Private student loans as co-signer: Annual vs. semester applications impact on credit score?

You'll typically apply once per academic year for private student loans. Each application will generate a hard inquiry on your credit report, which can temporarily lower your score by 5-10 points. However, these usually recover within 3-6 months. I co-signed for my son's Sallie Mae loans for 4 years and my score dropped about 8 points after each annual application but rebounded within 4 months. One thing to consider: if you anticipate needing different loan amounts for fall vs. spring semester, make sure you request the total annual amount in your initial application. Some lenders will let you adjust the second disbursement amount slightly if needed. Also, check if the school offers a payment plan to reduce the amount you need to borrow.

i co-signed for both my kids and did it by semester but thats cuz i never new exact amounts until right b4 each term started. big mistake!!! the loan people told me later i should hav just applied for the max amount for the year and then only used what we needed. my score got hit like 4-6 times more than necessary lol

One thing no one warned me about with private loans is that INTEREST STARTS ACCRUING IMMEDIATELY, unlike federal loans. My daughter's $15K private loan from freshman year had already accumulated nearly $3K in interest by the time she graduated! If you have any way to increase your federal loans instead, I'd recommend that route. To answer your question though - we used College Ave for all 4 years and applied once annually. My credit dropped about 7-9 points each time but rebounded within 5 months. The annual application was better than per-semester for sure. They also let us choose between interest-only payments while she was in school or full deferment until graduation.

I've co-signed with both Sallie Mae and College Ave for my son. College Ave was MUCH easier to work with and had slightly better rates. Sallie Mae was incredibly difficult when we needed to make any changes to the loan. BOTH required annual applications, not per semester. Regarding your credit score: Each annual application caused a 7-12 point drop that mostly recovered within 4-5 months. By year 4, my score was actually higher than when we started despite the annual hits! This was because the regular payments improved my credit mix and payment history. One tip though - call the financial aid office AGAIN and ask if they have any additional institutional grants or work-study opportunities. We found $4,500 in additional institutional aid by speaking directly with the financial aid director after our initial package.

Have you considered Federal Parent PLUS loans instead of private loans? The advantage is that Parent PLUS loans offer income-contingent repayment options, loan forgiveness possibilities, and more flexible deferment/forbearance options than private loans. While the interest rates might be slightly higher (currently around 8.05%), the federal protections can be worth it. If you do go the private route, definitely apply annually rather than by semester. Credit bureaus will typically combine multiple inquiries for the same loan type within a 14-45 day window (depending on the scoring model), so you won't be penalized for rate shopping among different lenders within that timeframe. But separate semester applications would count as separate inquiries. Also, watch out for variable vs. fixed interest rates. Some private lenders advertise very low variable rates that can increase significantly over the life of the loan.

the whole system is a SCAM anyway!!!! my kid has $87,000 in loans and cant find a job paying more than $45k now. dont get fooled by these private loan companies they will RUIN your credit and your kids future. colleges just keep raising tuition bc they know families will just take out bigger loans. its all a racket and ur getting played!!!!

Has anyone tried calling the financial aid office directly? I spent WEEKS trying to get additional aid for my son through emails and the online portal with zero response. Finally I found Claimyr (claimyr.com) which got me connected to an actual financial aid officer in under 20 minutes! They have this great demo video showing how it works: https://youtu.be/TbC8dZQWYNQ The financial aid officer found an additional $3,800 in institutional grants for us once I actually got to speak with someone. Might be worth trying before committing to private loans for the full amount.

One last thing to consider: most private lenders offer a 0.25-0.50% interest rate reduction if you sign up for automatic payments. This can save hundreds or even thousands over the life of the loan. And if you have excellent credit (which it sounds like you do), don't be afraid to negotiate! I actually called College Ave after getting approved and asked if they could beat a competitor's rate. They lowered our rate by 0.30%!

As someone new to this process, this thread has been incredibly helpful! I'm in a similar situation with my son starting college next fall. Based on what I'm reading here, it sounds like the key takeaways are: 1) Apply annually rather than per semester to minimize credit hits, 2) Consider applying for the full annual amount even if you're not sure you'll need it all, and 3) Don't forget to explore all federal options first (including Parent PLUS) before going private. One question I haven't seen addressed - for those who went with private loans, how long did the approval and disbursement process typically take? I'm wondering if there's a deadline I should be aware of for getting applications in before the fall semester starts.