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How to Pick a Good Student Loan Co-borrower

When delving into the world of private student loans, you may discover that many lenders mention a “co-borrower.” A co-borrower is someone who applies for the loan with you and is equally responsible for ensuring it is repaid. A private student loan will be held in your name as the primary borrower, but the co-borrower’s name and credit will be tied to the loan as well.

Why do you need a co-borrower?

Most high school and college-aged students have not yet built a good credit history, meaning lending to them is a bigger risk for financial institutions. They can’t look at your credit and payment history to be assured you will repay the loan. By applying with a co-borrower, you may have a better chance of being approved for a loan, and you may receive a lower interest rate.

Characteristics of a good co-borrower

First and foremost, a co-borrower needs to have established – and good – credit. They also will need proof of a stable income, and a low amount of debt. Specific criteria, including credit union membership requirements, vary by credit union.

Your co-borrower needs to be aware that they are as legally responsible for making payments toward your student loan as you are. As the name indicates, they are borrowing the funds alongside you and sharing the same debt. Just as a couple shares a mortgage for their home, your co-borrower will hold the student loan with you.

What’s the difference between a co-borrower vs a co-signer?

You may come across the option to select a student loan co-signer rather than a co-borrower. Most often, a loan cosigner is required when the person applying for a private student loan doesn’t have the credit history to qualify for it on their own. The co-signer does not share the loan and debt repayment as a co-borrower does. However, the co-signer agrees to take responsibility that the loan will be repaid, and will step in and cover payments if the borrower is unable to afford them. 

Who can be a co-borrower on a student loan?

Parents are the most common co-borrowers on a student loan, but there may be reasons a parent isn’t the best (or available) choice. They may not be involved in a student’s life, or they may not have a strong enough credit history. Essentially anyone can be a co-borrower – a grandparent, another family member, or even a mentor or family friend, so long as they meet the criteria above.

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*APR = Annual Percentage Rate

In order to apply for a loan, you must first pick an individual credit union from which you wish to borrow. You can apply for the loan without being a member of the credit union you select, but you will need to become a member of that credit union in order to receive a funded loan. Therefore, it's important that you select a credit union that you will be eligible to join. Credit union membership requirements can include where you live, work, or attend school. Results are based on membership criteria provided by individual credit unions and do not imply a guarantee regarding accuracy or eligibility to join the listed credit union(s).

Calculations are based on the lowest possible rate and available repayment terms per lender. Rate estimates are based on credit information entered by the user and will not impact your credit. During the application process, a hard credit inquiry will be performed to provide exact rate information. Repayment calculations assume immediate full repayment. View the full range of rates and terms by visiting your credit union's website using links listed for each credit union above.

Using the free student loan refinance calculator does not constitute an offer to receive a loan and will not solicit a loan offer. Any payments and savings will depend on the actual amounts for which you are approved, should you choose to apply. This calculator is provided for educational purposes only and should not be relied upon as financial advice. Always consult your credit union or financial advisor when making your decision.

IMPORTANT NOTICE for refinance borrowers: By refinancing federal student loans, you may lose certain borrower benefits from your original loans. These may include interest rate discounts, principal rebates, or some cancellation benefits that can significantly reduce the cost of repaying your loans. Please review this important disclosure for more information.

Your actual rate within the range stated will be disclosed upon approval. Student borrowers may apply with a creditworthy cosigner which may result in a better chance of approval and/or interest rate.