When do you need a cosigner for a student loan?
August 24th, 2012 by Jennifer Frankel
The cost of a US college education continues to rise – increasing at annualized average of 6.2% each year for the last 20 years – and, as a result, an increasing number of students are turning to alternate sources of funding to finance their higher education goals. Thus both domestic and international students alike are availing themselves of an increasingly varied array of school-sponsored or third-party scholarships and fellowships, as well as a wide variety of private loans. Still, while the cause of the problem – increased costs – affects all students equally, its solutions do not.
For example, although Pell Grants are a mainstay for many domestic students, foreign nationals studying in the US with on any “J” or “F” visa are not eligible to participate in the program. In a similar way, the regulations regarding student loans are likewise different for domestic and international student loans. In this case there is a considerable difference between what is encouraged and what is required. Consider, as an illustration, the issue of a cosigner for a student loan. According to Citi Student Loans, for instance, “most undergraduate students will need to apply with a creditworthy cosigner” in order to meet the company’s income- and credit history-based eligibility requirements. If a domestic student can satisfy these requirements on their own, however, no cosigner is necessary. The same is true of almost any lender.
By contrast, all international students need a cosigner. Indeed, by and large a US-based (citizen or permanent resident) cosigner with good credit is considered de rigueur for lenders and is therefore all-but obligatory for borrowers. In this way the cosigner’s country of residence and credit history thus serve as an additional insurance on the part of the lender (and make the loan’s eventual collection that much easier). In the end, though, it is important to stress that while not all loan options require a US cosigner for an international student loan it is important to check with your college or university before applying. By contacting them directly you can ensure that the loan in question is a good fit for you.