Imagine someone randomly asking you on the street to borrow $500. Do you think you’d oblige? Would it help if someone they knew could vouch for them? If they could guarantee that you’d get back that money this random person wanted to borrow?
When applying for private student loans, a lender might feel this way about you. But, if you can have someone vouch for you, in this case a cosigner, you might bolster your loan application.
And what exactly is a cosigner? Cosigners apply for a loan with you, almost like a reference. They typically have a longer, or more reliable credit history, and because of that, they might be easier for a bank to rely on than a credit young’un such as yourself.
Below, we explore why someone might need a cosigner, tips for applying for a student loan without one, and some key details about how the process works.
Why You Might Need a Cosigner
You may be wondering, “Why do I need a cosigner for student loans?” If that’s the case, consider these common reasons why a cosigner might be needed in order to secure a private student loan.
You’re Taking Out a Private Student Loan
If you’re applying exclusively for federal loans , it’s unlikely you’ll need a cosigner. Most federal loans don’t require students to have a cosigner.
However, if you’re applying for a private student loan, a cosigner can make the process easier. To qualify for a private student loan, you typically have to check more boxes regarding financial history than you do for a federal loan.
If you’re looking to get through the loan application process without a cosigner, applying for federal loans first could be the way to go.
You Have a Low or New Credit Score
If you’re just finishing up high school, you probably don’t have much of a credit history. Heck, you likely don’t even have a credit card, since you have to be 18 and have a steady income to get one. But a lack of credit history might be a red flag when applying for a private student loan.
To secure a student loan on your own, you might need to show the bank that you’re a responsible borrower with a solid credit history.
This typically means you haven’t been delinquent on paying bills or loans, and might include factors like how close you are to your credit limit on your credit card, if you have one.
Even if you’ve been doing all the right things and paying on time, if you don’t have a long credit history (the longer the better, typically), there may not be much for the lender to go by. In that case, a cosigner with a longer-established credit history might help prove to the bank that someone is going to pay the loan, no matter what.
You Have Little or No Income
Your unpaid internship, after-school sports commitment, or volunteering gig might mean you’re not earning an income at the moment.
However, to a lender, having an income could show that you can pay back your loan. So, if you don’t have anything to pay your private loans with, chances are probably slim you’ll be approved on your own.
Even if you intend to have a job after college, lenders might not be willing to take that risk. Many private student loans require you make payments while you are still enrolled in school.
With a cosigner, you can show there’s already an income stream to pay back these loans, even if you don’t expect your cosigner to be the one paying them.
Pros and Cons of a Cosigner
If you choose to apply for private student loans, having a cosigner might make the process easier. However, it’s not as simple as finding a friend or colleague to sign on the dotted line. Having a cosigner on your student loans could be helpful for the application process, but the cosigner isn’t without risk.
A cosigner on your loan means you might pay less in fees and interest. However, they’re not just signing a piece of paper. The person who cosigns a loan with you is on the hook if you’re unable to make your student loan payments in the future.
If you miss a payment, the cosigner’s credit score could be affected. If you lose your job, or are unable to make payments for some other reason in the future, your cosigner could be held responsible and may have to make payments on your behalf.
Choosing a Cosigner
Many students opt to have a close family member or parent cosign their loans. Cosigners are typically chosen because they have a strong financial history and a close relationship with the primary applicant.
When borrowing a private student loan with a cosigner, it’s a good idea to review each company’s cosigner release policy. Some companies allow it but with strict requirements, while others don’t offer the option to release a cosigner at all.
Keep in mind that the Consumer Finance Protection Bureau found that 90% of cosigner release applications were rejected by the lender.
Private Student Loans
If you have exhausted all of your federal student loan options, private student loans could be a good option to look into. And, a cosigner could be a solution to securing private student loans at all.
SoFi offers private student loans with no origination fees, no late fees, and no insufficient fund fees. Plus, SoFi offers flexible repayment options to help you find the loan that fits your budget.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Business Oversight under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.