A co-signer of a student loan is someone with good credit who jointly signs the promissory note for a loan. This person assumes responsibility for repaying the loan with the primary borrower. Co-signers are different from endorsers – who is a person with secondary liability for a loan; if the primary borrower does not make their monthly payments as agreed, the endorser is responsible for making the payments, including any late fees. Endorsers are usually used for PLUS or Graduate PLUS loans when the primary borrower has an adverse credit history and is not or would not be approved for the loan.

For federal student loans, such as Perkins or Stafford, you do not need a co-signer. For private student loans, anyone without a very good credit score and credit history should apply with a credit-worthy co-signer to increase the chances of approval and possibly improve the rate and fees on the loan. Some lenders require college student borrowers to apply with a co-signer regardless of income or credit rating. Be sure to look at each loan program for these requirements.

Most lenders will require a borrower to have a strong credit score (good to excellent) in addition to other criteria such as no negative credit history (such as missed payments), debt-to-income ratio (amount of debt vs. your current income) and even proof of current employment and income.

So, if you are an undergraduate student without sufficient personal income or credit history, you’ll almost certainly need to apply for a private student loan with a credit-worthy co-signer.

For more on using a co-signer, or being one for a student borrower, read our tips:

  1. For Co-Signers: Co-Signing on a Private Student Loan
  2. For Borrowers: W orking with A Student Loan Co-Signer

Related Articles

Cars News Daily