If you’re planning to get a private student loan, chances are high that you’ll need a creditworthy cosigner to get approved. Even if your credit is great, adding a cosigner can help you get a lower interest rate — saving you money.
Who to Ask
Your cosigner needs to be (1) willing and (2) able to cosign your loan. Think about family and friends who know you well, and are interested in your success.
- Start with your parents (the most common student loan cosigners)
- Ask other close relatives, such as your spouse, siblings, aunts, uncles, cousins, and grandparents
- Consider a close personal friend
Just remember, your cosigner must have excellent credit. This means a high credit score, a solid employment history, and enough income to repay the loan if you can’t.
Uncle Bob, who has trouble keeping a job for more than a few months at a time and uses credit card cash advances to pay his rent, is probably not your best choice!
How to Ask Someone to Cosign Your Loan
Tell your potential cosigner why you need a cosigner and offer some reassurances:
- You’ve maxed out all other financial aid options, like scholarships, grants, and federal student loans.
- You aren’t borrowing more than you need.
- You aren’t borrowing more than you can afford to pay back.
Use a loan repayment calculator to figure out what your monthly payments will be after you graduate, and show them the numbers. Give them examples of how you’ve managed money responsibly in the past and promise that you’ll make all the payments on time.
Explain how cosigner release works. They may be able to drop off the loan once you’ve proven you can repay your bills on time and established good credit. (Check with your lender to see if they offer cosigner release and what their requirements are.)
- If you’re asking your parents to cosign a private student loan, make sure they know about other loan options like Parent PLUS Loans and private parent loans.
- Watch out for websites that claim to match potential borrowers with cosigners for a fee, such as 5%, 10%, or 25% of the loan amount. Scam artists may take your money without cosigning the loan or even use your private information to commit identity theft.