If you’re looking to apply for a private student loan, having a cosigner (endorser) is a requirement. This is because the majority of private loan applicants are fresh out of high school or early twenties and have little to no credit history, making them a risky loan candidate.  


What is a Cosigner? 

A cosigner (endorser) is someone who is creditworthy and agrees to be responsible for repayment of your loan should you default. This brings assurance to the private loan company that the loan will be able to be repaid in full or still be able to receive monthly payments if the borrower is unable or is refusing to make payments. 

A cosigner is not to be added for the sake of having someone else pay for the loan for you. Again, the cosigner would only be used if the borrower defaults and/or refuses to pay.  


Why do private loans require a cosigner, but not a federal student loan? 

The federal government funds and provides federal student loans therefore a cosigner is not needed. Private loans are provided by banks or private lenders and are biased off of creditworthiness. Looking into the borrower’s credit history helps the private loan lenders asses the borrower’s ability to pay the loan back.   


How do I know I need a cosigner? 

When applying for a private student loan, it's likely you will need one. The need to provide a cosigner is not a bad thing. It is just good practice to learn about credit and building your own personal credit history for future loans.  


Who should be my cosigner? 

The key element in choosing a cosigner is that they are creditworthy. Being creditworthy means, they have a good credit score, a good standing on repayment and a steady income. In some cases, the better the consigner looks in those three aspects, the better chance the borrower will have of securing a lower interest rate, which will affect the total amount you owe towards the loan.  

More often than not, a cosigner is a parent, guardian, or a relative to the borrower. If those options are not available, consider asking a family friend or someone close to you who would gladly invest in you going to college. When approaching the subject of being a cosigner, be sure to be able to answer all questions they have regarding the loan process.  

Some questions they ask: 

  • Why are you applying for a private student loan? 

  • Who is the lender? 

  • How much do you need to borrow? 

  • Why do you need a cosigner? 

Opening the door to communicate about your finances to a possible cosigner helps them get a better understanding of what you need and build trust. If you have someone in mind, it may be best to ask them to join you by visiting the private loan lender or giving them the contact information to be able to ask them questions directly.  

What are the risks of having a cosigner? 

Since cosigners are responsible for repayment of the loan in the case of the borrower defaulting, they consume majority of the risk. They trust that the borrower will make the payments on time. If a payment is missed, their credit will be affected. The borrower benefits from the cosigner’s credit history and in knowing that if anything were to happen, they do have a solid back up plan to help them continue on with the repayment of the loan.