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How Cosigning Works for Student Loan Refinancing


By Adam Sisson

If you have student loan debt with high interest or a large student loan balance that you're struggling to pay off, your best option may be student loan refinancing.

Student loan refinancing offers valuable benefits for those who qualify including the ability to:

  • Get a lower rate to save money on interest
  • Choose a shorter term to pay off loans faster with less total interest
  • Choose a longer term to lower your monthly payment
  • Consolidate your student loans into one easy bill

However, for many student loan borrowers, one of the primary drawbacks of refinancing is the qualification aspect.

It can be difficult for some to qualify for a student loan refinance and get offered the lowest available rates. In order to qualify, you'll need to meet standard eligibility requirements regarding your overall creditworthiness such as:

  • Credit score
  • Income
  • Debt-to-income ratio
  • Employment history

Struggling to qualify due to one of the above? You could still get a student loan refinance — and a lower rate — with the help of a cosigner.

Learn all about what a cosigner is, how adding a cosigner works, and what the benefits of a cosigned loan are.

Cosigner Definition

A cosigner is someone who signs your student loan refinancing application with you — usually a spouse, parent, or family member.

The cosigner is ultimately responsible for making payments if the borrower is unable to do so. Having a cosigner with good credit is a great way to ensure you can get the best rates available on student loan refinancing.

How Do I Know if I Need a Cosigner?

Start out by using an online Find My Rate tool to get a better idea of what kind of rates you could prequalify for.

If your interest rate is higher than you expected, it could be because you credit score needs improvement. There are several easy ways to raise your credit score, if that's the case.

Improving your credit typically takes time, however. A faster way to qualify for a lower interest rate while you build your credit is to use a cosigner with good credit.

What are the Benefits of Adding a Cosigner?

Although you may have good credit yourself, applying with a cosigner who also has good credit and strong income could help you meet your lender's credit criteria.

Adding a creditworthy cosigner to your application will increase the likelihood that you will pass the initial credit screening process and can provide you with the lowest possible rates on your student loan refinance.

Lenders use the higher of the two credit scores for qualification purposes which helps you maximize your potential savings.

How Do I Add a Cosigner to My Student Loan Refinance?

Adding a cosigner to your refinance application is simple and straightforward.

When you fill out an application to refinance your student loans, part of the application process with your lender will likely give you the option to add a cosigner. In that step, you will enter your cosigner's financial information and documentation.

Remember: It's essential to discuss with your cosigner before submitting your application.

Note that when an application has a cosigner, the borrower and the cosigner will both jointly apply for credit (with both credit histories being impacted) and be jointly liable for the requested loan (if the primary borrower is unable make scheduled payments, the cosigner will need to do so).

Can I Remove My Cosigner at a Later Date?

Lenders will often allow you to request the removal of a cosigner if your payments have been made on time for a certain period. The lender will then re-evaluate your credit profile. This does not mean you would have to reapply.

Your Next Steps

If you think you need a cosigner to refinance your loans, find the right person and get their permission. But remember, if you can't make your payments on time, your cosigner will be responsible.

Refinancing your student loans can help you save a lot of money in the long run, so get started soon.

Is Refinancing Right for You?

Find out whether refinancing is your best option.

Ready to Refinance?

See the benefits of refinancing your student loans at PenFed.