credit history going back to before he was born because I added him to my Sears account several years ago. But that won't help at all with satisfying a lender on the debt-to-income ratio thing. A lender is going to want to see that you have a net monthly income of around $1650 before letting you take on that second $30K loan on top of an existing loan -- how are you going to have that kind of income while you are in school? And what are you going to do about your 3rd and 4th year?</p>
<p>While you may feel your sister is doing a great thing for you have you thought about what her being a co-signer for 30,000 worth of debt and how it is going to affect the choices that she will be able to make in the future? She exactly won't be in the best postion if she decides to purchase a home or do other things either.</p>
<p>calmom, I won't have to pay those loans off immediately. Payments are deferred until after undergrad, at which point I don't have a doubt I will be able to pay them off. Are you sure that student loan lenders would be so strict? I have to research this some more.</p>
<p>sybbie, my sister already owns a home. The most she might do in the near future is get a new car.</p>
<p>But I guess it just doesn't make economical sense to go to NYU, especially coming from a low-income family. This is a heart-breaking decision to make, but I guess I'll have to turn them down. I gave it a fight, I only wish my family was richer...</p>
<p>Remember even though the loan is not due, the interest begins accuring from the moment you with draw the money out of the bank. If you are talking about 30,000 now (and this is the best package you are going to get from NYU), your are talking about having a minimum of 120,000 worth of debt by the time you graduate (not counting the amount of debt incurred from stafford loans).</p>
<p>We can talk scenarios all day but you said, your sister is only looking ro borrow the money for your education for one year. </p>
<p>The net-net is this: </p>
<p>Unless you work and earn atleast 18,000 and are deemed credit worthy, you will not be able to take out a loan sophomore year. </p>
<p>So lets say for example you do make the required $18,000. You still will not be able to go back to get a loan for sophmore year because while you may still have your hypothetical 18,000/yr job making you on the surface for a loan, your debt (30,000 in your name even though your sister is the co-signer) to credit ratio (making only 18,000) is not going to make you a financially viable candidate. </p>
<p>You will then have to get another co-signer and the vicious circle starts all over again.</p>
<p>Yeah...I guess I just can't go. I remember applying for colleges:</p>
<p>Stanford
NYU
Emory
UGA
GA Tech</p>
<p>In that order. I applied to UGA and GA Tech ED, thinking I would go into medicine and it wouldn't matter what undergrad school I went to. Then I realized I wanted to go into business, and applied to S, NYU, and E on almost the last dates. I remember telling my buddy, "Oh man, with my luck I won't even get into those 3 colleges and end up going to UGA. If that happens I'll kill myself", I joked, even though I had already gotten an invitation for Stern Scholars and pretty much knew I was in at NYU. I was so sure I wasn't going to UGA or Tech that I didn't even bother to put them down on the FAFSA. Now I'll probably end up paying a lot more for UGA (about 2000-4000), whereas with my scholarships and need-based aid it probably would have been free. This is the life I lead, where even jokingly awful worst-case-scenarios come true.</p>
<p>I'm not sure if this is an option at all, but you could go instate for your first two years and transfer to Stern for your junior and senior years. Perhaps you sister would be willing to cosign for you then? Also, in the meantime, you could start working and generate a (slightly) more substantial credit history.</p>
<p>duobeef, you should still apply for financial aid from UGA & GA Tech - even though you are late, you never know -- you might get something.</p>
<p>The only shortcoming of that is that I can't be a Stern Scholar as a transfer, and I'll get substantially less (probably non-existent) financial aid. I will apply for transfer to really good business schools though, and I'll make the best of UGA while I can. I'm waitlisted by Emory though, so hopefully I can get in there.</p>
<p>EDIT: I did apply for aid. But I missed the priority deadline.</p>