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Home Student Loans Private Student Loans Private Student Loan Cosigner: Everything you Need to Know
  • Contents
  • What is a Cosigner?
  • Do I Need a Cosigner?
  • Why You Might Need a Cosigner
  • Who Makes a Good Cosigner?
  • What Makes a Good Cosigner?
  • How to Ask Someone to Cosign Your Loan
  • Why Consider a Cosigner if Your Don't Need One?
  • Should You Cosign a Student Loan?
  • How Cosigning May Affect Your Credit
  • Risks of Cosigning a Student Loan
  • What is Cosigner Release?
  • What to Read Next

Private Student Loan Cosigner: Everything you Need to Know

Tre Norman
By Tre Norman
Updated on September 23, 2022
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What is a Cosigner?

A cosigner is a person who agrees to be held legally responsible for paying back a loan if you are unable to do so. This can be a parent, relative, close friend, etc. Both the borrower and the cosigner are equally responsible for repaying a loan in full.

Do I Need a Cosigner?

While you may need a cosigner for a private student loan, you may not need one for most federal student loans. According to a study from MeasureOne, over 90% of undergraduate students needed a cosigner for a private student loan for the 2019-2020 academic year.

However, when it comes to federal student loans, only Direct PLUS loans may require you to have a cosigner if you are found to have adverse credit. All other federal student loans, like Direct Stafford Loans (subsidized and unsubsidized) do not require and or allow you to add a cosigner if you are denied the loan.

Why You Might Need a Cosigner

You might need a cosigner if you are unable to qualify for a student loan on your own. A private student loan lender will look at a potential borrower’s credit history to determine the if that borrower meets the lender criteria to borrow money—essentially, they are determining the level of risk you are as a borrower. Each lender will have their own criteria. They typically will look at your credit score, your credit history, your work history, and your debt-to-income ratio.

If you have a low credit score, history of making late payments, or any issues with defaulting on a debt, you probably need a cosigner to help you qualify for a loan. However, did you know that not having established credit history could also be a reason why you need a cosigner? And many students, especially undergraduate students, don’t have sufficient credit history to apply for a loan on their own.

Even if you qualify for a loan, you may still opt to use a creditworthy cosigner. Why? Well, if you’re just starting out, or if you meet the minimum requirements to qualify for a loan, your loan terms will be based on your creditworthiness. Meaning, you may not qualify for the rates you want, and that’s where a creditworthy cosigner can help—they can help you qualify for better terms and rates on your loan.

Who Makes a Good Cosigner?

Many students use a family member as a cosigner. This could be a parent, aunt, uncle, or grandparent. However, a cosigner does not have to be a relative. A good cosigner can be any responsible adult who meets the criteria of a creditworthy cosigner. Some students who have trouble securing a cosigner they know may look to alumni associations, or their local faith-based community to find a willing cosigner.

A cosigner will have to meet the criteria set by the lender, and typically:

  • Must be a U.S. citizen or permanent resident
  • Must have a valid Social Security Number
  • Must pass a credit check
  • Must be over the age of majority in their state of legal residence, typically 18, 19, or 21.

What Makes a Good Cosigner?

A good cosigner will meet the following criteria.

A History of Making On-Time Payments

Your cosigner will be evaluated based on their ability to make on-time payments. In other words, your cosigner will be less desirable to potential lenders if they have past due bills, a history of being late on payments, or missing payments altogether. Make sure that the person you're considering to be your cosigner has a strong history of making timely payments.

A Good Credit Score

Your cosigner's credit score will also impact the interest rate you qualify for. In general, the higher the credit score and the stronger the credit history of your cosigner, the better the interest rate you'll receive.

Stable Employment

Employment history is another variable that lenders look at when deciding creditworthiness, and it is another reason why many students will need a cosigner. A good cosigner will typically have at least two years of employment history.

No Recent Bankruptcies

If you or your cosigner have a bankruptcy on your credit report, it is highly unlikely you will qualify for a private student loan.

