Finding an Alternative Student Loan Co-signer

In today’s financial environment, very few students will be able to get approved for an alternative student loan without a co-signer. Although alternative student loan co-signer qualifications vary from lender to lender, we’ve provided information to help you select a co-signer and ask them to help you pay for college.

Who can be an alternative student loan co-signer?

Any adult you know can be an alternative student loan co-signer as long as they are willing to share the responsibility of the loan with you. Your alternative student loan will show up on your co-signer’s credit report, and he/she will be responsible for making sure it gets paid back, just like you will be. Students can use a parent, friend or family member as an alternative student loan co-signer.

You should verify that your alternative student loan co-signer has the following basic qualifications:

  • A good credit history with more than 18 months of borrowing, charging and repayment with few or no late payments on their credit report
  • No excessive delinquencies, judgments, accounts that have been charged off or bankruptcies that were pending, filed or discharged in the past two years
  • No prior student loan defaults
  • Be a U.S. citizen and 18 years or older
  • Verifiable income (the amount will vary by lender)

What can I say to help convince someone to become my alternative student loan co-signer?

If you are truly in need of an alternative student loan, you should have already exhausted all of the other financial aid options available to help you pay for college (scholarships, grants and federal student loans). Here are some of the points of discussion that you can bring up with your alternative student loan co-signer:

  1. “I have exhausted all other financial aid options” – Explain that you have utilized all of the forms of financial aid that you can access on your own, and that you need to have an alternative student loan co-signer to get the remaining money to pay for college.
  2. “By co-signing, you can not only help me get approved, but you may be able to lower my interest rate and loan fees” – A credit-worthy co-signer may be able to help you:
    • Lower your interest rate
    • Lower your origination fee
    • Increase the amount of money that you are eligible to borrow (if the school agrees that it’s needed)
  3. “I plan to be responsible when paying back the loan” – Make sure your potential alternative student loan co-signer knows that you plan to make your payments on-time, so that their credit will be protected (as well as your own)!
  4. “You may only need to be on the loan temporarily” - Your co-signer may only need to be on the loan temporarily. Some lenders allow you to request a release of your co-signer after 2 or 3 years of good payment history. In order to have your co-signer released, you will need to qualify for the loan on your own and/or document your income for your lender.

Once you go through these exercises, if you truly cannot find a co-signer, or your only co-signer option is denied for the loan, speak to your financial aid office about what to do next.