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What are the Responsibilities of a Student Loan Cosigner?

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  • Written By: B. Miller
  • Edited By: Andrew Jones
  • Last Modified Date: 29 November 2016
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Put simply, the responsibilities of a student loan cosigner are exactly those of the student who is taking out the loan. First, the cosigner's credit history will be checked; this is because many borrowers will add a cosigner to the loan in order to get a better interest rate, so it is important that the cosigner has a good credit history. The student loan cosigner will then be responsible for making payments on the loan, and essentially paying the loan in full, if the student borrower defaults on the payments.

This is why it is important to be informed about the potential consequences of becoming a student loan cosigner. If the borrower is responsible, the responsibilities of a student loan cosigner should ideally be no more than the initial credit check, and of course making sure that the monthly payments are being made. Someone who cosigns a student loan, however, is agreeing to be completely financially responsible for the loan if payments are not made.

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If the borrower misses one or more monthly payments, the lending company will contact the student loan cosigner requesting the payment. If he or she does not then begin making payments, the student loan will go into default. When a loan goes into default, the entire amount of the loan is technically due at once. In addition, a defaulted loan will have an extremely negative impact on credit scores, both of the borrower and of the student loan cosigner. Low credit scores can make it much more difficult to get any credit in the future, and can affect rates on things such as car insurance, as well as make it more difficult to rent an apartment or get a job.

It is important to keep in mind that it is not possible to discharge a student loan in bankruptcy. It is virtually impossible to get rid of a student loan for any reason, and student loan companies can often sue for the balance or even garnish wages to make sure the payments are made. Cosigning a student loan for someone can be very helpful to them, but it is generally something that is not recommended between friends, or even in some cases between husbands and wives, because an ex-spouse could find him or herself responsible for someone else's debt. Reading the fine print before signing any loan is necessary and important to be sure it does not negatively impact one's life down the road.

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