Do You Need a Cosigner for Federal Student Loans?

cosigning a student loan

If you’re looking for ways to pay for school, you’ve likely come across both federal and private student loans. Federal student loans are offered by the U.S. Department of Education, while private student loans are offered by private lenders.

And one big difference between federal student loans and private student loans: the need for a cosigner.

Do I need a cosigner for federal student loans?

The good news is, in most cases, cosigning a student loan is not necessary to get federal loans. This is a big benefit for federal student loan borrowers, as finding a cosigner for student loans – or any type of loan – can be tough.

Additionally, cosigning a student loan can be risky for the cosigner, as they are legally on the hook for paying back your debt if you are unable to make payments.

Plus, taking advantage of any federal student loans first is a good idea anyway. Not only can you get financing without the use of a cosigner, but you’ll also enjoy federal benefits such as income-driven repayment options, deferment/forbearance, and guaranteed fixed interest rates.

One exception to the rule

While most federal student loans don’t require a cosigner, there is one exception. If you are applying for Direct PLUS loans and have a poor credit history, you may not be eligible without an “endorser.”

According to a Federal Student Aid worksheet on the matter, “You can receive a Direct PLUS Loan if you obtain an endorser (similar to a cosigner) who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if you do not repay it.”

Essentially, an “endorser” acts as a cosigner in this situation. If you’re applying to graduate school or are a parent taking out a loan on your child’s behalf, this one caveat could affect your financial aid, requiring you to get a cosigner.

But if you’re applying for federal financial aid for your undergraduate degree, it’s unlikely you need to worry about someone cosigning a student loan for you.

If you are a parent or applying for financial aid for your graduate degree, you should check your credit score and credit report first to see where you stand. If you have decent credit, you probably don’t need to worry about a cosigner. But if you have poor credit, you may need to find an endorser.

The dangers of cosigning a student loan

While most federal student loans don’t require someone cosigning a student loan for you, private student loans are a different story. These loans are made through financial institutions, which often have similar underwriting criteria to other types of loans.

According to a 2012 report by the Consumer Financial Protection Bureau and the U.S. Department of Education, over 90 percent of new private student loans are cosigned.

If you have limited or poor credit, you may need a cosigner to receive private student loans. A cosigner can help you get approved for a loan as well as a lower interest rate.

Remember, however, that there are serious consequences for borrowers and cosigners alike if those payments aren’t made on time.

If the borrower is unable to pay their student loans, the cosigner is liable for the debt. If a payment is missed, both parties can experience a hit to their credit.

And while cosigning a student loan may make it easier to get approved for financial aid, it can often be hard to release a cosigner when one is no longer needed. In fact, the Consumer Financial Protection Bureau found that 90 percent of private student loan borrowers were denied cosigner release.

Even worse, some student loan borrowers face “auto default” if their cosigner passes away. In other words, when the cosigner dies, the student loan balance is due in full.

Since the majority of federal student loans don’t require a cosigner and come with a host of government-backed benefits, it’s a good idea to take advantage of these first. Then if you need to borrow more money, investigate your private loan options (check out the table below for some of our favorites).

Need a student loan?

Here are our top student loan lenders of 2018!
LenderRates (APR)Eligibility 

1 = Citizens Disclaimer.

2 = CollegeAve Autopay Disclaimer: The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of
Smart Option Student Loan customers.

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3.92% -
Undergraduate, Graduate, and ParentsVisit CollegeAve
3.62% - 11.85%*3Undergraduate and GraduateVisit SallieMae
2.93% -
Undergraduate, Graduate, and ParentsVisit CommonBond
3.46% -
Undergraduate, Graduate, and ParentsVisit Citizens
4.21% - 9.69%Undergraduate and GraduateVisit LendKey
3.35% - 10.89%Undergraduate and GraduateVisit Connext
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