Do Federal Student Loans Require a Cosigner?

Federal student loans are a primary source of financial aid for higher education. A common question is whether a cosigner is needed to qualify. Generally, federal student loans do not require a cosigner, a key distinction from many private loan options.

Federal Student Loans and Cosigners

Federal student loans typically do not require a cosigner because their eligibility is based on financial need, enrollment status, and other general criteria, rather than a borrower’s credit history. This approach differs from private lending, where creditworthiness is a primary determinant. Direct Subsidized Loans and Direct Unsubsidized Loans do not involve a credit check during the application process.

However, Direct PLUS Loans, available to graduate or professional students and parents of dependent undergraduate students, do involve a credit check for adverse credit history. If an applicant for a PLUS Loan has an adverse credit history, they may still qualify by obtaining an “endorser” or by documenting extenuating circumstances. An endorser functions similarly to a cosigner, agreeing to repay the loan if the borrower does not, but this arrangement is specific to federal PLUS Loans.

Eligibility Requirements for Federal Loans

To qualify for federal student loans, applicants must meet specific eligibility criteria:

Individuals must be a U.S. citizen or an eligible non-citizen.
A high school diploma or a General Educational Development (GED) certificate is also a prerequisite.
Enrollment in an eligible degree or certificate program at an accredited institution is required.
Students must maintain satisfactory academic progress (SAP) to continue receiving aid.
Applicants must not be in default on any federal student loans and must not owe a refund on a federal grant.
Signing a statement of educational purpose and a certification statement on the Free Application for Federal Student Aid (FAFSA) is mandatory.
For males, registering with the Selective Service System is another requirement, if applicable.

Private Student Loans and Cosigner Considerations

Private student loans are financial products offered by banks, credit unions, and other private lenders, contrasting with government-backed federal loans. These loans are credit-based, meaning lenders evaluate a borrower’s creditworthiness to determine approval and interest rates. Many young adults entering higher education have limited or no credit history, making it challenging to qualify for private loans independently.

A cosigner is frequently required to secure approval for a private student loan or to obtain more favorable terms and interest rates. A cosigner assumes equal legal responsibility for the debt, meaning their credit history is used to help the primary borrower qualify, and they are obligated to repay the loan if the primary borrower fails to do so. Private loans typically offer fewer borrower protections and more limited repayment options compared to federal student loans.

How to Apply for Federal Student Loans

The application process for federal student loans begins with creating an FSA ID, which serves as a username and password for federal student aid websites. This ID allows access to the Free Application for Federal Student Aid (FAFSA), which is the primary application for federal student aid. The FAFSA collects essential financial and demographic information from the applicant and, if applicable, their parents.

After completing the FAFSA, it is submitted online through the official Federal Student Aid website. Upon submission, applicants receive a Student Aid Report (SAR), which summarizes the information provided. Schools where the applicant has been accepted will send financial aid award letters detailing the types and amounts of federal aid offered. The final step is reviewing these offers and accepting or declining the aid, which may include signing a Master Promissory Note and completing entrance counseling requirements.