How to Ask Someone to Cosign Your Loan

As you prepare to ask someone to cosign your loan for you, you want to do your homework. They will need to know why you need a cosigner, how much you need to borrow, and they need to trust you to eventually repay the loan. They will also need to know the details of the debt, like the lenders you’ve researched, the interest rates available, and the terms and conditions of the loan.

Help them understand that you’ve exhausted all of your other financial aid options, such as federal student loans, grants and scholarships, that you are not borrowing more than what you need, and don’t forget to include them on your plan to repay the debt.

Estimate your monthly income after graduation and what you think your monthly loan payments will be. This will help demonstrate to your cosigner that you can afford to pay back your loan. Show them your ability to manage money and a budget, so that can be confident that you will make the necessary payments on time.

Make sure to identify any cosigner release options on the loan you are choosing. And explain your plan to qualify for the option as soon as possible.

Be transparent with them about the risks of cosigning a private student loan. Explain to them your plan to inform them of any financial difficulties you face. That way you are both in agreement on how to handle the payments if you are unable to do so.

If you’re considering using your parent as a cosigner, they may be interested in the Parent PLUS Loan or a private parent loan as an alternative to cosigning a private student loan. These loans won’t help you (the student) build a good credit history, but will provide your parent with more control over loan payments.

Compare Featured Lenders

College Ave Student Loans

Recommendation
Best for Private Loans
Interest Rates

Variable rates as low as: 4.74% APR1

Fixed rates as low as: 4.74% APR1

Repayment Terms

5, 8, 10 or 15 years2

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College Ave Student Loans
  • Competitive fixed and variable APRs starting at 4.74%1
  • Multiple repayment options including: full principal and interest, interest-only, deferred, and flat payment
  • Flexible payment terms ranging from 5, 8, 10, and 15 years2
  • Coverage up to 100% of your school-certified cost of attendance ($1,000 minimum)3
  • No origination, application and processing fees, no fees for early repayment
  • Apply online in 3 minutes and get an instant credit decision

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

1Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

2This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

3As certified by your school and less any other financial aid you might receive. Minimum $1,000.

Information advertised valid as of 03/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

Cosigner Recommended

Sallie Mae Private Student Loans

Recommendation
Best for Private Loans
Interest Rates

Variable Rates: 5.49% APR - 15.83% APR1

Fixed Rates: 4.50% APR - 14.83% APR1

Repayment Terms

10-15 Years6

(undergraduate)

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Sallie Mae Private Student Loans
  • Variable Rates: 5.49% APR - 15.83% APR. Fixed Rates: 4.50% APR - 14.83% APR. Lowest rates shown include 0.25% interest rate discount with auto debit payments.1
  • Apply online in minutes and receive an instant credit result2
  • Multiple repayment options from in-school payments to deferred.1 No origination fee or prepayment penalty3
  • Last year, students were 4x more likely to be approved with a cosigner4 and it may help you get a better rate.
  • Borrow up to 100% of school-certified expenses, whether you're online or on campus5

Borrow Responsibly

We encourage students and families to start with savings, grants, scholarships, and federal student loans to pay for college. Students and families should evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan.

Loans for Undergraduate & Career Training Students are not intended for graduate students and are subject to credit approval, identity verification, signed loan documents, and school certification. Student must attend a participating school. Student or cosigner must meet the age of majority in their state of residence. Students who are not U.S. citizens or U.S. permanent residents must reside in the U.S., attend school in the U.S., apply with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident), and provide an unexpired government-issued photo ID. Requested loan amount must be at least $1,000.

1Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent.  Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment.

2In 2021, instant credit decisions were provided to 97% of applicants.  Other applications typically received credit decisions in 3 to 5 business days.

3Although we do not charge a penalty or fee if you prepay your loan, any prepayment will be applied as outlined in your promissory note-first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.

4Based on a comparison of approval rates for Sallie Mae Smart Option Student Loans for Undergraduate Students who applied with a cosigner versus without a cosigner during a rolling 12-month period from October 1, 2020 through September 30, 2021. 

