Do You Need Your Parents to Cosign on a Federal School Loan?


The high cost of college tuition prevents many people from attending school. However, federal aid is available to students in the form of grants and loans. Federal lenders take several factors into consideration when approving applicants for funding, such as the applicant's income and his parent's income. Some student loans allow a cosigner, but before approaching your parents to cosign your loan, understand the income and credit requirements for federal loans.

What is a Cosigner?

Cosigners on student loans -- or any type of loan -- is an individual who approves of being held responsible for the loan balance. Applicants also share responsibility, but if they don't repay their lender, cosigners are contacted to resume payments and keep the account in good standing. Because college students may have little or no credit history, or lack the income necessary for a loan, some might ask their parents to cosign their student loan in order to receive financing for certain loans.

Federal Loans and Cosigning

Federal student loans provided by the U.S. Department of Education do not require cosigners. Students attending a college or university can obtain financing without a parent's signature because federal student loans do not require a credit check. Furthermore, these students can acquire financing without being employed. Repayment on federal student loans does not begin until after a student graduates, and federal lenders typically allow a grace period after graduation (about four to six months), which gives graduates time to secure employment.

Qualifying for Federal Loans

While federal loans do not require cosigners or credit checks, the Department of Education requests personal financial information to determine the appropriate aid for students. Some students qualify for grants and can attend school free because of their low income status. The application completed for federal financial aid requires a few numbers off an applicant's tax returns, as well as information off the tax returns of his parents. Information on bank account balances and other assets is also required. After review of this financial information, the department responds with information on the type of aid approved and the approval amount.

Other Types of Loans

Some students acquire sufficient federal aid to pay for their yearly schooling costs. However, students who need additional funding can apply for private student loans. These loans include funding received from banks or credit unions. Because private loans aren't backed by the federal government, good credit and perhaps a cosigner are required for approval. Applicants can submit their income and personal information. But if rejected for a loan, applicants may need a parent's signature to acquiring financing. Additionally, parents can apply for student aid on behalf on their children with the federal Parent PLUS Loan. These non-collateral loans do evaluate a parent's credit history. If the parent can't qualify due to a low credit score, they can use a cosigner to receive additional federal funding for their child.

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