Do you need a cosigner for student loans?

Depending on your financial history, you may need a cosigner to qualify for a student loan. When you apply for a loan with a cosigner, the lender considers their credit and financial history in addition to your own. Even if you don’t need one to qualify, having a cosigner could help you secure better interest rates and loan terms.

Cosigners for federal vs. private student loans

The process of cosigning a student loan differs by lender. Federal student loans all require the primary borrower to fill out the Free Application for Federal Student Aid (FAFSA) before applying, including if they’re applying with a cosigner. Private student loans all have different applications.

Federal student loans

All undergraduates can apply for federal student loans without a cosigner, and the same is true for graduates who apply for Direct Unsubsidized Loans. Some graduate school loans do not require a credit check and therefore are available to all eligible students who wish to apply.

For grad PLUS loans, graduate students must go through a credit check. Those who have an adverse credit history will need an endorser who essentially serves as a cosigner on the loan.

If you’re a dependent listed on your parents’ tax return, they will need to supply their information as well. Endorsers don’t need to apply with you, but they will need to submit an endorser addendum.

Private student loans

You may be able to get a private student loan without a cosigner if you have good credit — anything above 670 is typically best. If you have a great credit score and no history of late payments, you may be able to qualify on your own. Some lenders also advertise nontraditional application requirements or offer loans specifically to students without cosigners.

Private student loans require a cosigner if you don’t have much credit history or if your credit score is low. This is why most undergraduates who take out a private student loan do so with a parent or other family member. Even if you qualify for a loan, you may want to consider a cosigner if you’re still building credit. Adding a cosigner will help you qualify for more competitive private student loan interest rates.

Private student loans, unlike their federal counterparts, are issued by banks, credit unions and online lenders. Instead of filling out a FAFSA, you apply for private student loans by submitting an application on the lender’s website or, if the lender has physical offices, in person. This application considers your credit history, credit score, income and employment history to determine whether you qualify and what rate you’ll receive.

How to get a student loan without a cosigner

Your best option for getting a student loan without a cosigner is to apply for a federal student loan. If you must apply for a private student loan, you’ll need to make sure that you’re in good financial health to qualify for a loan so you do not need a cosigner for your loan.

To increase your chances of being approved:

• Make timely payments on existing credit. Make your credit card payments on or before the due date. This shows that you are trustworthy and will help boost your credit score.
• Don’t max out your credit card. Every credit card has a maximum credit limit. If you are constantly using all of your credit, it will impact your credit score negatively.
• Establish a steady income. Many lenders have a minimum annual income requirement, but they also typically look for borrowers with a steady source of income.
• Find a lender with fewer requirements. There are some student loan lenders that want to make it easier for borrowers with bad or little credit to access student loans. These lenders may look at your school information, major and future earnings potential to qualify you for a loan.

Releasing a cosigner from your loan

Private lenders commonly require cosigners, but some lenders may release cosigners from student loans once the primary borrower can meet certain requirements, such as making a set number of on-time payments.

Whatever the reason, releasing a cosigner from your loan is typically a straightforward process as long as it is an option with your lender, and you’ve met any established requirements. In most cases, you’ll simply fill out a form requesting the release and potentially go through a credit check.

If you anticipate wanting to release your cosigner from the loan eventually, look for lenders that are upfront about their cosigner release policy. From there, ensure that you make timely payments on your loans and take steps to build your credit score to give yourself the best chance of qualifying. In some cases, you can apply for cosigner release after 12 to 36 months of consecutive, on-time payments.

Bottom line

When you need help paying for college, consider all your options before taking out a loan with a cosigner. A cosigner might help you secure a student loan when your personal credit or income isn’t strong enough to qualify on your own — but they are equally liable for student loan debt, as much as if they were the sole borrower. You should have an honest conversation beforehand about expectations once the loan enters repayment.