Do You Need a Cosigner for Student Loans?

A cosigner is someone who agrees to be responsible for repaying your student loans if you can’t make payments. Of students applying for a private student loan, more than 90% need a cosigner.

Lenders often require a cosigner if you have no credit history or a low credit score. Having a creditworthy cosigner can make it easier to qualify for a private student loan and get a lower interest rate once approved.

That said, not all student loans require a cosigner. Keep reading to learn when you might need to add a cosigner to your student loan application and the pros and cons of adding one.

Do you need a cosigner for federal student loans?

You generally don’t need a cosigner to get a federal student loan since most of them don’t require a credit check. However, you must pass a credit check to qualify for a Direct PLUS loan.

If you can’t qualify for a Direct PLUS loan on your own, you can add an “endorser” to your loan application, which is similar to a cosigner. Like a cosigner, the endorser agrees to repay the loan if you can’t make payments.

Do you need a cosigner for private student loans? 

Unlike federal loans, private student loans are issued by private financial institutions like banks and credit unions. 

When you apply for one, the lender performs a credit check to review your credit history. As a result, cosigners are more common for private loans because many students don’t have long credit histories. Plus, they may not meet the lender’s minimum income requirements.

If that describes you, applying for a student loan with a cosigner may be necessary. When you apply with a cosigner, a lender evaluates their financial situation, including their:

• Credit score
• Annual income
• Debt-to-income ratio (DTI) 

Adding a cosigner with better credit than you and a decent income can boost your chances of qualifying and help you qualify for a lower annual percentage rate (APR).

If you’re a student with a stellar credit profile and sufficient income, you might qualify for a student loan without a cosigner.

Why do you need a cosigner for student loans?

You may need to apply for a student loan with a cosigner if you have insufficient credit history or don’t meet the lender’s minimum income requirements. 

When someone cosigns your student loan, their responsibilities include:

• Repaying the loan if you’re unable to make payments
• Paying any late or collection fees on the loan if you default

As long as you repay your loan as promised, your cosigner will be fine, and their credit may even improve as you make on-time payments.

However, if you miss a payment or stop repaying the loan, it can cause major damage to your credit and your cosigner’s. Plus, if you default, a lender can attempt to collect the debt from either one of you via wage garnishment or filing and winning a lawsuit. 

Important: If your cosigner dies, some lenders will forgive the loan, while others will still hold you accountable for repaying the loan.

Who can cosign on a student loan?

Many students ask their parents or grandparents to cosign their loans, but it doesn’t need to be a relative. Cosigners can be any adult you know and trust as long as they understand their rights and responsibilities after signing on the dotted line.

You should also consider their income history and credit when choosing a cosigner. The better their credit score and the steadier their income is, the more likely adding them to the loan will increase your approval odds.

Pros and cons of adding a cosigner

Applying for a student loan with a cosigner has many advantages, like potentially better approval odds, but some risks must be considered. Here are some of the pros and cons of using a cosigner.

Pros

• You might have better approval chances

  Having a cosigner on your application can make it much easier to qualify for your loan, especially if you have minimal credit history and income.

• You might get better terms

  If your cosigner has excellent credit and a high income, you may qualify for a lower interest rate than you’d get on your own.

• You’ll have the motivation to stay on top of payments

  Having a cosigner also provides accountability. Since you know your cosigner may see financial problems if you fail to make payments, it may motivate you to stay on top of your finances and get your payments on track.

Cons

• Any missed payments can hurt the cosigner

  The biggest downside is that any slip-ups on your part can hurt your cosigner’s credit and cause financial problems. You must stay current on payments if you bring in a cosigner.

• Releasing your cosigner may not be easy

  Cosigners can sometimes be released of their responsibilities, but not always. We’ll go into this in more detail below.

• Can make it more difficult for cosigner to qualify for other loans

  When someone cosigns your student loans, it increases their debt-to-income ratio (DTI), potentially making it harder to qualify for future financing products like mortgages and auto loans.

Can a cosigner be removed from the loan?

Some lenders offer the ability to release your cosigner from the loan after a certain period of on-time payments. But releasing a cosigner isn’t always easy—about 90% of cosigner release applications are rejected.

The most common reason why students’ applications to remove the cosigner are denied is because they haven’t made the required number of consecutive payments. Another reason is that some borrowers postponed their payments via forbearance, resetting the clock on their consecutive payments.

Here’s a list of lenders that offer cosigner release.

Lender	Months of on-time payments required to release cosigner
SoFi	24
Ascent	12
PNC	48
LendKey	12 – 36
Navy Federal	24 months for new private loans (12 months for refinance loans)
Sallie Mae	12

To learn more, check out our guide on student loan cosigner release.