Student loan cosigners: Everything borrowers need to know

College is a dream come true for many students, but funding that dream can be expensive. Many young adults turn to student loans to pay for their tuition, textbooks, housing and other education costs. But not everyone is able to qualify for a loan on their own.

If you're having trouble getting a student loan — or getting as much as you need — having a cosigner can help. But it's a big financial decision that affects you and another person. So, it's important to know exactly what you're getting into before you ask someone to be your cosigner.

Explore your student loan options online now to see how much you can borrow.

Student loan cosigners: Everything borrowers need to know

Deciding whether to get a cosigner for your student loan? Here's what you need to know.

What is a student loan cosigner?

A cosigner is someone who agrees to share the legal responsibility of repaying your student loan. If you can't make your payments, the cosigner is legally obligated to repay the remaining balance.

Lenders usually require a cosigner if the borrower has a low credit score, no credit history or limited income. Since these borrowers are more likely to default, bringing a cosigner on board minimizes the risk the lender is assuming by providing the loan.

Find out how much you can borrow with student loans here.

Who can cosign a student loan?

Anyone who is over the age of 18 and meets the lender's qualifications can cosign your student loan. This person might be a parent, relative or even a close friend.

Most student loan lending companies require that cosigners have a good credit score, stable income and a low debt-to-income (DTI) ratio. They want to see that the cosigner has the ability to pay back the loan in the event you default.

Benefits of having a cosigner

If you have a limited credit history, low credit score or insufficient income, a cosigner can help you qualify for a loan you wouldn't otherwise be eligible for.

They may also be able to secure you a larger loan amount or a lower interest rate, which can make it easier to repay the loan and save you thousands of dollars in interest.

Risks associated with having a cosigner

Getting someone to cosign your student loans isn't a decision you should make lightly. It's essential to remember a cosigner is just as responsible for the loan as you are. If you default on your payments, your cosigner must step in and make them. This can put a strain on their finances and your relationship with them.

In addition, since their name is on your loan, your cosigner's credit score will be damaged if you default. And if they aren't able to pay back the loan on their own, the lender will come after them.

So, you owe it to your cosigner to have a plan in place to repay your loan on time. Otherwise, you could put them in a tough situation and potentially damage the relationship for good.

Alternatives to having a cosigner

If you're unable — or unwilling — to get a cosigner, there are some alternatives you can consider.

Most federal loans don't require a cosigner; they are need-based and don't involve a credit check. You should max out your federal student loan money before looking to private student loans because federal loans have comparatively low interest rates and offer a range of repayment and forgiveness options.

In addition, look into scholarships and grants, which you'll never have to repay.

You can also brainstorm ways to earn more money for your college expenses, such as getting a part-time job or applying for a work-study program. And you can trim your costs so you won't need to pay for as much. For instance, consider buying used textbooks rather than new, attending a community college rather than a private one and cooking your own food rather than getting a pricey meal plan.

After exhausting these options, you can turn to private student loans to fill any remaining gaps. Some lenders offer private student loans that don't require a cosigner, but these loans often have higher interest rates. You can also consider borrowing from a credit union, which may be more flexible with its requirements.

When all else fails, you may need to put your college plans on hold while you work on boosting your credit score and establishing a steady income.

The bottom line

A student loan cosigner can help you get approved for a loan and potentially lower your interest rate, but being a cosigner carries significant responsibility. It's crucial to understand the risks and benefits associated with asking someone to be your cosigner and carefully consider all of your other options before doing so.

Make sure you have a clear understanding of the terms of any loan you're considering and be open and honest about your financial situation with potential cosigners. Develop a plan to pay your loan back on time so your cosigner isn't on the hook for you financially. With the right research and planning, you can navigate your financing options wisely and make your college dreams a reality.