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How to apply for a student loan with a cosigner step-by-step
Save on private loans by applying with another person.
While cosigners aren’t necessary on most federal loans, it could be hard to qualify for a private student loan without one. If you find the right person willing to back your loan, you could save on rates and be approved for higher loan amounts.
But asking a friend or loved one to become a cosigner is no small favor — cosigners are responsible for your debt, and they’ll need to rely on you to make on-time payments.
8 steps to apply with a cosigner
Student loan applications aren’t universal, but you can generally expect to follow set steps when applying for a loan with a cosigner.
Step 1: Find a cosigner.
Many private student loan providers enforce minimum credit score requirements of around 640 and income requirements of about $25,000 a year. You might have an easier time qualifying for the amount you want to borrow with a competitive rate if you apply with someone who has good to excellent credit, works full time and has a low debt-to-income ratio (DTI).
Most students ask their parents or a relative to cosign their student loans. But if family isn’t an option, look to:
- Family friends. You don’t need to share a last name to ask a person to cosign your loan. Another common option is a close friend — those who’ve known you since you were in diapers, maybe.
- Teachers. Graduate students who need a little help finishing their studies might ask a professor they’ve worked closely with to back their loan.
- Academic advisers. If you have a close relationship with your adviser, they might be willing to cosign a student loan with you.
- Other mentors. Former coaches, music teachers and other adults who’ve played an important role in your life might be willing to help you qualify for the funds you need to complete your studies.
Beware of cosigners-for-hire
You might be tempted to turn to Craigslist or sites like Hire a Cosigner, but note the risks. On top of charging hefty fees, cosigners-for-hire get access to identifying personal and financial information. Some might also request that you share part of your loan.
Step 2: Figure out how much you need to borrow.
Once you have a cosigner, calculate how much you need to borrow by looking at your expenses. Add up your tuition, fees and living expenses, and subtract from that total any other financial aid you receive — including federal loans, scholarships and grants and work-study programs. If your parents are footing part of the bill, subtract the amount they contribute too.
You don’t need to nail it down to the last cent, just a general idea to confirm your desired lender offers the loan amount you need. Most private student loan providers confirm your loan amount with your school so you don’t end up with extra money.
Step 3: Compare lenders.
It might be tempting to go with the first lender you come across, but you won’t necessarily get the best deal. To position yourself for the best loan you’re eligible for, list out your priorities that consider:
- Annual percentage rate. Your loan’s APR is an expression of interest rates and fees as a percentage. It’s a quick way to compare costs with loans at the same terms. Most private student loans come with both fixed and variable APRs. Fixed APRs stay the same, while variable APRs can fluctuate with the market over time.
- Loan terms. This is how long you have to pay off your student loan. Most private lenders offer terms of five to 20 years. The longer the term, the lower your monthly payments — but the more you’ll pay in interest and fees.
- Repayment plans. Many private student loan providers let you make interest-only payments or fully defer your repayments for six months if your course load drops below half time. A few offer flexible repayment plans after your grace period to make it easier for students struggling to find steady employment.
- Deferment and forbearance. These perks allow you to pause your student loan repayments if you lose your job, are injured and can’t work or face other financial hardship. If plan to return to school, look for a lender that offers in-school deferment even after you’ve started paying off your loan.
- Fees. Most private student loans don’t come with application, origination or prepayment penalties. But read the fine print to make sure yours doesn’t too.
- Eligibility. Confirm that you, your cosigner and your school are eligible for a private student loan. You might have to dig more deeply into eligibility if you go to a community college or for-profit school, because many lenders limit loans to students at schools that are eligible for federal loans.
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Step 4: Gather together the information you need.
After you’ve narrowed it down to a lender, learn what you need to apply. Most loans require:
- Your school’s tuition and fees.
- Any financial aid you’ve already received.
- Your contact information, including phone numbers and email.
- Your Social Security number and date of birth.
- Your start date and anticipated graduation date.
- Your cosigner’s monthly or annual salary.
- You or your cosigner’s credit score.
- Your cosigner’s email address.
Step 5: Complete the application.
Follow your lender’s directions to complete the application with your cosigner. Typically, you can do this online.
How your cosigner completes their portion of the application ultimately depends on your lender, but you might be asked to:
- Have them fill it out with you. While not as common, some lenders require you and your cosigner to complete the application together.
- Send them a code. More commonly, lenders send a code to your cosigner’s email address that allows them to unlock their portion of your application, often after you’ve completed your part.
- Send them a separate application. Some lenders also ask for your cosigner’s contact information so they can send a separate application. Your cosigner completes their portion after you’ve finished yours.
Step 6: Review your loan offer and submit additional documents.
Generally, you’ll wait a few business days to hear back from a lender after you and your cosigner have submitted your application. If you’re eligible, the lender provides a tentative offer that includes loan amounts, rates and terms. This offer isn’t necessarily what you’ll get — it’s just what your lender thinks you might qualify for.
Discuss the offer with your cosigner to make sure that it’s something you both agree to. Then follow your lender’s directions to submit additional information or documentation to complete your application.
Step 7: Review and sign your offer.
After you’ve completed the application, your lender sends you and your cosigner a final offer. Some private student loan providers send the offer after confirming costs with your school, while others do it before. If your lender hasn’t confirmed your costs, you could end up borrowing a different amount than what’s quoted on your final offer — but your lender will notify you before it disburses the funds.
If you and your cosigner agree to the lender’s terms and conditions, sign and submit your loan documents. You can typically do this online.
