What is a co-signer for a student loan?
A co-signer is a person who agrees to repay a loan along with the primary borrower.
Qualifying for a private student loan sometimes requires borrowers to get a co-signer. Having a co-signer may allow a student to borrow at a lower interest rate if the co-signer has a good credit record. Before you co-sign a loan or ask someone to co-sign a loan, you should consider the obligations and risks associated with co-signing a loan.
- Co-signers are equally responsible and legally obligated to repay the loan. A co-signer should consider whether they are willing and able to repay the loan if the student borrower does not repay the loan on time.
- Any late or missed payments for a co-signed loan will affect both the co-signer and the student’s credit history. A co-signer should decide before co-signing a loan whether they are willing to risk harm to their credit record if the student borrower does not repay the loan.
- Private lenders often hire collection agencies to get a co-signer to repay. A lender or a debt collector may also sue a co-signer.
- If you do not qualify for individual credit, a creditor may require a co-signer, but that person does not have to be your spouse.
Some lenders may offer to release the co-signer from the loan once the primary borrower or student borrower makes a certain number of on-time payments and meets other credit requirements, including a credit check. Many lenders and student loan servicers do not proactively tell you when you are eligible to have your co-signer released.
Here are more tips on protecting your credit as a co-signer.