Signs You Need a Cosigner for Your Student Loans

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Nick Mann

By Nick Mann

January 22, 2019


One way lenders minimize their risk is by requiring a cosigner for a student loan. More than 90% of private student loans to undergraduate students require a cosigner.

A cosigner is a person who’s creditworthy and assumes responsibility if you’re unable or unwilling to repay the debt. This reduces the risk for lenders and ensures that the loan is repaid on time and in full.

Here are some reasons why you may need a cosigner for your student loans.

You’re Applying for a Private Student Loan

The Federal Stafford loan doesn’t require a cosigner. They’re funded by the federal government, which does not require students to demonstrate an ability to repay the debt.

The Federal PLUS loan, however, does involve a credit check. The borrower must not have an adverse credit history. Eligibility for the Federal PLUS loan does not depend on credit scores or debt-to-income ratios, however. If the borrower has an adverse credit history, an endorser who does not have an adverse credit history may be required. An endorser is like a cosigner.

Private student loans, however, are funded by private lenders. Approval is based mainly on the borrower’s prior credit history and ability to repay.

Exhaust all other options before borrowing private loans – including grants, scholarships, and other ways to reduce the cost of college. Federal loans are recommended over private since they come with many benefits, including income-driven repayment plans, deferment options, and potential loan forgiveness. 

Each lender has their own unique criteria for a borrower to be approved. While not all private student loans require a cosigner, many do. Some lenders even mandate that all undergraduate and graduate student loans have a cosigner, regardless of financials.

If this is the route you’re taking, there’s a good chance you’ll need a cosigner.

You Have Bad Credit

Credit trustworthiness is one of the first things a private lender will look at. They want borrowers with a history of making repayments on time and with no bad marks on their credit report.  

Having a low credit score makes you a bigger risk, meaning it’s harder to obtain a student loan. In this case, you’ll likely need a cosigner.

What’s considered poor credit?

Borrowers with a credit score of 620 or less (in some cases, 650 or less), are considered to be subprime. Not only are subprime borrowers unlikely to be approved for a private student loan, but the likelihood of approval increases with increasing credit score. Most private lenders prefer borrowers with a credit score of 780 or above.

Late payments, not honoring payment agreements and defaulting on prior loans are common reasons for bad credit.

It’s wise to check your credit score before applying for a private student loan. If there are any errors in your credit history, correct them before applying. It’s also a good idea to bring any delinquent accounts current.

You Have No Credit

Lacking a credit history makes lenders equally as reluctant to offer a student loan without a cosigner. This is common for recent high school graduates who just recently turned 18. They may have never taken on debt, and therefore, have no credit history.

Federal student loans do not treat a lack of a credit history as negative. Lenders of private student loans, on the other hand, are unlikely to make loans to a borrower who doesn’t have a credit history, since they can’t assess the risk of default. As a result, you’ll likely need a cosigner to assume responsibility.

You Have a Short Credit History

Credit history length is another factor lenders consider. Ideally, you’ll have a positive track record of making on-time payments for several years. The longer, the better.

If you’ve only recently begun making payments, this can be an issue because your credit isn’t well established. Even if you’ve always been on time, private lenders still may want a cosigner.

You Have a Thin Credit History

If you don’t have many accounts, you’re considered to have a thin credit history. Even if you’ve had a single good account for a long period of time, a lack of diversity in the number of accounts may make a lender nervous about lending you money. Lenders want both depth and breadth in a prospective borrower’s credit history.

You are Low Income

Although it is illegal for lenders to practice redlining, where they refuse to lend in low-income neighborhoods, low-income borrowers are less likely to receive a private student loan.

Lenders are allowed to require borrowers to have sufficient income to repay the debt. This usually involves requiring a minimum income threshold and a maximum debt-to-income threshold. So, low-income borrowers may be required to have a creditworthy cosigner who has the means to repay the debt.

For example, data from the 2015-16 National Postsecondary Student Aid Study (NPSAS:16) demonstrates that low-income students are less likely to get a private student loan and the average loan amount is lower, as shown in this table.

Adjusted Gross Income (AGI)

Percent Receiving

Private Student Loans


Private Student Loan

Less than $50,000



$50,000 to $99,999



$100,000 or more



Minority students are also less likely to qualify for a private student loan, as shown in this table.


Percent Receiving

Private Student Loans


Private Student Loan







These differences may be partly due to low-income and minority borrowers being less likely to enroll at higher-cost colleges. 

Will a Lender Consider Your Earnings after Graduation?

The purpose of going to college is to eventually land a good job and earn money. You’re investing in your education to further your long-term career. Even if you’re not earning much now, your income will likely increase once you graduate.

But, will lenders consider how much you’ll be earning after graduating when determining your eligibility for a student loan?

The answer is generally no. Traditional lenders are risk-averse. They are focused on your current ability to repay the debt, not your future finances. Credit scores may be predictive of the likelihood of graduation, but are not predictive of income after graduation. Some income-share agreements (ISA) base the repayment obligation on the student’s academic major and likely income after graduation, but ISAs are in their infancy.

In other words, your earning potential won’t negate the fact that you still need a cosigner.

You’re Under the Age of Majority

Each state has an age of majority, which can be age 18, 19 or 21. This determines when a person is considered an adult and legally able to sign contracts, such as loan promissory notes.

Federal student loans are not subject to the defense of infancy, but private student loans are.

Lenders of private student loans will not approve a private student loan if the student borrower is under the age of majority. If this happens, you’ll need a cosigner who is the age of majority or older.

When Lenders Need a Cosigner for Your Student Loans

Private lenders are always looking to minimize their risk. They simply don’t want to take a chance of borrowers defaulting on a student loan.

That’s why many require cosigners. Knowing the reasons why lenders want cosigners should let you know whether you need one or not.

A good place to start:

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