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How to Get a Co-Signer for Your Student Loans


Blog Author ProfilePeppyWallet Editorial Team
Posted on August 18, 2019
PeppyWallet aims to help you make the best financial decisions when it's time to make them. In order to help maintain our platform and services, some or all of the products featured in this post are from our Product Partners. Our opinions however, are our own, and featuring specific products does not influence our analysis.
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A co-signer for your student loan is an individual who is required to pay back the loan if you're not able to make your minimum monthly loan payments. You have the ability to choose anyone to be a co-signer, such as a parent, a friend or even your spouse in certain situations. Having a co-signer can get you a better interest rate and more favorable terms when originating or refinancing your private student loan.

Private student loan servicers typically tend to be flexible about who you can choose to be a co-signer for your student loan. Your co-signer needs to be a U.S. citizen or permanent citizen with a strong credit score as well as have a steady source of income. It can still be a lot to ask to have someone pay for your student loans if you won't be able to, even if the potential co-signer can handle the emotional and financial burden.

Parents are the first two people many student loan borrowers first think of when they decide whom to ask to be a co-signer for their student loans. If you're not able to ask your parents or believe they may not be the best fit as a co-signer, there are still several ways you can get a co-signer for your private student loans.

When you don't need a co-signer

If you're looking to take out federal student loans, you won't have to worry about finding a co-signer, since the government won't check your credit score or income.

On the other hand, private student loans may require you to have a co-signer, especially if you don't meet certain minimum credit score and income requirements in order to qualify.

Additionally, if you're an international applicant, or don't have a low enough debt-to-income ratio, you may also be required to find a co-signer for your private student loan.

Most private student loans have a co-signer. For loans that don't require one, you most likely always end up paying a higher interest rate due to higher credit risk being priced into your personal financial profile. That's why choosing the right co-signer can maximize your chances of getting approved for a loan with a manageable interest rate, and the better the co-signer's credit score, the lower your interest rate will typically be. This lower interest rate can lead to huge savings over time. For example, even a 1% interest rate difference on a loan with a principal of $30,000 and maturity of 15 years and a starting interest rate of 8% can mean getting to keep an additional several thousand dollars or not.

Additionally, consecutively making payments and on time can help boost your credit history, which could help you down the road when you decide to refinance your student loans.

Co-signers obviously end up taking on substantial risk. Not paying your monthly loan payments on time and possibly even entering a default zone could force your co-signer to start paying for your education loan out of their own pocket. This would have financial ramifications for the co-signer but could even possibly damage a personal relationship with a friend or relative, which is why getting a co-signer for your private student loan is an emotional challenge, not just a numbers one.

Good options for a co-signer

Your parents should be your first bet to co-sign on your student loan, but if they won't do, ask an older sibling who has already graduated college and is working in a steady job and who ideally has no personal student loans to pay for either.

An uncle or grandparent who is comfortably in retirement could also be another person to ask for, especially if they already have an auto loan or a mortgage and several credit cards and won't need to worry about having their credit history weighed down in the case where you won't be able to repay. Members of your family who are older than you may be in a much better position to deal with the burden of your student loans.

Mentors and leaders from your community could also be good candidates for co-signing your student loan. If you're an active member at your church, your local priest may also be willing to lend a helping hand.

Another option could be someone who is directly aware of your academic abilities and drive for success, such as a teacher from honors or advanced placement courses from your high school and especially college teachers who understand your abilities from first-hand experience.

Bad options for a co-signer

We've shared with you ways to find a good candidate for co-signing your student loan, but there's also techniques you should probably avoid when going out on your search to find a great match for a co-signer.

Companies which claim to specialize in matching you with strangers who are willing to co-sign your student loans for a cost should be avoided, due to their typically bad reviews from the Better Business Bureau.

These websites will usually ask you to submit a free application, which may include information such as your loan amount and various personal information. Many of the co-signers on the other side of the table may not be legitimate, and you could waste your time and money and other resources trying to find a co-signer that you don't have a relationship with. This could have been time spent on finding a good co-signer match.

I think I found a good co-signer candidate, now what?

If you think you've found someone who could be a great co-signing candidate and they have the credit score and income to back your loan, how exactly do you try to convince them to co-sign the private loan agreement?

It's better to be honest and upfront with the risks of having them added as a co-signer. However, if they know you well enough to understand your ambitions and goals in life, they will be more open to listening to your points on why you would appreciate it if they were the co-signer on your private student loan.

Several good key points to bring up during this critical conversation could be:

Explaining why you need the student loan amount

You could mention how passionate you are about your major in college or how much you enjoy your full-time job which your degree allowed you to have. If you need a $20,000 private student loan to cover your sophomore year of undergrad, for example, explain what the money will be put toward, such as tuition, and what kind of internships you are looking to take on the following summer to help you pay back the loan.

Terms and risks of paying back the loan

If you can't pay back the loan in the future, discuss how you two would work out this situation.

Repayment plan

Have them understand your repayment plan. This could be goals for repaying the loan quicker or uses of extra cash from refinancing at a lower interest rate in order to help purchase a car or even get a mortgage on a home.

Independence

Explain how you can handle the payments without their financial assistance and that you are only looking to have a co-signer added to your application to reap the benefits of a lower interest rate, if this is the case.

Co-signer release opportunity

See if your private lender offers co-signer release and discuss any benefits from being released at a later point in time.

Taking on a co-signer for your personal student loans could be a great idea, especially in the case where you can comfortably afford making payments and can qualify for a refinancing without one. In this case, you're benefiting from having a co-signer backing you up due to your lower interest rate. If you need help calculating your new monthly payments, you can easily estimate your obligations after your refinance.



Here are some of the best refinance lenders


Lender
Variable APR
Earnest
2.14-6.79%1
CommonBond
2.41-7.95%2
LendKey
2.24-6.67%3

1Important Disclosures for Earnest

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.45% APR (with Auto Pay) to 7.49% APR (with Auto Pay). Variable rate loan rates range from 2.14% APR (with Auto Pay) to 6.79% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of September 5, 2019, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 08/15/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at hello@earnest.com, or call 888-601-2801 for more information on our student loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

2Important Disclosures for CommonBond

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.37% effective July 10, 2019.

3Important Disclosures for LendKey

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any education institution.


The team members at PeppyWallet pride themselves in finding and suggesting services and products that they believe are of high quality and have the potential to positively change a student loan borrower's financial circumstances. We may earn an advertising fee or sales commission when we recommend various services and products to you, which is how we maintain our site and education platform. Be sure to read the fine print to help you understand your product's or service's terms and conditions. PeppyWallet is not an investment advisor or lender, and is not involved in the investment or loan approval process, and does not make investment related or credit decisions. Any terms and rates which are listed on our website are our latest estimates but are subject to change at any time, and we cannot guarantee that they are up-to-date.