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Do You Need a Cosigner for Federal Student Loans?

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Do you need a cosigner for a student loan? If you’re borrowing a federal student loan, the answer is usually no. But if you’re in need of a private student loan, you’ll likely need a cosigner if you can’t meet a lender’s criteria for credit and income on your own.

To take find out if and when student loans need a cosigner, let’s answer the following questions:

Do you need a cosigner for a student loan from the federal government?

If you’re seeking federal loans, there’s good news: You almost never need a cosigner for student loans offered by the Department of Education. This is a big benefit for federal student loan borrowers, as finding a cosigner for student loans can be tough.

A cosigner is a guarantor who signs on to a loan on your name and agrees to repay it if you don’t. Cosigning a student loan can be risky for cosigners, as they are legally on the hook for paying back your debt if you are unable to make payments.

Taking advantage of any federal student loans first is a good idea. Not only can you finance your education without using a cosigner, but you can also enjoy federal loan benefits such as income-driven repayment options, fixed interest rates and deferment and forbearance.

One exception

While most federal student loans don’t require a cosigner, there is one exception. If you are a graduate student or parent applying for direct PLUS loans and have a poor credit history, you may not be eligible without an “endorser,” who is similar to a cosigner. So, if you find an endorser who does not have an adverse credit history, you can receive a direct PLUS Loan.

Essentially, an endorser acts as a cosigner in this situation. If you’re applying to graduate school or you are a parent with an adverse credit history who is taking out a loan on your child’s behalf, this one caveat could affect your financial aid, requiring you to get a cosigner. But if you’re applying for federal financial aid for your undergraduate degree, you likely won’t need to worry about someone cosigning a student loan for you.

If you are a parent or applying for financial aid for your graduate degree, you should check your credit score and credit report first to see where you stand. If you have decent credit, you probably don’t need to worry about a cosigner. But if you have poor credit, you may need to find an endorser.

Can you be denied a federal student loan?

Although a cosigner isn’t necessarily needed for a federal student loan, know that you can be denied a federal student loan for several reasons. This may happen if you don’t meet the basic eligibility criteria, which includes:

  • Demonstrating financial need
  • Being a U.S. citizen or an eligible noncitizen
  • Having a high school diploma or GED certificate
  • Completing and submitting a Free Application for Federal Student Aid (FAFSA)
  • Being enrolled or accepted as a regular student in an eligible degree or certificate program
  • Maintaining satisfactory academic progress

If you are denied federal aid, talk to your student aid office. You might be able to regain eligibility for financial aid.

Do private student loans need a cosigner?

While most federal student loans don’t require a cosigner, private student loans are a different story. These loans are made through financial institutions or private lenders, which often have underwriting criteria that’s similar to other types of loans.

In other words, a lender checks your credit and income before approving you to borrow money. So if you have limited or poor credit, you may need a cosigner to receive private student loans.

According to data firm MeasureOne, the majority of undergraduate private student loans — 92% — had a cosigner in the 2019-2020 academic year. A cosigner can help you get approved for a loan and get a lower interest rate.

However, you can still get a private student loan without a cosigner if you have an excellent credit score.

What are the downsides to cosigning a student loan?

Remember that there are serious consequences for borrowers and cosigners alike if student loan payments aren’t made on time. If the borrower is unable to pay their student loans, the cosigner is liable for the debt. If a payment is missed, both parties face a hit to their credit.

Getting a student loan cosigned may make it easier for you to get approved for financial aid, but it can often be hard to release a cosigner when one is no longer needed. Even worse, some student loan borrowers faced “auto default” when their cosigner died or went bankrupt, in which case the loan balance was due in full.

Since the majority of federal student loans don’t require a cosigner and come with a host of government-backed benefits, it’s a good idea to take advantage of these first. Then if you need to borrow more money, research your private student loan options.


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