- Most students need a cosigner to get private student loans because they do not meet the requirements on their own.
- While parents are common cosigners for student loans, they are not the only ones who are eligible to cosign.
- Relatives, friends, or any adult can cosign student loans provided that they meet the lender’s cosigner eligibility requirements.
Flickr user Marc Roberts
The large majority of students find themselves in a Catch-22 situation when it comes to paying for college. On the one hand, they need to take private student loans to cover the funding gap after they’ve exhausted their federal financial aid. On the other hand, they haven’t had a chance to build credit, which can make them ineligible to get approved for student loans.
Under these circumstances, an alternative solution is to apply with a cosigner who does meet the lender’s requirements. If this is your first experience with student loans, it helps to understand how cosigning works, who can cosign student loans, and the implications of cosigning.
What is co-signing a loan?
Co-signing a loan is a process that splits responsibility for payment between multiple parties on a loan. This only applies to private student loans and not federal student loans.
Private lenders use an applicant’s credit score and credit history to determine their eligibility for a student loan. Unfortunately, most students would not have had a chance to build their credit score yet, which can disqualify them from getting a loan on their own. To make it possible for students to get the money they need to cover their college costs, many lenders offer an alternative in the form of cosigned loans. This involves applying for a loan with a creditworthy individual who is the cosigner.
A creditworthy cosigner is a person who meets all of the lender’s eligibility requirements. When somebody agrees to cosign your loan, they are agreeing to share the responsibility of the loan with you.
Who can cosign student loans?
So, who exactly can cosign a student loan? In most cases, parents who meet the lender’s requirements will cosign their child’s student loans. But parents are not the only ones who are allowed to cosign student loans. Any family member, your significant other, family friend, or any other adult can cosign your loan provided that the individual meets the lender’s cosigner eligibility criteria. In addition, the cosigner must be a permanent US resident, and over eighteen years of age (or the age of the state majority).
Benefits of getting a cosigner for student loans
When you apply for a student loan with a cosigner, the lender assesses the cosigner’s financial credentials – credit score, income, and employment history. The loan approval as well as the interest rate on the loan is based on the cosigner’s credit score and not yours. This can be beneficial to you in different ways.
For one thing, applying for a loan with a creditworthy cosigner generally makes it easier to meet the lender’s eligibility requirements and to get approved for a loan.
Secondly, if your cosigner has a strong credit score, in addition to getting approved for a student loan more easily, you’ll usually pay a lower interest rate on the loan. Even a small drop in the interest rate can help you save in accrued interest over the life of the loan.
Last but not least, making on-time payments on your student loans is a great way to start building your own credit.
Before you ask someone to cosign your student loan, there are a few important things to consider.
3 Important things to know before getting a cosigner for student loans
- Cosigning a loan is a major commitment. When someone agrees to cosign your student loans, it is a commitment for the cosigner. In agreeing to cosign your loan, the cosigner is essentially sharing equal responsibility for the loan with you. That means if you stop repaying the loan at any time, the lender will hold the cosigner responsible for making the balance payments.
- The cosigner is risking their credit. If you fail to make your loan payments on time, it can damage your cosigner’s credit score as well as your own credit score. Payment history is a big factor in calculating your credit score. So late payments can negatively affect both credit scores – yours and your cosigners. When you ask somebody to cosign your student loans, it’s best practice (and courtesy) to make each loan payment on time. Your cosigner is trusting you to do this.
- Cosigning a loan increases the cosigner’s debt. When someone cosigns a loan, the loan amount becomes part of their overall total debt. So even if all loan payments are current, the higher debt ratio could impact the cosigner’s ability to qualify for a future mortgage, vehicle loan or small business loan.
Protecting your finances is just as important
When you get a cosigner, you are risking your credit score too. Earlier we said that if you miss a payment, it can damage your credit score as well as your cosigner’s credit score. The same can happen if your cosigner misses a payment on one of their individual loans or credit cards. In this case, the late or missed payment could damage your credit score as well as the cosigner’s. That’s why it’s important to be very careful about who you ask. Honesty and open communication with your cosigner is key.
Before you decide to get a co-signer for your student loans, consider the risks and benefits of cosigning for both parties involved, and make your expectations completely clear to your prospective co-signer. Whether they’re a parent, guardian, family member, significant other, or trusted friend, it’s always good to have this conversation up-front to avoid any problems later.
Ready to get started with your cosigner? Use College Raptor’s Student Loan Finder to discover personalized loan options. Compare lenders and interest rates to find a private loan option that works for you.
| Lender | Rates (APR) | Eligibility | |
|---|---|---|---|
 |
5.50%-16.12%* Variable
3.99%-15.61%* Fixed
|
Undergraduate and Graduate
|
VISIT CITIZENS |
 |
5.54% - 15.70% Variable
3.99% - 15.49% Fixed
|
Undergraduate and Graduate
|
VISIT SALLIE MAE |
 |
4.63% - 17.99% Variable
3.49% - 17.99% Fixed
|
Undergraduate and Graduate
|
VISIT CREDIBLE |
 |
6.00% - 13.75% Variable
3.99% - 13.75% Fixed
|
Undergraduate and Graduate
|
VISIT LENDKEY |
 |
5.66% - 14.72% Variable
3.69% - 14.56% Fixed
|
Undergraduate and Graduate
|
VISIT ASCENT |
|
|
3.70% - 8.75% Fixed
|
Undergraduate and Graduate
|
VISIT ISL |
 |
5.62% - 16.85% Variable
3.69% - 16.49% Fixed
|
Undergraduate and Graduate
|
VISIT EARNEST |
 |
5.00% - 14.22% Variable
3.69% - 14.22% Fixed
|
Undergraduate and Graduate
|
VISIT ELFI |