5 For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school.  Applications submitted to Sallie Mae through a partner website may be subjected to a lower maximum loan request amount.  Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. 

6 Examples of typical costs for a $10,000 Smart Option Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44.  For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment may receive a loan term that is less than 10 years. 

Information advertised valid as of 02/27/2023

SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK SALLIEMAE.COM FOR THE MOST UP-TO-DATE PRODUCT INFORMATION.

Smart Option Student Loans® are made by Sallie Mae Bank. Sallie Mae, the Sallie Mae logo, and other Sallie Mae names and logos are service marks or registered service marks of Sallie Mae Bank. All other names and logos used are the trademarks or service marks of their respective owners.

Edvisors is not the creditor for these loans and is compensated by Sallie Mae for the referral of Sallie Mae loan customers.

© 2023 Sallie Mae Bank. All rights reserved. SLM Corporation and its subsidiaries, including Sallie Mae Bank are not sponsored by or agencies of the United States of America.

Discover Student Loans

Recommendation
Best for Private Undergraduate and Graduate Loans
Interest Rates

Variable: 5.87% APR - 16.72% APR*

Fixed: 5.49% APR-15.99% APR*

Repayment Terms

15-Year (undergraduate) repayment term; 20-Year (graduate) repayment term

Apply Now More Info
Discover Student Loans
  • Fixed rates: 5.49% APR - 15.99% APR*; variable rates: 5.87% APR - 16.72% APR*    
  • Borrow up to 100% of school-certified costs, including tuition, housing, books and more. Aggregate loan limits apply.
  • Choice of fixed or variable interest rate.
  • No fees. No application, origination or late fees.
  • Apply in minutes.
  • Got good grades? Get paid. You can qualify for a one-time cash reward on each new Discover student loan if you get at least a 3.0 GPA (or equivalent) in college or graduate school.**
  • 0.25% interest rate reduction while enrolled in automatic payments.***

Discover® Disclaimers

 

*APR ranges vary by loan type and the lowest available APR may be higher than what is shown here. Lowest APRs are available to the most creditworthy applicants, and include an interest-only repayment discount and Auto Debit Reward. Applying with a creditworthy cosigner may improve your likelihood for loan approval and you may receive a lower interest rate.

The fixed interest rate is set at the time of application and does not change during the life of the loan unless you are no longer eligible for one or more discounts. The variable interest rate and corresponding APR may increase over the life of the loan. The variable interest rate is calculated based on the 3-Month CME Term SOFR index plus the applicable margin percentage less any applicable discounts. The 3-Month CME Term SOFR index value for variable interest rate loans is 4.625% as of January 1, 2023. 3-Month CME Term SOFR is administered by CME Group and is published by CME Group on its website (cmegroup.com/termsofr). Discover Student Loans may adjust the variable interest rate quarterly on each January 1, April 1, July 1 and October 1 (each an “interest rate change date”), based on the 3-Month CME Term SOFR rate available for the day that is 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125), or 0%, whichever is greater. This may cause the monthly payments to increase, the number of payments to increase or both. If the 3-Month CME Term SOFR rate is less than zero percent, then the index will be deemed to be zero percent (as stated in the promissory note) for purposes of calculating your interest rate. Your variable interest rate (index + margin - applicable discounts) will not exceed 18%. Our lowest APRs are only available to applicants with the best credit. The APR will be determined after an application is submitted. It will be based on credit history, the selected repayment option and other factors, including a cosigner’s credit history (if applicable). If a student does not have an established credit history, the student may find it difficult to qualify for a private student loan on their own or receive the lowest advertised rate. Learn more about Discover Student Loans interest rates.

**Students who get at least a 3.0 GPA (or equivalent) may qualify for a one-time cash reward of 1% of the loan amount on each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Visit DiscoverStudentLoans.com/Reward for reward and redemption terms and conditions.

