How to find the right student loan cosigner

As the cost of higher education rises, growing at an annual rate of about 2% over the last decade, many students are finding themselves in need of financial assistance to pay for their college classes. The average yearly cost of tuition, books, supplies and daily living expenses is $36,463 per student, according to the Education Data Initiative, though some colleges and universities can have much higher costs than the average. 

So, with the start of the fall 2023 semester closing in, you may be searching for ways to cover these costs. While federal grants and loans may cover some of the costs of higher education, they may not be enough to cover everything. In that case, private student loans offered by private lenders can be a good option to fill in the gaps.

However, if you have bad or no credit history and a limited income, securing a private student loan can be challenging. Private student loan lenders take into account your credit score and income when considering your application. But the good news is that finding the right cosigner can significantly improve your chances of obtaining a private student loan with a lower interest rate and better terms. 

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How to find the right student loan cosigner

To get you started on the right foot, consider these tips for finding the right cosigner for your student loans.

Start with close family

The most natural place to look for a student loan cosigner is within your own family. Parents, in particular, are often the first choice due to their vested interest in your academic success. They may be more likely to have a strong credit history and stable financial situation, increasing your chances of approval for the loan. Your close family is also more likely to take a chance on cosigning your loan, as most will want to see you succeed in your education. 

When approaching your family, have an open and honest conversation about your educational plans, loan terms and your repayment plan. Make sure they are fully aware of their responsibilities as a cosigner and only proceed if both parties are comfortable with the arrangement.

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Ask a relative or your inner circle

If your parents are unable to serve as cosigners, consider reaching out to other close relatives or trusted individuals in your inner circle. Siblings, aunts, uncles or grandparents could be potential candidates if they meet the requirements set by the lender. Cosigners typically need to have a good credit score and an income to qualify — and for you to get the best loan terms — so make sure to consider those factors when narrowing down the options.

As with your parents, approach these conversations with transparency, explaining your goals and how their support can help you achieve them. Any potential cosigner should also understand what cosigning on a loan actually entails. While you may have the option to release your cosigner from your student loans in the future, it's important to be upfront about what the process looks like, potential repercussions and what their obligations may be if you default on your loan.

Be wary of online cosigners

In researching options for a cosigner, you might come across online platforms or services that connect students with potential cosigners. This might seem like a convenient solution, but take caution. Entrusting your financial future to an unknown cosigner could pose risks. 

For starters, many online cosigners come with application fees or other types of fees which can increase the cost of borrowing — may not be refunded if you aren't matched with a cosigner by the service. These types of cosigner services could leave you with little to no control over the cosigner you're matched with, and whether they meet the requirements by your private lender. This, in turn, could lead to higher interest rates or loan denials. 

Depending on the situation, you may be better off applying for a student loan with a higher rate rather than using a cosigner service, but if you do choose this route, always thoroughly vet any potential cosigners you're matched with.

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Consider the alternatives

If finding a cosigner ultimately proves challenging, you may want to explore no-cosigner student loan options instead. While they tend to come with higher interest rates, some private lenders do offer loans specifically designed for students without cosigners. You can also look into student loans with bad credit — like lenders without credit score requirements. 

As with any type of loan, it's important to consider all the factors before choosing, but these alternative loans may be a good way to secure the funds you need without having to track down a cosigner.

The bottom line

Finding a student loan cosigner may be a crucial step in securing financial assistance to pursue higher education. Start by approaching your close family, and if that option isn't available, consider reaching out to other trusted relatives or individuals in your inner circle. Online cosigners may seem convenient, but be cautious and thoroughly vet potential candidates. You can also consider no-cosigner student loans as an alternative. But no matter what you choose, remember that a well-considered decision will set you on the path to achieving your academic goals with a strong financial foundation.