HOBOKEN, N.J. – More than half of parents who cosigned on a child’s private student loan now believe their credit score and retirement funds are in jeopardy, according to a new survey.
LendEDU.com, an online marketplace for student loans and student loan refinancing, released survey results asked of 500 parents last month. Results show parents don’t fully understand the risk of cosigning student loans as it relates to their personal finances, and more than a third of respondents now say they regret cosigning.
“All parents want to send their children to college, and affordability is often a second thought,” according to the report. “When presented with the option to cosign on a student loan, most parents will assume the responsibility without hesitation. However, cosigners do take on quite a bit of risk and financial liability when doing so.”
About 57 percent of respondents said their credit score has been negatively impacted by cosigning a student loan, and 51.2 percent believed cosigning has put their retirement funds in jeopardy, according to the survey. Nearly two-thirds of parents have helped their child make monthly payments on a loan, and more than a third said cosigning has hurt their ability to qualify for mortgages, auto loans and other types of financing.
The organization estimates about 90 percent of all private educational loans are cosigned, and the survey concluded that “many parents are not only hurting their financial health by cosigning, but also second-guessing the decision to help their child.”
