Do Parents Have To Cosign Student Loans

Parents are not required to cosign if your student applies for student loans. But increasing the likelihood that a parent will cosign for a private loan

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Student loans are frequently used by college students to finance their education. The first choice for students who need to borrow money is usually a federal student loan because most of them don’t require a credit check or cosigner.

However, credit will matter if your child needs to use private student loans because their federal student loans won’t be enough to cover all of their expenses. A cosigner may also be required in order to obtain a private student loan because the majority of college students have a limited credit history.

Are parents required to cosign student loans?

Most federal student loans are unrequired by credit checks or cosigners. However, to be eligible for a federal Grad PLUS Loan, a graduate student with a poor credit history may need a cosigner (also known as an endorser).

Private student loans are different. Most private lenders will take into account a borrower’s income and credit history. Your student may require a cosigner to be approved for a private student loan if they have little to no credit history and don’t make enough money to meet the lender’s requirements.

Before agreeing to cosign for your child’s student loans, you should be aware of the benefits and drawbacks.

Advantages of parents cosigning student loans

Being a cosigner for your child’s private student loans can provide them with a number of benefits if they need to fill a funding gap.

Improves the odds of approval: If your child has a thin credit history or negative marks on their credit report, they may not qualify for a private student loan without having a cosigner. Of course, approval isn’t a guarantee. A borrower can still be denied a student loan with a cosigner if the person cosigning the loan also doesn’t meet the lender’s credit requirements.

Access to lower interest rates: Loan interest rates are generally based on credit history. If you have good to excellent credit and you cosign the loan, your student may have access to lower interest rates and, therefore, lower monthly payments.

Help your child build credit: If your child needs a cosigner on their student loan, chances are they either have a poor credit history or not much credit history at all. Opening a student loan (with your help) and paying it off over time can help boost their credit, which will help set up their finances for the future.

Possibility of being removed from the loan later: Just because you cosign a loan doesn’t mean you’ll be on the hook forever. Your child could refinance the loan later to remove you. Additionally, many lenders offer a cosigner release after the primary borrower has made a certain number of on-time payments.

Risks for parents cosigning student loans

Without really thinking about the risks, many parents automatically agree to cosign their children’s student loans. As much as you may want to support your child financially during their college years, agreeing to cosign their loans has some drawbacks:

Responsible for payments if the cosigner defaults: By cosigning a loan, you’re agreeing to repay it if the other borrower doesn’t. Unfortunately, it’s impossible to determine what your child’s earnings will be when they graduate. If your child can’t make their loan payments after college, you’ll be on the hook for them.

Impact on your credit and debt-to-income ratio: Even if your child does make their loan payments, cosigning the loan will affect your credit and debt-to-income (DTI) ratio. First, your credit score could go down by increasing the amount of credit you’re using. And if you qualify for other loans, such as a mortgage, your cosigned student loan will count as a debt payment when a lender calculates your DTI ratio.

Potential to harm relationships: No one wants to think that cosigning their child’s student loans could ultimately harm their relationship, but it’s a possibility. If your child fails to make their payments and you end up having to pay them, it could strain your relationship.

Student loan options without a parent cosigner

Most federal student loans don’t require a cosigner.

To qualify for federal student loans, your student must complete the Free Application for Federal Student Aid (FAFSA), where they’ll share information about your family’s personal finances.

Whether your student is an independent or dependent student affects the information they must include on the FAFSA. Except for those who are 24 years of age or who meet one of the many other requirements, such as:

Being married

Working toward a master’s or doctorate degree

Having dependent children

Serving in the armed forces

Being emancipated

Having deceased parents

Being in foster care

Being an unaccompanied youth.

On the FAFSA, independent students are only required to list their own assets and sources of income. However, dependent students are required to provide the same details for their parents, whose assets will be taken into account when determining how much financial aid the student is eligible for.

Students may qualify for one of three types of student loans depending on the information they provide on the FAFSA:

Loan type	Pros	Cons
Direct Subsidized Loans	Must have financial need to qualify Government pays the interest that accumulates while you are enrolled at least half-time in school and for the first six months following graduation.	Only available to undergrads with financial need If you put your student loans in forbearance, you can delay them, but interest will still accrue.
Direct Unsubsidized Loans	Not being required to prove financial need results in a higher borrowing cap than subsidized loans. Available to undergrad, grad, and professional students	You are liable for all accumulated interest, even if you are a student. Higher interest rates for grad and professional students
Direct PLUS Loans	Available to grad students and parents of dependent undergrads You are permitted to borrow up to your school’s certified tuition costs, less any other financial aid you have received.	Higher interest rates than subsidized and unsubsidized loans 7.54% disbursement fee for the 2022-2023 academic year

How to Respond if Your Parent Plus Loan is Rejected

3 best private student loans without a cosigner

With a private student loan, students are more likely to require a cosigner, but it isn’t always the case. Without a cosigner and possibly even for students with weak credit histories or low credit scores, some private loans are available to students.

