Student Loan Cosigner

Understand what to expect and how cosigning a student loan impacts a cosigner's credit

Private student loans are loans just like those a borrower takes out to purchase a house or a new car. And just as with your car loan or mortgage, the lending institution must first be sure you have steady income and a reasonably good credit record before they'll lend you the money. Unfortunately, that means most undergraduate students will not qualify for a loan on their own. They'll need a student loan cosigner of their choice, often a parent, legal guardian or family member.

That does not, however, change the fact that the student remains the primary borrower (except in cases where parents are actually taking out the loans themselves for their child's education). The cosigner on the student loan is simply agreeing to step in and take responsibility for paying the money back, in the event the primary borrower cannot. As a student loan cosigner, you assume equal responsibility for repayment of the loan. You should note that means late payments will affect both the student's and cosigner's credit ratings.

Benefits of being a student loan cosigner

The good news is that being a cosigner on a student loan doesn't only entail obligations on your part. There are also some serious benefits, for you and your child:

  • Lower interest rates—your good cosigner credit history will result in your child receiving lower interest rates on the loan. And of course, lower interest rates means less money must be repaid over the life of the loan.
  • Your child can begin establishing their own credit history. This is an often-overlooked but nevertheless important benefit of cosigning.

At the same time, your status as a co-signer need not be for the life of the loan. On Citizens Bank's Student Loan™, for instance, cosigners have the option of being released from their legal responsibilities after a period of 36 months of consecutive on-time payments (subject to certain terms and conditions). And even if your child experiences post-college setbacks (such as unemployment) that temporarily prevent him or her from continuing repayment, your child may well qualify for a deferment, rather than necessitating that the student loan cosigner step in to make payments. These are details to ask of your lender.

Learn more about college loans from Citizens Bank

You can find information about an affordable Citizens Bank Student Loan™. If you still have questions about the loan or the effects on cosigner credit ratings, students and parents can call a student loan specialist at 1-800-708-6684, and we'll help walk you through the process.

Additional student loan and college planning resources

Financial Aid Disbursement Process
What Do I Do if I've Been Denied for a Private Student Loan?
Your Student Loan is Pending…What Does This Mean?
What Can I Expect After My Financing is in Place?
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