Navigating the world of student loans can be tough, particularly with confusing words like “cosigner.” In this post, we’ll help you understand what a cosigner is and how that person can help you get the most out of your student loans.

What is a Cosigner?

A cosigner (usually a parent or guardian) is someone who signs on to a loan with the student in need (the borrower), guaranteeing that if the borrower cannot pay back the loan, the cosigner will be legally obligated to pay back the full amount of the loan.

When applying for a private loan, as opposed to a public loan, a cosigner is required because most students have little to no credit history (a track record of paying back debts like bills, rent, and credit card expenses) and very little income, both of which are necessary for the bank to evaluate your ability to pay back a loan. Lenders are not likely to approve a loan for someone with no proven track record of being able to pay back debt and little income to do it with.

Public loans do not require a cosigner because everyone is eligible for some amount of federal financial aid.

How Can a Cosigner Help Me?

A cosigner to the loan helps you meet the lender requirements for credit and income, adding a second proof of income to assure the bank that you will be able to pay back the money. This makes it more likely that you will be approved for the loan.

If the cosigner has good credit, they might also be able to negotiate a better rate. How? Interest rates are the cost of borrowing money, so somebody with good credit will get a more favorable interest rate since the risk to the lender is lower — less risk, lower cost!

How Do I Find a Cosigner?

A cosigner is usually a parent or guardian, but could be anyone who has an established credit history (track record of being able to pay back debt).

Whoever you choose to co-sign on your loan, you must understand that this person is taking a big risk. If the loan is not paid on time, the cosigner risks damage to their credit score. They are also financially obligated to pay the loan if you cannot, which could put them in a not-so-great financial position.

So, this person should be somebody who really, really, REALLY cares about your education and is willing to take on this big responsibility.

Can I Get a Loan Without a Cosigner?

Technically, yes, but it will be much harder to do it without an established credit history and source of income. This limits the pool of loans available to you, but it’s not impossible. Keep in mind that public loans do not require a cosigner, so you should max out your options with public loans first.

Where Can I Search for Loans?

After maxing out your options for scholarships, federal aid, and public loans, if you still need money to pay for school, private loans should be your last resort.

Our partner, Edvisors, allows you to compare the different loans available to you based on the school you go to. You can view the terms up front to make the best decision possible.