7 mistakes to avoid when co-signing student loans

In order to get approved for some student loans, some borrowers may choose to apply with a cosigner — a creditworthy individual who will be legally responsible for repayment.

Borrowing a private student loan with a cosigner is common. But, before you jump in, make sure you understand the ins and outs of choosing — and removing — a student loan cosigner.

Medium Brush Stroke

Ignoring Your Income and Cash Flow

Some lenders will review a borrower’s income as part of their eligibility requirements and may also consider something called “free cash” flow.

Going for Romance

It may make sense to consider family members. Though anyone can cosign a loan for you, a relative is generally a more reliable choice than a friend.

Going in Blind

If you can’t make good on your loan for any reason, the lender has the legal right to pursue your cosigner for repayment.

Failing to Set Expectations

You’ll need to discuss whether you’ll repay that person should he or she have to make payments at some point or if those payments will be gifts.

Expecting a Handout

If you think a legal agreement sounds drastic, keep in mind that a friendly cosigning situation can go sour when you don’t hold up your end of the deal.