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How Student Loan Co-signing Works


If you haven't built up a credit history, it can be awfully hard to get a student loan from a private institution without a co-signer.
If you haven't built up a credit history, it can be awfully hard to get a student loan from a private institution without a co-signer.

College is tough. First, you have to endure 12 years of compulsory education before you can even enroll in a school of higher learning. Then, once you get there, you have to find a way to pay for it. And, it's expensive -- really expensive. In fact, college is so pricey that many struggling students have to rely on various forms of financial aid to pay for it. If, like most recent high school graduates, you have little to no credit history, or your credit score is less than ideal, you might need a co-signer to take out student loans.

A co-signer is someone who signs the loan with you, essentially guaranteeing that he or she will cover the debt should you fail to pay. Of course, it's still your debt, but you and your co-signer are on the hook for it, so it will affect both your credit ratings and credit histories. Should you and your co-signer completely default on the loan, legal action, including garnishments and liens, can and probably will be issued against you both. Co-signing is a pretty big commitment and shouldn't be taken lightly.

However, because most of us can't afford to pay for college without some sort of financial assistance, student loans are often the only way struggling students can afford to get a higher education. Regardless if you're a high school student trying to figure out how to pay for college or an established, creditworthy co-signer, it's a good idea to know the benefits and pitfalls of co-signed student loans.

In this article, we're going to school you on co-signed student loans. We'll teach you how to maximize you chances of securing a loan and what to do if you think you might fall behind on your payments. You'll learn how to make the most informed decisions about financing your education.

On the next page, learn which friend or family member will make the best co-signer.