Should You Cosign a Private Student Loan?

Should You Get a Cosigner for Your Private Student Loan

The pros and cons of cosigning a private student loan

College is extremely expensive. Even after getting all the grants, aid, and more, your child could still be left with a huge expense. This could even be the case after getting a federal student loan. Sometimes, it’s worth exploring a private student loan to help cover costs. And if your child is thinking of going to take that route, they may ask you to be a co-signer. Here’s a look at the pros and cons of cosigning a private student loan.

Pros of Cosigning

  • Help With Approval. The main reason why private student loans often have a cosigner is that young people lack credit or have low credit scores. If you have a good credit score, cosigning a loan may increase the likelihood of approval.
  • Lower Interest Rate. Along with approval, cosigning a loan may help your child secure a lower interest rate. The lender will look at your credit to determine the loan terms, which may result in a more favorable interest rate.
  • Help to Build Credit. Another pro of cosigning a private student loan is that it will help build your child’s credit. The loan will appear on your credit report and theirs, so every on-time payment slowly improves their score and builds their credit history.

Cons of Cosigning

  • Could Hurt Your Credit. Cosigning can help build your child’s credit, but only if they consistently make on-time payments. If they start missing payments, their score and your score may suffer.
  • Relationship Strain. If your child misses payments, your credit score (and theirs) could take a hit. That makes for a difficult and awkward scenario that could strain the relationship. It’s not easy making money decisions with your child, especially if things go south. Have that hard conversation ahead of time so that they understand the impact their payment history has on your collective credit scores.
  • You’re On the Hook. According to one report, one out of every three private student loan cosigners end up taking over the payments because the borrower can’t handle them. You don’t want that to happen to you, so set proper expectations ahead of time to minimize the likelihood of taking over student loan payments in the future.


Do One Thing: Even if your child could use the help, carefully think through all the pros and cons before cosigning a private student loan. If it makes you uncomfortable, consider another strategy.

Chris O'Shea

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