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Do I Need a Co-signer for Student Loans?

Getting a student loan like the NC Student Assist Loan can be a smart way to pay for college or graduate school when other financial aid and savings aren’t enough to cover the cost of your degree. But what’s a student to do if they haven’t established credit yet or have a poor credit history? A responsible co-signer can help you qualify for the right student loan so you can focus on earning your degree!

Why do you need a co-signer for certain student loans?

It’s common for a parent or other qualified family member to act as a student loan co-signer to help students who may not otherwise qualify for a loan get the funds they need to pay for school.

Most private student loans require a credit check, and borrowers must have a good credit score to qualify. Many college students are new to adulting and often haven’t started building a credit history, which is basically a way to prove that you pay back debts on time.

Co-signing a student loan: pros and cons

If you intend to ask someone to be a student loan co-signer for you, it’s crucial for both of you to weigh the pros and cons of the agreement.

Pros

• Lower Interest Rates: Having a co-signer with a strong credit history improves your chances of qualifying for a private loan with competitive rates. For example, interest rates on an NC Assist Loan are typically lower than those offered by other private lenders and may be lower than some Federal Direct Loans. These lower rates can translate to big savings over the life of your loan.
• Greater Borrowing Power: A student loan co-signer may help you qualify for a larger loan amount so you can cover more of your college expenses.
• Building Credit: As you make on-time payments on your loan, you begin establishing a positive credit history and set yourself up for future financial success.

Cons

• Financial Responsibility: Your co-signer is fully liable for your loan until their death or permanent disability, and their credit score will reflect whatever happens with the loan, for better or worse. If you don't make payments, your co-signer will be negatively affected, too.
• Limited Borrowing Power: Co-signing a large loan can limit your family member’s ability to secure other loans (like a mortgage or car loan) in the future.

3 Qualifications of a Strong Co-signer

As you can see, co-signing a student loan is a serious responsibility, and it isn’t appropriate for everyone. Here are some qualifications to consider:

1. They should be invested in your education.

Your co-signer is doing you a big favor. They should be someone close to you who trusts you. For someone to co-sign your NC Assist Loan, that person must also be a qualified relative. Parents, stepparents, grandparents, siblings, spouses, sons, or daughters of a student loan applicant all count as qualified relatives.

2. They should have a good credit score.

Lenders want to see that your co-signer can handle debt responsibly, so they’re looking for a credit score that’s good to excellent and, depending on the loan, a low debt-to-income ratio.

3. They should be responsible with money.

It’s best if you choose someone with a stable job who makes enough money to handle their own financial responsibilities and take on your loan repayment, if necessary. If your co-signer is accustomed to living within their means and avoids excess borrowing, they’ll probably take the co-signing agreement seriously.

Can I get a loan without a co-signer?

If you’re a student with a good credit history and a reliable income source, you may qualify for a student loan without a co-signer. However, if you don’t have good credit, be careful not to fall for ads that promise “bad credit student loans.” Those loans often charge much higher variable interest rates and come with excessive fees. Make sure you understand the repayment terms before you borrow money from any lender.

A co-signer can help you achieve your college dreams!

In addition to enabling you to get an NC Student Assist Loan, having a student loan co-signer shows that a trusted family member has faith in your talents, energy, and good intentions. The NC Assist Loan can be part of your bright future.

After you’ve applied for other financial aid and scholarships, calculate how much money you’ll need to borrow in loans to cover the cost of college. Apply now for an NC Student Assist Loan to bridge the gap and move forward with your education and your future career!