College Ave Corner

What is a Private Student Loan Cosigner?

Did you know that over 90 percent of private student loans include a cosigner? 

Many students pursue private student loans to fill the gap between their financial aid package and the cost of attendance. While doing so, most students are faced with the necessity to “add a cosigner” to their loan. So, what is a cosigner, and why do most students need one?

What is a private student loan cosigner?

A cosigner is a creditworthy individual willing to take responsibility for the loan alongside the primary borrower. In most cases, borrowers seek a parent, grandparent, or guardian as their cosigner. Cosigners can help borrowers get approved for credit. In turn, cosigners are equally responsible for all loan payments if the primary borrower fails to repay the loan. Most private student loan borrowers will need the help of a cosigner to get approved.

Why do most students need a cosigner?

Qualifying for a student loan without a cosigner is possible for some students; however, it is not common. In general, you will need good credit (above 680) and income above $25,000 to be eligible for a student loan without a cosigner (criteria will vary by lender). Most students coming out of high school, and those students currently in college, will not meet the income requirements necessary to get approved without a cosigner. Moreover, most young adults do not have an established credit history. So, if you’re thinking about adding a cosigner to your loan, or are required to when applying, don’t worry – you’re not alone!

By adding a creditworthy cosigner to your loan, you will be able to meet the credit and income requirements needed to get approved for the loan. In addition, adding a cosigner to your loan may help you get a lower interest rate (varies by lender and cosigner’s credit)! If you have a creditworthy cosigner available, you should consider adding them to your loan application.

What are the risks for cosigners?

Cosigning a private student loan does have its risks. Like any financial decision, cosigners should consider the risks of cosigning before entering into the obligation. As mentioned above, cosigners are equally responsible for the repayment of the student loan. If the primary borrower, the student, fails to make principal or interest payments, the cosigner is technically responsible for making those payments. If the borrower is late on a payment and/or in default, the cosigner’s credit would be affected too. Cosigners are potentially risking their credit health when they sign the promissory note. Cosigners will also have their credit checked during the application process. On average, FICO reports that each hard credit pull will affect cosigner credit by a little less than 5 points. .

Cosigners should consider these risks ahead of time. We recommend having a candid discussion about the risks before making the decision to cosign.

While most private student loan borrowers will need the help of a cosigner to get approved, federal student loans do not require a cosigner. Federal financial aid is not issued on the basis of creditworthiness. Instead, federal financial aid is offered to all students on the basis of need.

Now that you know what a cosigner is, you can use College Ave’s pre-qualification tool to figure out whether you need one. You can also have potential cosigners use it to see if they can help you!


This article was written by Nate Matherson, Co-Founder and CEO of LendEDU.

About LendEDU

LendEDU is a marketplace for student loans and student loan refinance created to help student loan borrowers find transparency without damaging their credit.