Before taking out a private student loan without a cosigner, students should take a few factors into account. Having a cosigner can help you qualify and frequently result in better interest rates. If they apply without a cosigner, their chances of getting approved or the interest rate they pay may both increase.

Students should comparison shop and take into account options from as many lenders as they can in order to find the best loan for their circumstances before applying for a private student loan without a cosigner. Credible makes this simple for students; in just two minutes, they can compare prequalified rates from our partner lenders who provide student loans without cosigners.

Lender	Fixed Rates From (APR)	Variable Rates From (APR)	Loan amounts	Credit score
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	4.62%+10	4.72%+10	$2,001 to $400,000	Does not disclose
Fixed APR: 4.62%+10 Variable APR: 4.72%+10 Min. credit score: Does not disclose Loan amount: $2,001 to $400,000 Loan terms (years): 5, 7, 10, 12, 15, 20 Options for repayment include full deferral, flat/fixed repayment, interest-only payments, academic and military deferments, forbearance, and loan forgiveness in the event of disability or death. Fees: None Discounts: 0. 25% to 1. 00% automatic payment discount, 1% cash back graduation reward. Eligibility: Must be a U. S. student who is a citizen, permanent resident, or DACA and is enrolled at least half-time in a program leading to a degree Customer service: Email, phone Soft credit check: Yes Cosigner release: After 12 on-time principal and interest payments Loan servicer: Launch Servicing, LLC
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	5.25%+8	4.38%+8	$1,001 up to 100% of school certified cost of attendance	670
Fixed APR: 5.25%+8 Variable APR: 4.38%+8 Min. credit score: 670 Loan amount: $1,001 up to cost of attendance Loan terms (years): 5, 10, 15 Options for repayment include a full deferral, a full monthly payment, interest-only repayment, immediate repayment, academic deferment, and forbearance. Fees: Late fee Discounts: Autopay, reward for on-time graduation Eligibility: Must be an Indiana resident or a U. S. citizen attending an eligible Indiana school. Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 48 months Loan servicer: American Education Services
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	4.89%+	N/A	$1,500 up to school’s certified cost of attendance less aid	670
Fixed APR: 4.89%+ Variable APR: N/A Min. credit score: 670 Loan amount: $1,500 up to cost of attendance less aid Loan terms (years): 10, 15 Options for repayment include full deferment, interest-only payments, immediate repayment, academic deferral, and forbearance. Fees: None Discounts: None Eligibility: Must be a U. S. citizen or permanent resident and be making satisfactory academic progress. Customer service: Email, phone Soft credit check: Yes Cosigner release: After 48 months Loan servicer: American Education Services (AES)
Compare private student loan rates without affecting your credit score. 100% free! Compare Private Loans Now Trustpilot

Is a parent loan or cosigning a student loan better?

Parent PLUS Loans are a type of student loan that the federal government provides and are available to parents of undergraduate students. Unlike with other federal loans, the parent is the borrower here rather than the student.

Parent PLUS Loans have some benefits, including providing the child with more financial aid for school. However, the parent is the only borrower and is accountable for paying back the loan. Your child won’t be considered responsible in the eyes of the lender even if they agree to help with loan repayment. You’ll be the only one harmed if they don’t make the payments.

Continue reading for two options for parents with bad credit seeking student loans.

Credible makes it simple to compare rates from various private student loan providers, whether you’re the borrower or the cosigner, without affecting your credit score.

Multiple lenders compete to get you the best rate

Get actual rates, not estimated ones

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See Your Rates Checking rates will not affect your credit

With more than eight years of online writing experience, freelance personal finance writer Erin Gobler She is passionate about making the financial services sector more approachable by simplifying complex financial concepts.

Choosing a Student Loan

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FAQ

How can I get student loans if my parents won’t cosign?

If your parents won’t co-sign for a private student loan, you can ask a close family member or a reliable friend to do so. The co-signer will typically need to have income and a good credit score in order to qualify, though eligibility requirements vary depending on the lender and the loan you want to apply for.

Are parents responsible for their child’s student loans?

Technically, parents are not required to co-sign for or sign student loans for their children because they are not needed for federal loans since there is no credit check. When it might be necessary is if there is a need to borrow money that exceeds the federal loans’ borrowing cap and necessitates private loans.

Should my parents cosign my student loan?

Parents don’t have to cosign student loans. Since most federal loans don’t require a credit check, your child most likely won’t need a cosigner for them. But because there is a borrowing cap on federal loans, your child might have to use private loans to close funding gaps.

Do federal student loans require cosigner?

For the majority of federal student loans, there is no cosigner or credit check required. Prior to leaving college or dropping below a half-time load, you have time to start repaying your federal student loans.