What Is a Cosigner?

A cosigner shares equal responsibility for the repayment of the loan, and agrees to pay back the loan if the borrower does not. Since the cosigner accepts equal responsibility, late payments affect both the borrower’s and cosigner’s credit profile and score. Your cosigner doesn’t have to be related to you, but many borrowers ask a parent, spouse or other relative to cosign their application.

What are the Benefits of Having a Cosigner?

Private education loans require a certain credit score and history, as well as an annual income. There are several benefits to having a cosigner:

  • You may receive a lower interest rate on your loan, which lowers your monthly payment and overall costs.
  • It can often be difficult for many students and borrowers to meet the credit and income requirements, so a cosigner can help you get the loans you need.
  • It can help you to qualify for a loan, allowing you the opportunity to establish a good credit history. Having good credit will help you to qualify for and receive a lower interest rate on a variety of financial products such as credit cards, auto loans, and home mortgages.

What You Need to Apply

Before you begin the application process, make sure you’ve gathered the following information
(*Cosigner required field, if applicable):

  • Name, permanent address, phone number(s), and email address*
  • Date of birth*
  • Social Security number*
  • Driver's license number (or government-issued ID number)*
  • Last school attended, last date of attendance, and highest degree achieved
  • Employer name, address, and phone number (if applicable)*
  • Gross annual income*
  • Monthly rent or mortgage payments*
  • Two most recent pay stubs or other proof of income*
  • Personal reference name, address, and phone number*
  • Information on the loans you wish to refinance, including loan holder/servicer, loan type, account number, interest rate, and total balance. This information should be on your student loan billing statements and can also be found on your loan servicer’s website.

What to Expect When You Refinance

Once you’ve completed your application for a refinance loan, the following events will occur:

  • Your (and any cosigner) income, along with the existing student loans being refinanced will be validated.
  • Your (and any cosigner's) credit will be checked and you will be notified of a credit decision.
  • If approved, you will need to choose your loan terms based on the options you qualify for, including how many years you will have to pay back the loan and your interest rate type.
  • You will receive an approval disclosure and you must acknowledge acceptance of the terms of the loan.
  • You (and any cosigner) will receive a final disclosure that will confirm the terms of the loan and provide you with your Right to Cancel notice.
  • The student loans you are refinancing will be paid off.
  • Repayment of your refinance loan will begin within 30-45 days.
  • Continue making any monthly payments on your current student loans until you receive notice the loans you are refinancing are paid off.

What to Know About Loan Refinancing

Loan refinancing offers many benefits, but isn’t the best choice for everyone. Consider the following before you refinance your federal and private student loans:

  • Compare the interest rates of the loans you are refinancing to the interest rate of your refinance loan.
  • If you are switching from a fixed interest rate to a variable interest rate, your variable interest rate could rise in the future.
  • Look for borrower reward benefit programs, as these can help reduce the total cost of your loan.
  • While extending the repayment term may lower your monthly payment, you may end up paying more interest over the life of your refinance loan.
  • Understand if there are any fees, as they could add to the total cost of your loan.
  • Determine the cosigner release option and what the requirements are.
  • Ensure the lender and servicer are reputable and financially strong. The servicer is the organization you will be making payments to and interacting with over the life of your loan.
  • If you are not a U.S. citizen or permanent resident, find out about your cosigner options.
  • Understand and evaluate the various features and benefits of your current loans, and any potential benefits that may be lost by refinancing federal and private education loans, such as the loss of any remaining grace periods. Learn more about what to take into consideration when refinancing federal student loans with private education loans.

What to Know About Private Student Loans

Private student loans are a great resource to help with education costs, but before you accept or apply for them, make sure you understand how they work and what you really need.

  • Only borrow as much as you need – not more.
  • Always review all the loan details including the interest rate, whether it is a fixed or variable rate loan, and if there are any application, origination, disbursement, or pre-payment fees.
  • Interest rates are either variable or fixed and are based on the borrower's credit score or that of the cosigner.
  • Look for money saving borrower benefit programs that could lower the total cost of your loan.
  • If you have a cosigner, find out if there is a cosigner release option.
  • Evaluate your repayment options, you may be able to defer principal and/or interest payments while you are in school or in your grace period.
  • Ensure the lender and servicer are reputable and financially strong. The servicer is the organization you will be making payments to and interacting with over the life of your loan.
  • If you are not a U.S. citizen or permanent resident, research your cosigner options.