The Earnest Blog > For Parents, Private Student Loans
Cosigning a student loan: pros and cons
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TL;DR
A cosigner is an individual with a strong credit history who agrees to pay a loan in the event that the borrower is unable.
Cosigning can help your child qualify for better loan options, score lower interest rates, and build credit.
Cosigning will affect both parties’ credit scores. If the student borrower makes late payments or defaults, you could see your score drop, too.
Some lenders let you remove a cosigner after a few years. Student loan refinancing1 is another path to cosigner release.
Table of contents
While federal student loans remain an affordable financing option for college, students can quickly hit the annual and aggregate borrowing limits. And with new federal loan limits on Grad PLUS and Parent PLUS loans starting July 1, 2026, it will be even easier to reach those borrowing caps. Private student loans can help fill the gap, but most private lenders require a solid credit history, which not all college students have. That’s where a cosigner can help. Here’s everything you should know about cosigning for a family member.
Who can cosign a student loan?
A cosigner is usually a parent or relative, but they don’t have to be. View our eligibility guide to learn about our cosigner eligibility requirements.
It’s best to cosign only if you have a strong relationship with the borrower. Once you put your name on the loan application, you’ll be responsible for the full loan amount should the borrower default.
Your options: Parent PLUS, cosigned loans, and private student loans
If you want to help your child with their college expenses, you have three main options:
Take out a federal Direct Parent PLUS Loan (for undergraduates only)
Take out a private parent loan
You and your child should always fill out the Free Application for Federal Student Aid (FAFSA), even if you don’t think you’ll qualify for financial aid. The FAFSA isn’t just for student loans; it’s what the government, states, and colleges use to evaluate applications for grants, scholarships, and institutional aid.
Apply for a Parent PLUS Loan
If your child has maxed out their federal Direct subsidized and unsubsidized loans and needs more money to pay for school, a federal Direct Parent PLUS Loan is an option. This loan can be used to pay for your undergraduate student’s tuition, books, and any other supplies intended for educational purposes. They have fixed interest rates that are the same for all borrowers, regardless of credit and income. However, they also have the highest interest rates of all federal loans and a disbursement fee.
Starting July 1, 2026, Parent PLUS loans look a bit different. There is now an annual cap of $20,000 per student, with a lifetime limit of $65,000. New borrowers will be limited to the new Tiered Standard Plan and will not have access to income-driven repayment (ICR) or the new Repayment Assistance Plan (RAP).
Keep in mind, with a Parent PLUS Loan, you are the borrower of the student loan debt—not your child. That means you are solely responsible for making payments on the loan.
Cosign a private loan
With a cosigned loan, both you and your student share responsibility for the loan and payments. If you have a good credit score, you and your child may qualify for a lower rate on a private loan than you’d get with Parent PLUS Loans. Outside of changes in the economy, rates for private cosigned student loans tend to be more favorable than the federal Parent PLUS loans.
With Earnest, cosigners can also borrow up to 100% of the school’s certified cost of attendance. We
origination, returned payment, or late fees, making cosigning a private student loan a potentially more cost-effective option than federal loans. You can also choose a flexible loan term to meet your needs, giving you a more affordable monthly payment. It’s important to note that private loans don’t come with federal benefits like income-driven repayment or loan forgiveness.
Apply for a private parent loan
A private parent loan works similarly to a Parent PLUS loan in that you are the sole borrower. However, it's issued by a private lender rather than the federal government. This can be a good fit if you want to keep the debt in your name and your child off the hook entirely.
Because private parent loans are credit-based, parents with strong credit profiles may qualify for rates well below the Parent PLUS rate, and without the 4.228% origination fee of a federal PLUS Loan. Private parent loans aren’t limited to just parents—family members or sponsors can take out a loan for either their undergraduate or graduate student.
The tradeoff: private parent loans don't offer federal repayment protections like income-driven repayment or loan forgiveness (though for new Parent PLUS borrowers, many of those protections are no longer available either). Terms vary by lender, so it's worth comparing multiple options.
The pros of cosigning a private student loan
Being a student loan cosigner for your child has several advantages:
You improve your child’s chances of getting a loan
Private lenders usually don’t issue loans unless a borrower meets their income requirements, minimum debt-to-income ratio, and credit requirements. As a college student, your child is unlikely to meet those requirements on their own. By acting as a cosigner, you increase their odds of qualifying for a loan. At Earnest, adding a cosigner improves odds of approval by five times.
You can help your child secure a lower rate
By adding a cosigner to their application, your child is more likely to meet the eligibility requirements to get a lower interest rate. This will both reduce their monthly loan payments and help them save money in interest over time.
Your child could qualify for a larger loan
While there are private lenders that offer non-cosigned loans, they tend to have lower loan maximums. By cosigning, you ensure your child gets the full amount they need to pay for school.
Your child can build credit
By helping your child secure a loan, they can start building their credit history. As they make payments, the lender will report their payment activity to the major credit bureaus. Over time, the loan can improve their credit score, which will help them qualify for credit cards and other types of loans in the future.
The cons of cosigning a private student loan
While cosigning a loan can be a big help to your child, there are some downsides to keep in mind:
You may be responsible for payments
As a cosigner, you’re responsible for making payments if the primary borrower falls behind. If your child fails to keep up with the monthly payments, you’ll have to make them instead. Before you cosign, make sure you each have a plan for holding up your end of the deal.
Your credit score could be affected
If your child stops making payments and you’re unaware that they’re delinquent, your credit score could be damaged, and the account could be sent into collections.