***Visit DiscoverStudentLoans.com/AutoDebitReward for terms and conditions.

Ascent offers loans that power bright futures

Recommendation
Best for Private Loans
Interest Rates

Variable rates as low as: 5.86% APR1

Fixed rates as low as: 4.62% APR1

Repayment Terms

5, 7, 10, 12 and 15 years

Apply Now More Info
Ascent offers loans that power bright futures
  • AFFORDABLE variable rates starting at 5.86% APR with Automatic Debit Discount*
  • 1% CASH BACK Graduation Reward*
  • NON-COSIGNED option may be available for undergraduate juniors and seniors.
  • PAY AFTER LEAVING SCHOOL – Customize your loan with flexible repayment options – start payments after graduation.
  • FORGET FEES – No application, origination or disbursement fees. No prepayment penalty if you choose to pay your loan off early.
  • COVER UP TO 100% of your tuition and eligible living expenses.

* Ascent's undergraduate and graduate student loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs

Rates are effective as of 3/01/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: www.AscentFunding.com/Rates

1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner.  Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.  

Earnest Private Student Loan

Recommendation
Best for Private Loans
Interest Rates

Graduate Rates

Fixed: 4.45% - 14.15% APR1

Variable:4.99% - 12.29%APR1 

Undergraduate Rates

Fixed: 4.45% - 14.60%APR1

Variable: 4.99% - 14.40%APR1 

Repayment Terms

5, 7, 10,15 or 20 years

Apply Now More Info
Earnest Private Student Loan
  • Check your eligibility in just 2 minutes
  • Flexible repayment options you can choose from
  • No fees for origination, disbursement, prepayment, or late payment3
  • Skip a payment once per year (once repayment period restarted)4
  • Will cover up to 100% of the school's certified cost of attendance
  • 9-month grace period (3 months more than most lenders)2

This information is for graduate and undergraduate students attending participating degree-granting schools. Borrowers must be U.S. citizens or U.S. permanent residents if the school is located outside of the United States. Non-U.S. citizen borrowers who reside in the U.S. are eligible with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident) and are required to provide an unexpired government-issued photo ID to verify identity. Applications are subject to a requested minimum loan amount of $1,000. Current credit and other eligibility criteria apply.

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.70% APR to 14.85% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% APR to 14.65% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

 

1You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.

2Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

3Earnest does not charge fees for origination, late payments, or prepayments. Florida Stamp Tax: For Florida
residents, Florida documentary stamp tax is required by law, calculated as $0.35 for each $100 (or portion thereof) of the principal loan amount, the amount of which is provided in the Final Disclosure. Lender will add the stamp tax to the principal loan amount. The full amount will be paid directly to the Florida Department of Revenue. Certificate of Registration No. 78-8016373916-1.

4Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

The information provided on this page is updated as of 03/08/2023. 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 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information.

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

 

 

Sallie Mae Private Student Loans

Recommendation
Best for Private Loans
Interest Rates

Variable rates as low as: 4.99% APR (with autopay)*

Fixed rates as low as: 4.49% APR (with autopay)*

Repayment Terms

Up to four repayment types (including no payments while in school) and multiple repayment terms help you find the loan that fits your budget

Apply Now More Info
Sallie Mae Private Student Loans
  • Variable Rates: Starting variable rates range from 4.99% APR - 13.13% APR (with autopay)*, and will never exceed 13.95% (sometimes lower in certain states as required by law)
  • Fixed Rates: Fixed rates range from 4.49% APR to 13.98% APR (with autopay)*
  • Easy online application!
  • No origination fees, late fees, and no insufficient fund fees. Period
  • Up to four repayment types (including no payments while in school) and multiple repayment terms help you find the loan that fits your budget
  • 0.25% discount when you set up autopay*

*UNDERGRADUATE LOANS: Fixed rates from 4.49% to 13.98% annual percentage rate ("APR") (with autopay), variable rates from 4.99% to 13.13% APR (with autopay). GRADUATE LOANS: Fixed rates from 5.25% to 13.60% APR (with autopay), variable rates from 5.49% to 13.07% APR (with autopay). PARENT LOANS: Fixed rates from 6.50% to 13.98% APR (with autopay), variable rates from 6.32% to 13.13% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 01/30/2023.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, years of professional experience, income, and a variety of other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

