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Selecting a Co-Signer or Endorser

If you have exhausted all other federal loan options, you may be applying for a Parent PLUS or Grad PLUS loan with a co-signer (or endorser)or you may be trying to secure a private student loan which often requires a co-signer.A co-signer promises to repay the loan if the student or parent borrower fails to do so. Listed below are tips to keep in mind when requesting that someone be a co-signer or endorser.

-Select an individual with whom you are close and who is financially stable. Many people will ask their immediate family members. Some people will ask extended family members or close friends who are supportive of their higher education goals.

-Review the reasons for needing the loan. Talk with the potential co-signer about your academic plans. Review the cost of your program and other sources of financial aid, such as scholarships and grants.

-Review the loan amount. Does the amount seem too high or too low? Remember that borrowing less, whenever possible, is always a good decision.

-Make sure the potential co-signer understands what is expected of him/her. Is this a one-time request, or will you need a co-signer in the future? Review the estimated monthly payments and your plans to make them on time. 

-Discuss when payments will start. For PLUS Loans, the first payment is due 60 days after the loan is fully disbursed unless you ask for a deferral while the student is enrolled at least half-time or up to six months after the student ceases to be at least half-time. For Graduate PLUS Loans, you may postpone payments on your loan until you graduate or drop below half-time status. Many private student loans begin repayment six months after leaving school. 

-Complete the loan application together. Co-signers may feel more comfortable if they participate in the application process and provide their information directly to the lender.

-Talk about the potential of a co-signer release, if applicable. Some private student loans still offer co-signer release options. For instance, some co-signers may be released from the financial responsibility of a loan if the borrower has successfully completed school and made 12-48 consecutive on-time payments.