The loan could affect your ability to qualify for other forms of credit
If you intend to apply for other types of credit, such as a home mortgage or car loan, cosigning a student loan could increase your debt-to-income (DTI). With a higher DTI, you may not qualify for other lines of credit.
Not all lenders offer cosigner releases
While some private student loan lenders offer cosigner releases, not all do. You may have to remain as a cosigner for the length of the repayment term, or until the loan is paid off. Earnest will automatically review eligible loans for release, or primary borrowers can apply for it after meeting certain requirements2. If approved, the cosigner will be released from the loan.
Alternatively, your student could refinance their student loan after graduation when they have proved their creditworthiness. And if approved after underwriting their application, the cosigner will be released from the refinanced loan.
Cosigner FAQs
Before you cosign a student loan, take the time to study all your options, including alternative sources of funding. Here are a few frequently asked questions to consider.
Can I remove myself as a cosigner eventually?
Some private lenders will let you remove a cosigner from a loan, while other lenders don’t provide any path for cosigner release. In this case, the only way to remove yourself from the loan is to refinance, which replaces your current loan with a new loan with new terms.
Refinancing is the only way to transfer the full balance of a Parent PLUS Loan to your student’s name. It’s also one route to removing a cosigner, or “endorser,” from a graduate student’s Grad PLUS Loan. (You can also remove an endorser through federal student loan consolidation.)
Are there alternatives to cosigning a student loan?
Before you consider cosigning a loan, make sure your student has already maximized their federal Direct subsidized and unsubsidized loans. Also look into grants and scholarships, which don’t require a credit check or cosigner and never have to be paid back.
Many states offer state financial aid programs, and most colleges provide financial assistance programs like work study. These options can help you close your child’s college funding gap without having to take on a cosigned loan.
How do I determine if I should cosign a loan?
Before you sign on the dotted line, take a hard look at your personal finances. You could be a good candidate for cosigning if you:
Meet all the eligibility requirements
Have a strong credit score and stable financial situation
Can afford to cover the loan in the event of an emergency
Know the borrower extremely well and trust their financial habits
Sincerely want to help the borrower achieve their educational goals
Conversely, you should try to avoid cosigning if you:
Can’t afford the monthly payment should your student fail to pay
Don’t fully trust the borrower
Anticipate needing a loan or other credit in the next few years
Fear cosigning could introduce resentment to the relationship
Are there private student loans that don’t require a cosigner?
If your loved one has at least two years of credit history, they may be able to qualify for student loans without a cosigner. However, their loan options may be limited and come with high interest rates.
If your student has little to no credit history, they may be able to qualify for outcomes-based loans. These use criteria like GPA, school, or major to evaluate a borrower’s trustworthiness. The downside to these types of loans is that they’re not always available to first-year undergraduates. They also tend to have high interest rates.
Find out how much you could save with Earnest
Cosigning a student loan can be rewarding, but it can also have a real impact on your personal finances. Carefully assess your financial situation to make sure you’re the ideal candidate for the job. Then, look for private student loans with low rates, flexible terms, and options for either cosigner release or easy refinancing.
With Earnest, cosigners and students can work together to pick the loan terms and repayment plan3 that work best for them. You can check your eligibility for a private student loan, or explore our student loan repayment calculator today to run different payment scenarios.
Earnest also offers fast, easy, in-house refinancing. That means you can transfer the loan to your student’s name and even secure a lower rate4 if your financial picture changes.
About the Author
Corey Buhay
Corey Buhay is a writer and editor based in Boulder, Colorado. She’s passionate about literature, the outdoors, and doing her taxes by hand. She has been writing about student loans and personal finance for Earnest since 2019. You’ll find her work in Outside Magazine, Backpacker Magazine, Smithsonian, and The Denver Post.
Disclaimer
This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice. It is accurate as of its publishing date.
Earnest Private Student Loans are subject to credit approval.
Before applying for private student loans, it’s best to maximize your other sources of financial aid first. It’s recommended to use a 3-step approach to assembling the funds you need: 1) Look for funds you don’t have to pay back, like scholarships, grants, and work-study opportunities. 2) Next, fill out a FAFSA® form to apply for federal student loans options. 3) Finally, consider a private student loan to cover any difference between your total cost of attendance and the amount not covered in steps 1 and 2. For more information, visit the Department of Education website at studentaid.gov.
1 You may lose benefits associated with your underlying federal and/or private loans if you refinance such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options. If you file for bankruptcy, you may still be required to pay back this loan.
2 To qualify for automatic cosigner release, the outstanding principal balance of your loan must be paid down to 50% or less of the original principal balance. The primary borrower must have made 36 months of required payments after the end of the Interim Period. The primary borrower must meet our eligibility and minimum credit requirements. Additional terms and conditions may apply. To request cosigner release, the primary borrower must have made 12 consecutive, monthly on-time principal and interest payments (or an amount equal thereto) immediately preceding the cosigner release application. The primary borrower must satisfy certain eligibility and credit criteria at the time of application. Additional terms and conditions may apply.
3 Repayment terms and repayment options available vary based on loan type.
4 You may be able to refinance your Earnest Student Loan Refinance again. To be eligible, the loan must have been disbursed more than 30 days ago, it must not be past due, and you must not be enrolled in a hardship or bankruptcy forbearance, skip a pay or any interest only repayment program. Keep in mind that a hard credit check will be required each time you refinance, which may impact your credit. Please review our Eligibility Guide & Requirements for further details.