August 12, 2022
You’ve been accepted to college, now what? For many students, figuring out how to pay for their education is a big step. It’s important to remember that it’s okay to ask for help navigating financing your education. Securing student loans on your own without a credit history can be a challenge and that’s why it makes sense to pursue the option of adding a cosigner to qualify.
A cosigner is a person who signs onto your loan and shares legal responsibility to pay it back. In this way, you’re essentially able to use your cosigner’s income, credit, and other financial information to qualify for a loan you otherwise would not have been able to qualify for.
Private student loans and student loan refinancing both allow for the option of using a cosigner to qualify. A cosigner can also help you secure more favorable repayment terms, such as a lower interest rate on a loan, which will make a financial impact for many years to come.
Asking somebody to cosign a student loan should not be taken lightly. When someone agrees to cosign a student loan or refinance loan, they’re taking on a serious legal burden and doing you an enormous favor. It’s important to choose your potential cosigner carefully and approach the subject tactfully.
Choosing a Student Loan Cosigner
The first step of the process is to decide to whom you want to cosign your loans. Keep in mind that a person will need to meet certain requirements in order to serve as your cosigner. Carefully consider how asking someone to cosign a loan will affect your relationship.
The Ideal Cosigner
Cosigner requirements will vary depending on whether you’re applying for a private student loan or a refinance loan. The best way to find out about specific cosigner eligibility requirements is to check directly with your prospective lender.
A cosigner is a responsible person who:
- Maintains a “good” credit score (generally 670 or above)
- Has an established credit history
- Earns a steady income stream
- Is at least 18 years of age
Keep in mind that credit scores and credit history are not available to the public. This is private information that your cosigner may want to keep private.
Anyone who meets the cosigner eligibility requirements for your loan is a potential candidate. Cosigners do not necessarily have to be family members, though many borrowers feel most comfortable asking parents, guardians, or other close relatives, such as aunts and uncles, to cosign. A spouse or partner can also cosign a student loan, as can a friend.
No matter who you decide to ask, be sure to consider how having this person cosign on a loan, or even asking them to, could affect your relationship. If you have a falling out with your cosigner, they will still have the financial responsibility to pay off your loan. Cosigners can be removed from loans in some cases, but this can be a long and drawn-out process.
When choosing whom to ask, you will also want to be careful not to make any assumptions. For example, a potential cosigner may appear to have their finances in order but may have poor credit and a lot of their own debt. This can create an uncomfortable situation where they cannot help you.
Planning “The Talk”
Once you have a potential cosigner in mind, you need a game plan to best approach the subject.
Do Your Research
Taking out a loan is a big enough obligation on its own. Start by doing research to ensure that you’ll be able to afford the loan for which you’re applying. Online calculators can help determine what your monthly payments may look like and how much interest you’ll pay over the entire repayment period.
From there, research average starting salaries for graduates in your field or factor in your current salary if you’re already working in the field. Make sure you’ll be able to comfortably afford your student loan repayments on this amount. Be prepared to share all this information with your potential cosigner. Your potential cosigner will appreciate that you’ve taken careful consideration of the different aspects of student loan repayment responsibilities.
Meet in Private
Whenever possible, approach the subject in person and in a private location. Bringing it up around others may leave the person feeling obligated to say yes, even if they cannot help you.
Keep the conversation light and do not pressure your potential cosigner into a decision. Reassure the person that they are under no obligation to say “yes” to your request.
What if Your Cosigner Says No?
There are many reasons a potential cosigner may decline your request. Perhaps they cannot meet the requirements to cosign on your loan, or maybe they’re simply not comfortable with the idea. They could be worried about their current job status or ability to help you repay the loan in the future. Do not fret, as there are other options available to move forward.
Ask Somebody Else to Cosign
Are there any other potential cosigners you could ask? If a parent is unable to help, perhaps an aunt or even a sibling could.
Explore Other Options
If you haven’t investigated your student loan or refinance options extensively, there may still be loan options that you can qualify for without a cosigner. Take some time to research these further. And remember that you can always take some time to build your credit, work, and save money a bit before going to school or refinancing your loans.
A cosigner can lower your rates and raise your chance of approval for student loans, but it’s good to have backup options if your cosigner falls through. Just remember there are many roads to financing education and you can achieve your goals even without a cosigner.
It’s important to keep in mind that the people around you want to see you succeed and are usually happy to help you reach your goals when they can. Taking a few extra steps in asking for help and being clear about your needs and goals is crucial to ensuring your relationship with your cosigner stays strong and you achieve what you’re setting out to achieve with your education and future career.
Please note that the information provided on this website is provided on a general basis and may not apply to your own specific individual needs, goals, financial position, experience, etc. LendKey does not guarantee that the information provided on any third-party website that LendKey offers a hyperlink to is up-to-date and accurate at the time you access it, and LendKey does not guarantee that information provided on such external websites (and this website) is best-suited for your particular circumstances. Therefore, you may want to consult with an expert (financial adviser, school financial aid office, etc.) before making financial decisions that may be discussed on this website.
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