5 Tips for Approaching Potential Cosigners

how to find a cosigner for a student loan

Is your financial aid package a little lighter than anticipated? It may be time to consider getting a private student loan. And if you do, keep in mind that you will likely need a cosigner to qualify for the loan; very few students are able to receive financing based on their own creditworthiness. But, how do you approach a potential cosigner?  How do you find a cosigner for a student loan? It’s a good idea to start with someone you trust, such as a friend or family member.

Find a Cosigner for a Student Loan

Be sure your potential cosigner has a good credit score (720 or higher), as well. This not only increases your chances of being approved, but may also reduce the interest rate on your loans. Once you decide who will be the most likely candidate (and most willing to help), you’ll want to follow these steps to ensure the conversation goes smoothly. 

1. Exhaust All Other Financial Aid Options

Have you completed the Free Application for Federal Financial Aid (FAFSA)? Did you apply for all available scholarships? Are you checking into work-study opportunities? These are some of the questions your potential cosigner may ask. Be prepared to answer them honestly and provide proof, such as a copy of your FAFSA and any scholarship applications you may have submitted.

If you really want to impress him or her, draft a laundry list of every financial aid application completed, including the date submitted and the result (declined, pending, etc.).

2. Do Your Research

Before you approach any cosigner, make sure you use an online student loan comparison tool to determine which private student loans offer the best rates, benefits, and repayment options for you. Be sure to check out the steps for having a cosigner released from the loan, as well.  Some banks will allow a cosigner to be removed after you have made a certain number of on-time payments, and this could be a selling point when negotiating with your potential cosigner.

You’ll want to print the terms of the loans you are considering and have them available for your cosigner to review.

3. Prove That You Are a Good Risk

Anyone who cosigns on a student loan is taking a risk. It can affect their credit rating, their ability to take out other loans, and they could be saddled with unwanted debt. Your cosigner will want evidence that you are a good risk. This can be accomplished in several ways.

You can provide a copy of your credit report, pay stubs, and also any documentation for past debts that have been paid in full. Another way to prove that you may be a good risk is to demonstrate your ability to make smart choices for college. Provide a side-by-side cost comparison of the colleges on your list so your cosigner knows you have taken everything into consideration before making an investment in your education.

4. Provide a Budget

One of the best ways to prove to a potential cosigner that the risk will be minimal is by doing some simple math. Create a budget that outlines your monthly income and expenditures (now and post-graduation), and make sure it includes a line item for your monthly student loan payment.

You’ll want to have a “Plan B” in place, as well; just in case you lose your job or are unable to find suitable work immediately after graduation. It’s also a good idea to start paying the interest while you are still in college, so that should be calculated and included in your budget. If you’ll need the loan for more than one year, make sure your budget reflects the total amount you anticipate borrowing.

5. Get it in Writing

Even if your cosigner is a close friend or family member, you’ll want to make your obligation to him/her legally binding. Draft a simple cosigner agreement that includes the date of the transaction, total amount borrowed, terms of repayment, and any penalties for missing payments.

Be sure to have the agreement signed by both parties and notarized, too. You may also want to draft a letter for your student loan lender that requires notification be given to your cosigner anytime the terms of the loan are altered or a payment is missed.

Remember that the person you approach is taking a considerable risk by cosigning on a student loan for you, so even a close friend or family member may be hesitant to help. Always assume that you’ll need to cover your college expenses on your own and have a back-up plan (such as taking a gap year or finding an alternative pathway to a career), just in case you can’t find anyone to sign on the dotted line.

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