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Cosigners and Credit References for Private Student Loans

A private student loan may require a creditworthy cosigner and one or more credit references.


Most student borrowers will need a cosigner to qualify for a private student loan.

A cosigner can be a parent, relative, or friend who meets the criteria set by the lender, typically:

  • Must be a U.S. citizen or permanent resident
  • Must have a valid Social Security Number
  • Must pass a credit check

Facts about Cosigners

  • May also be known as a guarantor or endorser
  • Will have their credit history reviewed by the lender during the application process
  • Are equally obligated to repay the loan
  • Will have their credit rating affected by the loan
  • Cannot use the loan funds for their own personal benefit
A good credit score from a cosigner can compensate for a student's bad or limited credit history.

Cosigner Release

Many private student loan lenders offer a cosigner release option. If the student borrower makes 12, 24, 36, or 48 consecutive on-time payments (principal and interest) and satisfies the lender's credit criteria, as well as other criteria the lender may have, the cosigner may be released from financial obligation for the loan.

Pros of Being a Cosigner

  • The cosigner can help a student achieve educational goals and possibly save money by qualifying for a lower interest rate
  • If the borrower satisfies lender requirements, the cosigner may be released from the loan

Cons of Being a Cosigner

  • Cosigning a loan may make it more difficult for the cosigner to obtain other credit, such as refinancing a mortgage
  • Credit score can be negatively impacted if the borrower makes late payments or defaults on the loan

Credit References

A credit reference is an individual or business that provides reliable information about the borrower to the lender. A credit reference can also be the primary contact person in the event the borrower cannot be reached.

Facts About Credit References

  • Should have a relationship with the borrower and have knowledge of the borrower's credit history
  • Commonly include family, friends, and businesses that the borrower has worked with in the past
  • Are not responsible for the loan if the borrower fails to make payments
  • Do not have their credit rating affected by the loan

Looking for more information on cosigners? Check out Five Things to Consider Before Seeking a Cosigner.