If you are planning to apply for an international student loan, you will soon run across the term cosigner. A cosigner is someone who assumes responsibility in case you are unable to pay back the loan. All international students in the US and many US students going overseas will need to have a cosigner in order to be approved for a student loan.

So while you may be asking yourself, “why do I need a cosigner for an international student loan?” you will soon find that there are many advantages to this. First, all international students are required to have a cosigner in order to apply to a US student loan. This requirement is standard for all US loans.

Why, you ask?

Many international students return to their home country after their studies, and by having a US cosigner this allows the lender to ensure repayment. A co-signer is legally obligated for repayment of the loan, the same as the borrower. The loan will appear on the cosigner’s credit history as an outstanding obligation. If the borrower fails to repay, the cosigner would have to repay. Basically the cosigner is joining the loan application, as an international student cannot receive such credit on his/her own.

For US citizens, while it is not required, it does help your chances of getting approved, depending on your credit history. Even if you may not be required to have a cosigner, choosing a creditworthy cosigner can reduce your overall cost of borrowing. International student loans require that you pay back not only the amount you borrowed, but they also charge an additional percentage as your cost of borrowing. Depending on the creditworthiness of your cosigner, this percentage may vary. It is important to choose a creditworthy cosigner to ensure a good interest rate with the lowest borrowing rate.

The main requirement for your co-signer is that he or she is a US citizen or permanent resident with good credit, living in the US for the past two years. Unfortunately there are no exceptions for US international student loans. So the next time someone asks you, “why do I need a cosigner for an international student loan?” – you can now answer with certainty! Not only does it increase your likelihood of getting approved, but it can also lower your overall interest rate on your loan.