Students wondering how to find a co-signer typically don’t wonder for more than a few minutes. They ask Mom or Dad.
But what if your parents are out of the picture? That’s where finding a co-signer can become more complicated.
On the plus side, private lenders are pretty flexible about who can serve as the guarantor of your loan agreement. They simply need to be a U.S. (or permanent) citizen with good credit and steady income.
On the downside, it’s still a lot to ask someone to support you through school. Here are some options if you need a co-signer for your student loans.
Why you might need a co-signer at all
Almost all federal loans can be applied for and granted without a co-signer, one of many reasons to rely on them first. Private loans, on the other hand, almost always require a co-signer when you don’t meet their credit requirements for approval.
College Ave, a top-rated student loan lender, reported that more than 90 percent of private loans have a co-signer. Those that don’t might have higher interest rates as a result; the lender likely took on more risk.
A good co-signer helps improve your loan application with their superior credit history. Co-signers are also keenly aware that they’ll be responsible for loan repayment if the primary borrower fails to keep up.
In a sunnier scenario, the primary borrower can build up their own credit history by making regular payments on the loan. Their co-signer could rest easy behind the scenes, serving as a safety net.
There is a lot of risk in being a co-signer, though, which helps to explain why typically only those closest to you are willing to be one.
How to find a co-signer for a student loan
Short of a parent or a spouse who might feel more obligated to support you through school, you do have options for nontraditional co-signers. Here are some safe options, plus some you should avoid.
Safe options for atypical co-signers
First, think about those in your inner circle. Maybe you have an aunt, uncle, or grandparent who’s set financially and wouldn’t mind staking their credit report on you. The senior members of your family could be in a better position to take on this kind of risk.
Calling on siblings or cousins can be more tricky. They might want to keep their borrowing history clear to prepare for their own big purchases, such as applying for a mortgage.
Beyond your relatives, consider the people in your life who would go to bat for you. Lifelong friends and mentors might be willing to back you up even though you don’t share the same last name. (If you have to go through your social media network to find them, the relationship likely isn’t strong enough for co-signing.)
If you’re going to graduate school, a former teacher you grew close to could be convinced to help you further your studies. This could be true if you have exhausted every other avenue to funding and simply need a smaller private loan to push you over the hump.
Co-signer options to avoid at all costs
There are many reasons to avoid finding a co-signer on Craigslist (or similar online classifieds that lack security). You should also be wary of companies that claim to specialize specifically in matching needy students with strangers willing to co-sign loans at a cost.
Websites such as Hire A Cosigner and Cosigner Finder ask you to submit a free application, including your personal information and loan amount.
Then, you could be asked to pay a fee of some kind. Hire A Cosigner costs $149 for 30 days of access to its peer-to-peer platform. Cosigner Finder charges customers based on how fast they’d likely be matched with a co-signer — $99.99 for within a week, for example.
From there, you’d need to make it worth the stranger’s while. In exchange for serving as your co-signer, they could ask for a portion of your loan, for example. In fact, you might be asked whether you’re open to sharing your loan amount on your initial application.
That’s if you’re matched with a legitimate co-signer at all. Some Cosigner Finder users requested refunds via the Better Business Bureau. Crowdsourced sites like the Ripoff Report also don’t speak highly of the website or its competitors.
If you’re thinking about how to find a co-signer for a student loan online, put the service (and the co-signer) through the same kind of tests you’d give to a lender. Don’t take advertising at face value. If it seems sketchy at first glance, it probably is.
Convince a co-signer to pick up the pen
Before zeroing in on a co-signer candidate, make sure they’re eligible. College Ave, for example, has a pre-qualification tool that can help your prospective co-signer verify their residency status, income, and credit score.
The question of how to find a co-signer for a student loan then becomes how to convince a co-signer to sign on the dotted line.
When you’ve found an eligible co-signer, state your case like a Ph.D. student would defend their thesis. Come prepared, and be honest about the risks. For example, you can cite a 2016 CreditCards.com survey that said 38 percent of co-signers on credit cards and loans lost money.
Then, explain how your co-signer will end up in the majority. Answer these five questions to strengthen your case:
- Why do you need the loan amount?
- What is your plan for repayment?
- How are you equipped to handle repayment on your own?
- How would you navigate your worst-case repayment scenario?
- What is your plan for seeking co-signer release?
When possible, answer these questions with facts, not just niceties. Your co-signer is hitching themselves to your wagon, so they deserve to know the destination and how you’re going to get there.
If you need a $10,000 private loan to cover your junior year, for example, explain what exactly the money will be put toward, whether it’s tuition, housing, or another expense.
Open up about the details of your loan repayment plan. Show them with data (and maybe the help of our monthly payment calculator) how your estimated postgraduate income and savings will cover your future loan payments.
Also, don’t be shy about sharing your finances with a person you trust. If you have other loans (or plans to take out additional debt), they might like to know that your exposure goes beyond the loan they’re co-signing.
Finally, make sure to answer any questions they have about their own liability. They need to know, for example, that the lender will hold them accountable for loan payments if you are unable to make them.
Close the deal with co-signer release
More positively, tell your prospective guarantor about the benefits of co-signer release and your plan to work toward it.
As you’re looking to finance your college or graduate school education, it’s important to know that you have options for finding a co-signer other than your parents. They’re not all great options, of course. But finding a relative or friend offline will generally be the best way to go.
Rest assured that if you can’t find someone like that, there are ways to get loans without a co-signer.
Need a student loan?Here are our top student loan lenders of 2018!
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.
|3.24% - 11.99%1||Undergraduate, Graduate, and Parents||Visit Citizens|
|2.93% - 9.67%||Undergraduate, Graduate, and Parents||Visit CommonBond|
|3.54% - 12.66%2||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.98% - 9.07%||Undergraduate and Graduate||Visit LendKey|
|3.00% - 10.76%||Undergraduate and Graduate||Visit Connext|
|3.25% - 11.85%||Undergraduate and Graduate||Visit SallieMae|
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