When applying for private student loans, many borrowers have the luxury of asking their parents to cosign. Using a cosigner could mean the difference between qualifying and not qualifying for a loan and, at the very least, help you secure a better interest rate.
But how can you find a cosigner for student loans when your parents aren’t an option? That’s a complicated question requiring a nuanced answer, so let’s look at this problem from a few different angles to get a clearer picture.
What Is A Cosigner?
A cosigner is a trusted, creditworthy partner that serves as support on your private student loan applications. Your lender will consider your cosigner’s credit history in addition to yours when you apply for a loan, and if approved, that loan will appear on your credit reports and your cosigner’s.
Borrowers with limited credit histories often rely on cosigners if they’ve maxed out their federal student loans and cannot qualify for private student loans as individual applicants. Cosigners can help improve your chances of getting the financing you need to pay for school.
Eligibility Requirements for Cosigners
While every lender has its specific criteria that cosigners must meet, most require that cosigners have the following:
- A solid credit history, with a credit score of around 680 or higher
- Steady employment and income (If your cosigner is self-employed, they may need to provide previous tax returns to verify their income)
- US residency, usually citizenship or permanent residency
Lenders also require that cosigners be at least 18 years old. Your cosigner need not be related to you, and you don’t need to verify your relationship with them. While most cosigners are parents, they can be any adult you know and trust.
How to Find a Cosigner for a Student Loan
If you’re wondering how to find a cosigner for a student loan, you can start by asking other relatives or adults you have a close relationship with. A foster parent, grandparent, aunt, or older sibling may all be suitable candidates. The cosigner can also be a family friend, former supervisor, mentor, or teacher.
Here are some steps you can take to find a cosigner:
- Make a list of the adults you feel comfortable asking to cosign a loan.
- Reach out and ensure they understand their responsibilities and that the loan will show up on their credit report, possibly impacting their ability to secure financing.
- Consider asking your cosigner to prequalify with the lender to determine whether they’re eligible to cosign your loan.
- Consider asking different people to cosign individual loans if you need to borrow several private student loans. You are not required to use the same person each time.
While some lenders will remove a cosigner from the loan after you’ve made a certain number of on-time payments, most will require that you refinance the student loan to remove the cosigner. Ensure your cosigner understands that the loan could stay on their credit report for several years.
Avoid Online Cosigners
Students who are unsure how to find a cosigner for a student loan may think about using a third-party company that promises to deliver a creditworthy cosigner. These companies say they can find you a cosigner, but often at a steep cost.
According to financial aid expert Mark Kantrowitz, third-party companies usually charge a fee of around $30 or $40 to find a cosigner. Depending on their terms, the cosigner then charges their own fee, often as high as $1,000 or 20% of the loan amount.
Alternatives If You Can’t Find a Cosigner
If you cannot find a cosigner for private student loan applications, you may still have some options for securing financing for college. Here are some strategies to consider.
Max Out Federal Student Loans
Ensure you’ve maxed out your federal student loans before applying for private student loans. A common misconception is that federal student loans require a parent to cosign the loan, but that’s not true.
You typically must include your parent’s information on the Free Application for Federal Student Aid (FAFSA) form, but they’re not required to cosign your federal student loans. Even if you don’t have your parent’s financial information, you can still complete the FAFSA to determine your eligibility for federal student loans and financial aid.
Here are the types of federal student loans available as well as maximum loan amounts.
- If you’re considered a dependent student, the maximum amount you can borrow in Direct Unsubsidized Loans as an undergraduate is $31,000.
- If you qualify as an independent student, then you may be eligible for up to $57,500 in Direct Unsubsidized Loans for an undergraduate degree.
- If you’re a graduate student, you can receive up to $138,500 in Direct Unsubsidized Loans.
- Grad PLUS loans are an option if you’ve already met the aggregate borrowing limit for direct unsubsidized loans. The maximum annual amount available in Grad PLUS loans is the cost of attendance minus any other financial aid.
In some cases, parents who don’t qualify as cosigners on private student loans may still be eligible for Parent PLUS loans. These are federal student loans where the parent is the main borrower and not the child. The maximum amount you can borrow for a Parent PLUS loan is the annual cost of attendance minus any other financial aid.
Improve Your Credit Score
Working on your credit score is another option if you can’t find a cosigner. Private student loans are typically credit-based, meaning lenders review your credit history and score when determining if you’re approved for a loan. One of the benefits of a good credit score is that you’re more likely to qualify for financing without a cosigner.
While requirements vary by lender, many require a credit score of at least 680 to qualify for a loan. Aim to improve your credit score as much as possible by making your monthly payments on time and in full, paying down existing debt as much as possible. In general, the better your credit, the lower your loan rates.
Use A Cosigner With An ELFI Student Loan
ELFI offers private student loans with low rates and no fees for individual borrowers and those with cosigners. While you can apply individually, using a cosigner could work in your favor, especially if your credit history is limited.
Learn more about our borrower and cosigner requirements for new loans. Those with existing loans can also learn about how to refinance student loans with a cosigner.
