It's not too late to save money on your student loans: Try these 3 tips

Posted: September 26, 2018 | Word Count: 589

Adding a cosigner to your student loan application can be a smart financial move, according to a new analysis from online student loan marketplace The research found that borrowers who added a cosigner to their private student loan applications were more than five times more likely to be approved for a loan. In addition, borrowers applying with a cosigner reduced their interest rate by 2.36 percentage points, on average, opening the door to rates that were 28 percent lower than those available to borrowers applying without a cosigner.

Private student loans are often used to cover funding gaps when families hit their federal student loan limits. Banks, credit unions and online lenders provide private loans at rates that can be competitive with the federal government’s Parent PLUS loans, depending on the borrower’s (and cosigner’s) credit worthiness.

Save thousands with a cosigner

Credible’s analysis of more than 90,000 student loan requests submitted through the marketplace in the last year found that for a freshman deferring loan payments until after graduation, adding a cosigner saved them an average of $3,505 when taking out a $10,000 fixed-rate loan paid back over 10 years. Adding a cosigner helped borrowers across the entire credit spectrum get lower rates — even those with good or excellent credit.

Because students often have little to no credit history, many, if not most, private student loan lenders require a cosigner in these situations. In cosigning a loan, a cosigner agrees to take responsibility for paying back the loan in full if the borrower is unable to pay it back themselves.

“Taking on student debt is a serious long-term obligation, so it’s important that students and their cosigners enter into it wisely,” said Stephen Dash, founder and CEO of “Cosigners may be underappreciated as a group. They deserve tremendous credit for helping many students get the loans they need to further their education at a significantly lower rate.”

Not all cosigners are equal

Not all cosigners are equal, however. The benefits of applying with a cosigner are tightly correlated with the cosigner's credit score. The higher the score, the lower the interest rate offered by lenders. To help students identify their strongest cosigner, the marketplace allows students to request rates from multiple lenders and compare potential cosigners to see how each cosigner affects their available rates.

Although parents usually serve as cosigners, anyone with good credit who wants to help a student can fill the role. Credible found that more than one in four undergraduate students turn to other relatives or a spouse, friend, or employer to serve as a cosigner. offers the following tips for students seeking to minimize their student loan debt:

* Shop around. Do your research and comparison shop. Private lenders offer different types of loans on rates and terms that depend on the borrower. In general, it pays to shop multiple lenders before you commit to one. Credible’s online comparison tool shows you the actual rates and loan products you could qualify for with multiple, vetted lenders.

* Keep an eye out for discounts. Many student loan lenders offer discounts to borrowers who agree to have payments automatically deducted, for example.

* Thank your cosigner. Your cosigner puts their own credit on the line to help you get a lower interest rate. Why not thank them for all they do for you? Credible offers a series of cards at no charge designed to thank cosigners for all they make possible.

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