Beware of automatic default
It used to be fairly common for lenders to include a clause in the contract that said the loan would go into automatic default if your cosigner declares bankruptcy or dies.
Most lenders have revised their contracts to exclude this law after a Consumer Financial Protection Bureau report brought this issue to light in 2016, but it’s possible that some have not. Carefully read the terms and conditions of your loan before signing your documents.
Step 8: Pay off your loan.
How and when you begin repaying your loan depends on the repayment option you choose. Many private student loan providers allow you to defer payments for up to six months if your course load drops below half time at school. But while deferment could be the least expensive option in the short term, you’ll end up paying more over the life of your loan because of something called interest capitalization.
With interest capitalization, your lender adds to your loan principal any interest that accumulated while you were in school or over your grace period. Because interest is based on your loan principal, you end up paying back a larger loan with larger interest payments after deferment.
To avoid capitalized interest, consider looking into whether you or your cosigner can afford to make full repayments as soon as the loan is disbursed. That way, you’ll save the most on interest. Many lenders also offer the option of interest-only repayments of $25 or more while you’re in school to reduce the interest added to your principal.
Bonus step: Apply for cosigner release or refinance.
Cosigner release is a process by which you apply to remove your cosigner’s name from your student loan. Releasing your cosigner shows is an option after you’ve become financially independent and can afford your repayments. It also frees up your cosigner’s finances and lowers their DTI should they need to take out another loan.
Many lenders offer cosigner release after one to two years of consecutive, on-time repayments. Some allow you to keep the same loan terms, while others update your rates and terms depending on your credit score and income.
If your lender doesn’t offer cosigner release, you can refinance your student loan in your own name. This could be a particularly good option for former students who’ve built a strong credit history and have a higher income than their cosigner. You might see more competitive rates and terms on your own.
What exactly is a cosigner?
A cosigner is a person who signs your loan documents and becomes equally responsible for paying back your student loan on time. Most cosigners are parents, relatives or somebody close to you. That’s because being a cosigner can be risky: If you’re late on a payment or default on your loan, it can damage your cosigner’s personal credit.
Do I need a cosigner?
It depends on the type of loan you’re applying for. Most federal loans don’t require a cosigner. But you might have an easier time qualifying for a strong private student loan with a cosigner.
Typically, you could benefit from applying with a cosigner if you:
- Are applying for a private student loan.
- Haven’t taken on debt before or have bad credit.
- Aren’t employed or have a part-time job only.
- Need help meeting other requirements from your lender.
How does cosigning a student loan work?
When a person cosigns a student loan, they help the applicant meet specific credit, income and other eligibility requirements by taking on some of the risk that comes with borrowing. When it comes to student loans, lenders often consider only the higher credit score and income, though some look at the credit history of both borrowers.
When someone cosigns a student loan, it’s as if they take on that debt themselves. They undergo a hard credit check, which can temporarily lower their credit score, and the loan shows up on their credit report as a debt obligation. In this way, cosigning a student loan can make it difficult for the cosigner to qualify for credit until it’s paid off or the borrower removes them from the loan.
Even with a cosigner, you generally repay your student loan on your own. But it’s your responsibility to notify your cosigner if you find yourself unable to making payments — technically, they’re responsible for making sure your lender gets the repayment on time.
How can it affect the cosigner’s credit?
Cosigning a student loan can hurt your credit when the lender runs a hard credit check during the application or if the student is late on any repayments. There’s no way to avoid the hard credit check, but a cosigner can stay on top of the student’s loan repayments by regularly checking in on the account.
But it’s not all bad. If the cosigner or student makes all repayments on time, it can help boost both credit scores since it establishes a history of on-time repayment.
Can I get a student loan without a cosigner?
Yes, but you might find limited options. If you’re eligible for federal funding, you might want to start there — federal loans offer more flexible repayment terms and highly competitive rates set by Congress each year.
Otherwise, you might be able to find a loan without a cosigner if you’re employed full time and have an established credit history. Students who don’t fit that description could have luck looking into international student loan options, like Mpower. These loans tend to rely on your academic performance and earning potential, rather than your personal credit history.
Applying with a cosigner on a student loan doesn’t add too many extra steps to your application. But asking a family member or close friend to cosign a loan is a serious request.
If you don’t know a trustworthy cosigner who’d be willing to help you, consider reaching out to your school’s financial aid office to learn about your other options.
Or read our comprehensive guide to student loans to learn more and compare lenders.
Frequently asked questions
What’s considered a good credit score?
Many lenders refer to FICO Score ranges when considering the quality of your credit score:
- Poor — 300–579
- Fair — 580–669
- Good — 670–739
- Very good — 740 and higher
To learn more about what goes into that three-digit number, read our guide to good credit scores.
What happens if my cosigner dies?
It depends on your loan contract. Typically, nothing changes in your student loan at all. However, some contracts contain a clause that requires your entire loan balance due if your cosigner passes away. If you don’t pay it off, your loan goes into something called automatic default, which can destroy your credit and personal finances in general.
Automatic default clauses are much less common than they used to be, thanks to protections put in place by the Consumer Financial Protection Bureau. But it’s worth making sure your loan doesn’t contain one.
What if my student loan cosigner is retired?
Your options could be limited, even if your retired cosigner receives a pension or benefits. It can also be difficult to qualify if your cosigner is self-employed, because their income is more difficult to prove. You’ll generally find easier approval if you apply with a fully employed cosigner.
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