 

Funding U Merit-Based, No-Cosigner Student Loan

Sallie Mae Private Student Loans

Recommendation
Best for Private Funding
Interest Rates

Fixed: 7.49% APR - 12.99% APR (not including 0.5% ACH discount)*

Repayment Terms

10 years

$20 minimum/month OR interest-only payments while in school

Apply Now More Info
Sallie Mae Private Student Loans
  • Up to $15,000 per academic year with no cosigner required
  • Fixed Rates (APR) from 7.99% to 12.49% (plus an additional 0.5% discount for ACH auto-payments)*
  • No origination fee. No late payment fees. No prepayment penalties.
  • Quick prequalification and rate check that won’t impact your credit
  • Multiple repayment options
  • Dedicated loan officer for every borrower

New student loans of $3,001 up to $15,000 per school year will be granted to residents of eligible states enrolled as undergraduates in bachelor’s degree or equivalent- granting programs at eligible schools.

Funding U offers fixed interest rate loans, without a cosigner, to students who are serious about their academic success and post-grad career. Eligibility is determined by several factors, including: school graduation rate, class hours completed, estimated graduation date, academic record, major; employment or internship experience; and, other academic and non-academic activities that demonstrate the borrower is working hard towards academic and professional goals and is on track to be able to repay debt accrued.

Eligibility is also limited by state of permanent residence. Terms and conditions vary by state. Not all loans are available in all states. Loan amounts available may vary by state.

DISBURSEMENT All Loan proceeds will be sent to the student borrower’s school around the time classes begin, on the date your school prefers. Funding U will require documentation to verify your registration and certify your loan need prior to disbursement. Your school must also certify your loan need. Your loan may be adjusted based upon the amount of need certified by your school.

REPAYMENT TERMS New Undergraduate loans for the 2021-2022 school year will have an Annual Percentage Rate (APR) of 7.49% to 12.99%. All loans have a fixed interest rate range of 7.49%* to 12.99% (before consideration of ACH discount). There is no origination fee. Interest accrues while students are in school.

In-school partial payments: Students may choose either $20 monthly as a “Fixed Payment” while enrolled in school or “Interest Only” payments. These payments will be reported to credit agencies like other student loans. All loans have a 10-year repayment term (paid monthly over 120 months starting 6 months after graduation). Both In-School payment options may not be available in all states. Student’s electing to make Interest-Only payments will receive a 0.5% interest rate discount.

PREPAYMENT PENALTIES There is no prepayment penalty on your loan.

Additional details, terms & conditions will be included in each loan offer.

*The lowest rate shown is available only to juniors & seniors with outstanding academic performance and is not typical of the rates offered to most borrowers. Your actual rate will depend on creditworthiness and other factors, such as your school year and GPA.

Why Consider a Cosigner if Your Don't Need One?

Given your credit history, you may not need a cosigner to be approved for a loan, but that doesn’t mean you shouldn’t consider one. You could benefit from having a cosigner. If your cosigner has a higher credit score, you might be able to secure a lower interest rate, which could save you money over the life of the loan. Here's how you can approach asking someone to cosign your loan.

Explain to them that there are two primary benefits to having a cosigner:

  • A cosigner increases the chances of the borrower being approved for the loan
  • A cosigner can qualify the borrower for a less expensive loan, such as a loan with lower interest rates and fees
  • A cosigner will allow you to be the primary borrow and start to build your credit and avoid assistance in the future

Should You Cosign a Student Loan?

When it comes to cosigning a loan, the decision is yours. You need to make the decision that you are comfortable with making, and you should only cosign a loan if you can afford the repayment of the loan if you need to step in.

There are pros and cons to being a cosigner, and they will impact your decision differently depending on your circumstances and those of the borrower. A borrower’s expected salary after graduation may give you the confidence that they will pay back their loans in full. However, you might not be as willing to be a cosigner for a borrower who, for whatever reason, doesn’t show promise in repaying the loan.

Pros and Cons of Cosigning

Take a look at the following chart and see how important the following factors are for you.

