7 Things to consider when cosigning a student loan

Know what you're responsible for before you cosign

If your student’s applying for a private student loan, chances are they’ll need a cosigner—someone who’s responsible to repay the loan if they don’t. Here are some things you should know before you cosign a student loan.

1. Cosigners are often needed for private student loans

Private student loans are credit-based. That means that the financial institution providing the loan (a bank or credit union) checks out a borrower’s credit history, along with other factors, before they approve an application. Federal undergraduate student loans, on the other hand, aren’t credit-based; they’re made from the information you and your student submit in the Free Application for Federal Student Aid (FAFSA®). Note that federal PLUS Loans for parents and grad students do allow a cosigner.

2. A lender looks at a borrower’s credit history to determine the risk level

When a bank lends money, they want to make sure the primary borrower and the cosigner have the ability to pay it back. They’ll look at your credit history, including the credit report and credit score, along with other factors. Have you made payments on time? How much outstanding debt do you have? Have you had any bankruptcies or defaulted on a loan?

3. Students may need a loan—but they probably don’t have a credit history

Lenders understand this, so that’s where you come in. When you’re added as a cosigner for private student loans the lender has more assurance that the loan will be repaid. Your credit history is evaluated along with your student’s; the combination of both can give the student a better chance of being approved for a loan—maybe at a lower interest rate.

4. You’re jointly—and legally—responsible for the loan

Deciding to cosign a loan is an important decision. It’s a legally binding agreement that you’re willing to share the responsibility of repaying the loan on time and in full. So, if your student doesn’t make payments for any reason, you’ll be expected to make them. Missed payments can adversely impact your credit report as well as your student’s.

5. A cosigner doesn’t need to be a parent

The CFPB (Consumer Financial Protection Bureau) defines a cosigner as someone who “takes full responsibility for paying back a loan, along with the primary borrower. Often a cosigner will be a family member.”footnote 1 Whether you’re a parent, guardian, grandparent, or spouse, the most important requirement is that you have good credit and understand/accept your responsibilities. Only one person can cosign for a private student loan. That means, if two parents are willing to be cosigners, only one will be able to do it.

6. There are benefits to cosigning a student loan

  • It helps your student start to establish and build credit in their own name. Then, when it’s time to get a car loan, mortgage, or credit card, they may have a better chance of getting approved and receiving a lower rate.
  • It can help them develop good financial habits.
  • It teaches them to be responsible for their own debt.

7. Being a student loan cosigner doesn’t need to be a lifelong responsibility

Some private lenders allow a borrower to release their cosigner after a certain period of time. Each lender has different requirements—at Sallie Mae, a student can apply to release you as a cosigner after they:

  • Make 12 on-time principal and interest payments
  • Meet certain credit requirements, like passing a credit reviewfootnote 2

Help your student get their education

Cosigning a loan for your student is an important financial decision. It’s also something that can help your student achieve their education and start building a strong credit history to help them throughout their life. 

footnote Sallie Mae does not provide, and these materials are not meant to convey financial, tax, or legal advice. We make no claims about the accuracy or adequacy of this information. These materials may not reflect our view or endorsement. Consult your own financial advisor, tax advisor, or attorney about your specific circumstances. Reproduction without explicit permission is prohibited.

footnote External links and third-party references are provided for informational purposes only. Sallie Mae cannot guarantee the accuracy of the information provided by any third parties and assumes no responsibility for any errors or omissions contained therein. Any copyrights, trademarks, and/or service marks used in these materials are the property of their respective owners.

footnote FAFSA® is a registered service mark of U.S. Department of Education, Federal Student Aid.

footnote 1. https://www.consumerfinance.gov/ask-cfpb/what-is-a-co-signer-en-745/ as of 7/27/2023.

footnote 2. Only the borrower may apply for cosigner release. To do so, they must first meet the age of majority in their state and provide proof of graduation (or completion of certification program), income, and U.S. citizenship or permanent residency (if their status has changed since they applied). In the last 12 months, the borrower can’t have been past due on any loans serviced by Sallie Mae for 30 or more days or enrolled in any hardship forbearances or modified repayment programs. In addition, the borrower must have paid ahead or made 12 on-time principal and interest payments on each loan requested for release. The loan can’t be past due when the cosigner release application is processed. The borrower must also demonstrate the ability to assume full responsibility of the loan(s) individually and pass a credit review when the cosigner release application is processed that demonstrates a satisfactory credit history including but not limited to no: bankruptcy, foreclosure, student loan(s) in default or 90-day delinquencies in the last 24 months. Requirements are subject to change. 

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