What Parents Should Know About Borrowing, Repaying Student Loans

The Student Loan Ranger receives many questions from readers. On occasion, we like to share some queries that other borrowers are likely to relate to.

Here's a sample of some questions from parents we've addressed recently. Letters have been edited for clarity and to protect readers' privacy.

Q: As the co-signer of my children's loans, between my children and I, we have not missed a payment in over six years. Is there a way to refinance, remove the co-signer or lower interest rates without giving up possible perks or hurting future credit? I am talking about private loans specifically. Everyone says not to refinance a federal loan for those reasons, but does the same concern apply to private loans?

Also, I have been a teacher in private education for over 40 years. Might that count as a nonprofit for some loan relief? My son, age 26, has been working for a nonprofit for the past five years. Does that help? Any direction you can point us would be helpful. We make regular payments but the interest rates rising are causing much financial stress.

Based on the information you have provided, it sounds like refinancing may be a viable option for your children's private student loans. While you should never refinance federal loans since this would eliminate some of the perks and protections that come with them, the same does not apply to private loans.

[See: 10 Advantages of Federal Student Loans.]

Refinancing a private loan is a good idea if your children's credit score has improved. Interest rates for private loans are based on your credit score.

Since you and your children have made on-time payments for six years, it sounds like your children's credit score may be high enough to qualify on their own for student loan refinancing, and you may be able to eliminate yourself as a co-signer, given they have no negative incidents on their credit report from other sources.

If they have a credit card and have managed it poorly -- making late payments, for example -- their score may not be high enough to qualify without a co-signer.

[Read: Why Repaying Student Loans on a Credit Card Is a Bad Idea.]

The Student Loan Ranger recommends pulling their credit report and checking to make sure there is no inaccurate information or negative marks. A credit report can be obtained for free from each of the credit bureaus by going to AnnualCreditReport.com.

Once you have determined that your adult children have good credit histories, either shop for a lower interest rate or contact the current lender and ask to refinance without a co-signer and to lower the interest rates.

While your experience teaching for more than 40 years does not qualify because it is not the result of work performed by the degree holder, your son working for a nonprofit may help him qualify for student loan forgiveness -- but it is not guaranteed.

He will need to apply for Public Service Loan Forgiveness. To find out if your son qualifies, he will have to submit an application. Loan forgiveness is granted after 120 on-time monthly payments are made in a qualifying repayment plan while working full time for a nonprofit.

Q: My daughter's student loan payments begin this month. We are blown away by the amount. Not only that, my twins start college this month too. What are some options for the Parent PLUS loan? How can we make this manageable? We have a unique living situation that I would hope would be a consideration. Am I able to do anything about this?

There's no doubt that attending college is expensive. This is a problem for many young adults across the country. According to a survey by Sallie Mae, only 39 percent of families made a plan to pay for college, even though 86 percent always knew their child would attend college.

The government has implemented a few different repayment options for students who may have trouble making their federal loan payments.

Your daughter may have selected or been assigned a repayment plan for her federal loans, but you can change plans at any time for free by contacting the loan servicer, which manages your loan and provide services like sending bills and collecting payments.

If you don't know who your servicer is, you can log in to the National Student Loan Data System, or NSLDS, the Department of Education's central database for student aid. This will give you a full list of all the federal loans, interest rates, balances and servicer information.

[Read: How to Find How Much You Owe in Student Loans.]

The Education Department's Federal Student Aid website also provides information and resources to change the repayment plan your daughter is on to make payments more affordable. These plans take your daughter's income into consideration with an aim to prevent causing hardship.

As for Parent PLUS loans, they are an option if your credit is up to par to qualify. These are available to help offset any remaining amount that is not covered by federal student aid or loans offered directly to the student. Your family must have submitted a Free Application for Federal Student Aid, or FAFSA, form to qualify. You must not have any adverse credit history and must be able to meet certain criteria.

The Student Loan Ranger understands that parents want to give children their best chance to succeed. Going to college is becoming increasingly expensive, so be sure to explore all of your options for student aid; consider more affordable options, such as a community college or a public university in your home state; and encourage your children to weigh the costs before choosing their school.

Courtney Nagle is the digital and social media specialist for the National Foundation for Credit Counseling. She oversees content creation for blogs, manages the organization's social media channels and engages with consumers to help increase financial literacy and raise awareness of the debt-relief resources NFCC member agencies offer. She graduated from Virginia Commonwealth University with a Bachelor of Social Work.