Why consider a cosigner for your private student loans
A student loan cosigner is a creditworthy adult who signs for a loan along with you. It’s a legally binding agreement stating that they’re willing to share the responsibility of repaying the loan on time and in full.
Since private student loans are credit-based and many students don’t have a credit history yet, it may be difficult to get approved for a loan. When a creditworthy adult cosigns a student loan with you, their good credit can make it easier for the loan to be approved.
Student loan cosigners aren’t just for undergraduate student loans. If you’re applying for a graduate student loan and you don’t have a credit history, you might also benefit from having a cosigner.
Who can cosign a student loan
Very often, a student loan cosigner is a parent. But it doesn’t have to be. Last year, 27% of Smart Option Student Loan® cosigners are someone other than the parent.footnote 1 Your spouse, relative, guardian, or friend can be a cosigner.
- Only one person can cosign for a private student loan. For instance, if two parents are willing to be cosigners, only one will be able to do it.
- Your cosigner is equally responsible for repayment of the full amount of the loan, not just part of it.
- Your cosigner can live in a different state than you.
- A student loan cosigner should be someone you know and trust, and who is willing to fill out the application on their own.
Cosigner responsibilities for private student loan repayments
Both you and your student loan cosigner are equally responsible for making sure that payments are made on time. Similarly, you’re equally affected if a payment is missed. Missed payments can adversely impact your credit report and your cosigner's credit report.
How to release a cosigner from a private student loan
Being a cosigner is a long-term commitment; they’re responsible for your student loan until it’s paid in full. But certain lenders let you apply to have your cosigner released from your private student loan after you’ve graduated, made a certain number of on-time principal and interest payments, and met certain credit requirements. Basically, you need to prove you can pay back the loan on your own.
Only the borrower can apply for cosigner release.