What To Do if You’re Denied a Student Loan With a Cosigner

Having a cosigner can improve your chances of getting approved for a private student loan, but it's not a guarantee. In the 2023-24 school year, more than 90% of undergraduate private student loans had a cosigner, according to Enterval Analytics - yet some applications still get denied.

If your loan application was rejected even with a cosigner, you still have options. Here's what you need to know.

Why was my cosigner application denied?

Lenders reject student loan applications for many reasons, even with a cosigner. If a lender denies your application, they are legally required to explain why.

The most common reasons for denial include:

• Your cosigner's credit score was too low
• Their income was too low or inconsistent
• They have too much existing debt
• They have negative marks on their credit report, like bankruptcy or foreclosure
• They aren't a U.S. citizen or permanent resident

Learn More: 3 Best Private Student Loans That Don't Require a Cosigner

What to do if you're denied a student loan with a cosigner

It might feel like a double whammy if you're denied a student loan with a cosigner — but not all hope is lost. Here are some strategies that might help you get that loan:

• Encourage your cosigner to check their credit. Sometimes credit reports contain errors, meaning your cosigner's credit score might not be correct. If your cosigner finds any mistakes and files a dispute with the appropriate credit bureau, their credit score could go up.
• Find a new cosigner. If your first cosigner doesn't succeed, try again. Consider asking someone else with good credit — such as a parent, another relative, or a trusted friend — to cosign your loan. Just remember that cosigning can be a risk, so you might not get an enthusiastic response.
• Build your own credit. It takes time to build or repair credit, so this isn't a quick fix. But if you've run out of other financing options, working on your own credit might be your best bet. Some potential ways to improve your credit include paying all of your bills on time and paying down credit balances (or better yet, paying them off each month) to establish a positive credit history and reduce your credit utilization.
• Look for scholarships and grants. Innumerable college scholarships and grants are available to both undergraduate and graduate students. This is essentially free money for school that you don't have to pay back, so it's worth taking the time to apply for as many as you might qualify for.
• Apply for federal or other need-based aid. If your options for getting a private student loan with a cosigner are limited, federal or other need-based student aid may be your best financial resource since your credit is usually not a deciding factor.

If you decide to re-apply for a private student loan, be sure to shop around and compare your options from as many lenders as possible to find the right loan for you. Keep in mind that several private lenders offer loans to borrowers with less-than-perfect credit, which could help you get approved.

Credible makes this process easy — you can compare your prequalified rates from our partner lenders in the table below in two minutes. Keep in mind that while some of these lenders have high required minimum credit scores, you might be able to qualify if you apply with a creditworthy cosigner.

How to find a cosigner

Agreeing to cosign on a loan is a major responsibility and shouldn't be taken lightly. If you miss your payments or default on the loan, your cosigner will be on the hook, and their credit will be damaged — all of this can also strain your relationship with your cosigner.

As you look for a cosigner, be prepared for someone to potentially say no or raise concerns before agreeing to do you this favor. If you're ready to find a cosigner, here are four important steps to follow:

1. Consider your options. A cosigner can be anyone with good credit — such as a parent, another relative, or a trusted friend — who is willing to share responsibility for the loan.
2. Figure out your payment strategy. Before applying with a cosigner, make a plan for how you'll handle repaying the loan if you're approved — and what you'll do if you can't make a payment on time. Showing your cosigner that you're ready to manage the loan could help ease concerns that they might have.
3. Discuss the risks. Don't shy away from talking about the risks of cosigning - instead, make sure both you and the cosigner are fully aware of the liabilities involved. Your cosigner should understand that they'll be responsible for paying back your loan if you don't keep up with payments.
4. Use teamwork. After comparing loan options and choosing a lender, go through the application with your cosigner. This way, both of you will know exactly what you're agreeing to. For example, you might want to consider applying for student loans that offer cosigner release, which will let you remove your cosigner from the loan in the future. To qualify for cosigner release, you'll typically have to make on-time, consecutive payments for a certain amount of time as well as meet the underwriting criteria on your own.

What lenders look for in a student loan cosigner

While qualifying criteria for a student loan cosigner can vary by lender, here are some common requirements that you'll likely come across:

• Good credit: Cosigners typically need good to excellent credit to be a cosigner — this usually means having a credit score of 700 or higher, though some lenders might accept lower scores than this.
• Stable income: Lenders want to see that your cosigner can afford to repay the loan if you can't make your payments. Your cosigner should be prepared to provide documentation that illustrates their income — such as tax returns or pay stubs.
• Low debt-to-income ratio: Your debt-to-income (DTI) ratio is the amount you owe in monthly debt payments compared to your income. Lenders will likely consider a cosigner's DTI ratio to ensure that they can reasonably fit an additional payment into their budget — in this case, your student loan payment if you fail to make payments.

How to get a student loan without a cosigner

If you can't qualify for a student loan with a cosigner, you may still have options. Some lenders offer no-cosigner loans that don't rely on credit history, making them an alternative for students with little or no credit.

For example, Ascent's Outcomes-Based Loan doesn't require a cosigner or established credit. Instead, it considers factors like your year in school and GPA. This option is available to college juniors and seniors who meet the lender's criteria.

Most students use a cosigner to get a private student loan

Most private student loans have a cosigner — so if you need one, you're not alone.

How does a lender decide who qualifies for a private student loan? When reviewing loan applications, lenders typically look at a range of factors to make a decision. The most important of these are typically your credit score, income, and other debt payments you're responsible for. Having a cosigner might make it easier for you to qualify.

If you're shopping for a private student loan, be sure to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can see your rates in two minutes after filling out just one form.