Can a Grandparent Cosign a Student Loan? What to Know Before Saying Yes

If your grandchild is heading to college and needs financial support, you may consider cosigning a student loan. And yes—if you meet a lender’s requirements, you can legally cosign a private student loan. But before you sign on, it’s important to understand how cosigning works, what risks it carries (especially if you’re retired), and how to protect your finances if things go wrong.

This guide explains everything grandparents need to know about cosigning student loans, including eligibility rules, pros and cons, and how to support your grandchild without putting your retirement at risk.

Table of Contents

1. Can a grandparent cosign a student loan?
2. Can a retired person be a cosigner?
3. What types of loans can grandparents cosign?
4. Cosigner requirements for private student loans
5. Pros and cons of cosigning as a grandparent
6. What happens if your grandchild defaults?
   1. Example: What default could look like
7. Can Social Security be garnished?
8. How to protect yourself when cosigning
9. Alternatives to cosigning a student loan

Can a grandparent cosign a student loan?

Yes, grandparents can cosign private student loans if they meet the lender’s requirements. While federal student loans typically don’t allow (or require) cosigners, many private lenders do. Cosigning gives your grandchild access to more loan options and potentially lower rates. But it also means you’re legally responsible if they miss payments.

Can a retired person be a cosigner?

Retirement doesn’t automatically disqualify you from cosigning. Lenders care more about your ability to repay the loan than your employment status. If you have steady income from Social Security, pensions, or investments, and minimal debt, you may still qualify. Your credit score, debt-to-income ratio, and financial stability all factor into the decision.

What types of loans can grandparents cosign?

Loan type	Can grandparent cosign?
Federal student loans	No
Parent PLUS Loans	Only if they legally adopted the student
Private student loans	Yes, if they meet lender requirements

Grandparents can only cosign private student loans. They cannot take out or endorse (the federal equivalent of cosigning) federal student loans unless they are the student’s adoptive parent.

Cosigner requirements for private student loans

To cosign a private student loan, grandparents usually need to:

• Be a U.S. citizen or permanent resident
• Have a strong credit history (typically 650+)
• Show consistent income or have sufficient assets
• Maintain a healthy debt-to-income ratio (DTI)

Even retired grandparents can qualify if they meet the financial and credit criteria. Some lenders may take a closer look at income type, especially fixed or non-wage income.

Pros and cons of cosigning as a grandparent

Before you agree to cosign your grandchild’s student loan, it’s wise to consider the benefits and drawbacks.

Pros

• Helps your grandchild qualify for a loan

• May secure a lower interest rate

• Supports their educational goals

Cons

• You’re equally responsible for repayment

• Missed payments hurt your credit

• Collection agencies can pursue you

• Could strain your retirement budget or savings

What happens if your grandchild defaults?

If your grandchild misses payments or defaults, you’ll be on the hook. The lender can report the delinquency on your credit report, pursue legal action, or even garnish bank accounts depending on state laws. While your Social Security is protected from garnishment, other assets are not.

Example: What default could look like

We used our student loan calculator to determine what payments might look like if your grandchild defaults and you’re on the hook.

Loan details	Information
Loan amount	$40,000
Interest rate	10%
Monthly payment	$529
Repayment term	10 years

Can Social Security be garnished?

No, private lenders cannot garnish Social Security income for defaulted student loans. However, they can go after other income or assets, like investment accounts or property, through court judgments.

How to protect yourself when cosigning

If you decide cosigning makes sense in your scenario, here’s what we recommend:

• Understand the fine print: Know the default definition and consequences.
• Ask about cosigner release: Some lenders allow you to be removed after a set number of on-time payments.
• Ensure there’s insurance: If the borrower dies or becomes disabled, what happens to the loan?
• Have a backup plan: Only cosign if you could realistically take over payments without financial harm.

Alternatives to cosigning a student loan

Not comfortable cosigning? Here are other ways to help:

• Encourage your grandchild to maximize federal aid first.
• Look into lenders that offer no-cosigner student loans. (We recommend Funding U, Ascent, and MPOWER.)
• Offer cash gifts toward tuition or living expenses.
• Help with financial literacy and budgeting to reduce overall borrowing.

Read More

Do you need a cosigner for a student loan?