Before you take out a private loan, it’s a good idea to calculate the estimated future monthly payment. You can use a student loan repayment calculator to estimate the student’s future monthly payment. Keep in mind that if the interest rate is variable, the payments could be higher or lower in the future, depending on changes in market interest rates.
You and the student should begin planning now to make sure he/she will be able to afford all his/her student loan payments after graduation. Keep in mind that as your student takes out private loans each year of school, monthly payments will increase as he/she borrows more. Each year you cosign, you’ll want to use a student loan repayment calculator to calculate an updated monthly payment. If you and the student are looking at how he/she is going to manage student loan debt, you might find it helpful to start developing a monthly budget for the student to manage his/her finances after graduation.
Remember, both federal and private student loan payments typically cannot be discharged in bankruptcy. If your student has late or missed payments on his/her private loan, it can have a negative impact on your credit as the cosigner.