Pros of Being a Cosigner Cons of Being a Cosigner

The cosigner can help a student achieve educational goals and possibly save money by qualifying for a lower interest rate

Cosigning a loan may make it more difficult for the cosigner to obtain other credit, such as refinancing a mortgage

The cosigner may be released from the loan if the borrower meets lender requirements  Credit score can be negatively impacted if the borrower makes late payments or defaults on the loan

Facts About Cosigners

Cosigners should know what saying yes to cosigning means. Here are some facts about cosigners:

  • May also be known as a guarantor or endorser
  • Will have a hard credit pull by the lender during the application process
  • Are equally obligated to repay the loan
  • Will have their credit rating affected by the loan
  • Cannot use the loan funds for their own personal benefit

How Cosigning May Affect Your Credit

When you cosign a loan, that loan will show up on your credit report. This is because cosigning a loan makes you legally obligated to repay the loan if the borrower fails to pay it back. Your credit may be impacted in some significant ways from cosigning.

Because the total amount of debt you owe impacts your credit score, cosigning a loan with a large balance could drop your score. Additionally, your debt-to-income (DTI) ratio could be less preferable after taking on a loan if your income doesn't increase at the same time. This can be important because a higher DTI ratio indicates to a lender that you have less discretionary income to pay back the loan you're trying to qualify for.

On the other hand, your credit always benefits from making payments on time, so make sure the borrower you're working with is doing this. If they come across a rough patch financially, you may want to step in and help so that your credit score doesn't take a negative hit. Also, cosigning on a private student loan can potentially help your credit score because it broadens your credit mix (your variety of different types of credit).

Risks of Cosigning a Student Loan

Cosigning a loan for someone else can be a great way to help a child, friend, or loved one obtain a loan or better interest rate, but there are risks that come with this decision. For private student loans, a cosigner is a co-borrower who is just as responsible for paying back the loan as the student borrower.

Moreover, agreeing to cosign a loan can impact other loans the cosigner may want to qualify for in the future. Because the student loan you cosigned will appear on your credit report, this might impact your ability to get a new loan or refinance an existing one. In some cases, you may be denied or get qualified for an interest rate higher than you anticipated. Remember, although it may not seem like it's your loan, from the lender's (or prospective lender’s) perspective, it is.

All in all, when you cosign a loan, you give the borrower the ability to damage your credit history. This possibility should not be taken lightly, which is why you should only act as a cosigner if you trust the borrower to be accountable and pay the loan back. As a cosigner you need to understand your ability to repay the debt, because in the worst case scenario when the borrower can't or does not repay the debt, you will be asked to take over payments. Be honest with yourself—can you afford to take over repaying the loan?

Cosigner Responsibilities

To put it simply, a cosigner is responsible for repaying a loan as much as the loan borrower. When someone cosigns on a loan, the borrower's debt for that loan becomes their debt too. This means that if the borrower gets behind on payments or defaults on the loan, the credit score of the cosigner will be negatively impacted as well. When a borrower does miss payments, it's likely that the lender will begin to reach out to the cosigner to make them.

When it comes to cosigning a loan, we recommend that the cosigner assume responsibility of the debt as if it were their own because legally it is.

What is Cosigner Release?

Cosigner release allows you to remove a cosigner from your loan once you’ve met certain criteria as set forth by your lender. If you are a cosigner, ask about working with a lender who offers cosigner release. If you are the borrower, you may look for this option as an added benefit for your cosigner.

How to Qualify for Cosigner Release?

Many private student loan lenders offer a cosigner release option. Typical criteria for cosigner release include making a series of consecutive, on-time monthly principal and interest payments (typically 12 to 48 months depending on the lender), and meeting the lender’s credit score and income requirements on your own. The borrower is the only person who can apply for cosigner release. The cosigner may not initiate this process.

What to Read Next

Best Private Student Loans for March 2023

Private Student Loans and Credit

Private Parent Student Loans

Parent PLUS Loans

Student Loans Without a Cosigner

 

 

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