Refinancing Your Student Loans With a Cosigner

Refinancing your student loans may lead to better rates and terms on your education debt. But if you don’t have good credit, it’s tough to qualify for a lender’s best rates. That’s where a cosigner can be helpful.

By applying with a creditworthy cosigner, you can boost your chances of qualifying for a lower rate. Adding a cosigner can also help you get approved if you can’t meet a lender’s criteria on your own. 

However, there are also cons to refinancing student loans with a cosigner. Let’s take a closer look at refinancing student debt with a cosigner, including both the advantages and potential disadvantages.

Can You Refinance Your Student Loan With a Cosigner?

Many lenders give you the option of refinancing your student loans with a cosigner. When you apply with a cosigner, you’ll both provide your personal and financial information on the refinancing application. If your cosigner has a good credit score and positive credit history, they could help your chances of qualifying for the loan or even get you better rates. 

Not all refinancing lenders permit this option, however.  

Also, some lenders also offer the option of releasing your cosigner after a certain period of on-time payments, typically a year or more. Cosigner release can remove your cosigner from the loan, but it’s not automatic. You’ll need to apply and be approved. 

Recommended: How Does Student Loan Refinancing Work?

Pros of Refinancing Student Loans With a Cosigner

Adding a cosigner to your student loan refinancing application can be beneficial if you can’t meet a lender’s underwriting requirements on your own. Most lenders require good credit and a stable source of income to refinance student loans. Basically, they look at your financial situation to make sure you’re likely to pay back your loan in full and on time. 

If you don’t have good credit — or don’t have much of a credit history — it could be hard to qualify for student loan refinancing on your own. Or you could be offered ever higher rates than your current loan that won’t save you much money in the long run. 

Adding a creditworthy cosigner may make it easier to qualify for student loan refinancing. With a strong cosigner on the application, a lender may feel more confident and offer better terms as a result.

Cons of Refinancing Student Loans With a Cosigner

There are cons to refinancing student loans with a cosigner, as well. First of all, refinancing federal student loans with a private lender means you will forfeit all federal loan benefits, including income-driven federal loan repayment programs and forbearance programs.

Second, if you miss payments, a debt collector could call your cosigner and demand that they pay. Plus, their credit could also be damaged if you miss payments or your loan goes into student loan default. 

Cosigning on debt could also increase their debt-to-income ratio. A high DTI ratio could make it harder for your cosigner to take out additional loans, whether they want to take out a mortgage, business loan, or help another person with a student loan. 

It’s important to keep in mind that missing payments on your student loans can hurt the both of you. Before asking someone to cosign, make sure you’re both on the same page about what cosigning means and who’s responsible for paying off the student loan. By clarifying expectations upfront, you can avoid hurting your cosigner’s finances or straining the relationship.

Do You Have to Have a Cosigner to Refinance Student Loans?

You’re not required to have a cosigner to refinance your student loans. If you can meet a lender’s criteria for credit and income on your own, you can refinance the student loans in your own name. 

In fact, you might decide it’s not worth refinancing your student loans with a cosigner and would instead prefer to refinance solo so you can assume full responsibility for your debt. Some students refinance parent loans in their own name, for instance, to take the burden off their parents. 

What’s more, some refinancing lenders don’t allow you to apply with a cosigner. They require that you qualify on your own merits, or you can’t refinance at all. 

How to Find a Cosigner

A cosigner should be a trusted adult with decent credit and a stable source of income, but they don’t necessarily have to be related to you. Your cosigner could be a parent or guardian, but they could also be a trusted friend or a spouse. 

That said, your cosigner will need to meet other lender requirements, such as being the age of majority in their state (typically 18) and holding a valid Social Security number or tax identification number. The exact requirements will vary by lender, but they will apply both to you as the primary borrower and any cosigner you add to your application. 

The Takeaway

Applying to refinance student loans with a cosigner could unlock the door to more agreeable rates and terms. Adding a cosigner can also help you qualify in the first place if your credit isn’t up to par.

However, asking someone to cosign on debt is a big ask. Not only will the loan show up on their credit history, but your cosigner will be considered equally responsible for paying back the debt. If your loans fall into default, a collections agency could pursue payments from your cosigner. 

Before you go all in with a cosigner, it’s a good idea to have a clear conversation about the pros and cons. Plus, make sure you’re both on the same page about who’s responsible for paying back the loan and how they will afford payments. 

Once you’re ready to move forward, take some time to shop around with multiple refinancing lenders to find your best rates. Lantern by SoFi can help you with refinancing student loans.  

Lantern can help you explore student loan refinance options.