{"id":9563,"date":"2023-01-16T11:38:55","date_gmt":"2023-01-16T11:38:55","guid":{"rendered":"https:\/\/varthana.com\/student\/?p=9563"},"modified":"2025-07-29T09:42:16","modified_gmt":"2025-07-29T09:42:16","slug":"5-things-you-should-know-before-cosigning-a-student-loan","status":"publish","type":"post","link":"https:\/\/varthana.com\/student\/things-you-should-know-before-cosigning-a-student-loan","title":{"rendered":"5 Things You Should Know Before Cosigning a Student Loan"},"content":{"rendered":"

With ever-increasing competition and soaring inflation, most parents who wish to send their children to study at prominent Indian universities are now opting to take out a student loan to further their children’s academic careers.<\/span><\/p>\n

Earlier, most parents were accustomed to liquidating assets like gold, fixed deposits, and property to finance their child\u2019s education. Parents or guardians have now begun to accept the paradigm shift of accessing funds through student loans<\/a> <\/span>for their children’s education.<\/span><\/p>\n

This is because both students and parents\/guardians are now aware of the many benefits that a student loan may provide. They understand that a student loan is preferable over a personal loan for education.<\/span><\/p>\n

Student loans are easily available to a large number of students (and their parents\/<\/span>guardians<\/span>) who are facing a financial crunch. That\u2019s why there has been a steady growth in <\/span>student loan<\/span> demand in the country.\u00a0<\/span><\/p>\n

According to a report by the credit bureau CRIF High Mark, disbursement of education loans increased by 9.25% between the year 2017 to 2018, and education loan companies, including banks, non-banking financial companies (NBFCs) and other financial institutions, disbursed Rs 11,000 crore loans during the year ending in September 2020.<\/span><\/p>\n

This demand reached a new high during the pandemic, with more than 3 lakh new borrowers signing up for loans between March and October 2020. As of October that year, the outstanding education loans totalled Rs 1 lakh crore \u2013 the highest on record.\u00a0<\/span><\/p>\n

If you are a parent or guardian and want to help your child pay for college by co-signing a loan from a bank or NBFC, here are some things you should know before making the decision:<\/span><\/p>\n

5 things to know before cosigning a student loan<\/a><\/span><\/span><\/h2>\n

1. Cosigners don\u2019t have to be parents<\/b><\/p>\n

A cosigner is someone who \u201ctakes full responsibility for paying back a loan\u201d. Often a cosigner is considered a family member, whether you\u2019re a parent, guardian, grandparent, or spouse, the most important requirement is that you\u2019re creditworthy and understand\/accept your responsibilities. Only one person can cosign for a private student loan. For instance, if two parents are willing to be cosigners, only one will be able to do it.<\/span><\/p>\n

2. Cosigner’s credit history is important<\/strong><\/p>\n

For most young people with a little credit history or low to no income, the only way they can get a student loan is with a cosigner. A lender looks at the borrower’s credit history to determine the level of risk. In the case of student loans, the lender would want to make sure the cosigner has the ability to pay it back.\u00a0 They\u2019ll look at your credit history, including the credit report and credit score, and other factors. Have you made payments on time? How much outstanding debt do you have? Have you had any bankruptcies or defaulted on a loan?<\/span><\/p>\n

Also Read<\/b>: <\/span>5 Best Tips To Get The Best Education Loan Interest Rate In India<\/span><\/a><\/span><\/p>\n

3. C<\/b>osigner is<\/b> legally responsible for the loan<\/b><\/p>\n

Deciding to cosign a loan is an important decision. It\u2019s a legally binding agreement that you\u2019re willing to share the responsibility of repaying the loan on time and in full. So, missed payments can adversely impact your credit report as well as the borrower\u2019s.<\/span><\/p>\n

4. There are benefits to cosigning a loan<\/b><\/p>\n