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For many parents, cosigning a private student loan for their child may be necessary to cover college expenses.

By adding their name to the student loan, the parent is giving their student access to credit that they may not otherwise qualify for.  What parents may not realize, however, is that their own credit standing is also on the line since as a cosigner they are equally responsible for repaying the student loan.

Here are some cosigning considerations parents and teens should discuss before signing on the dotted line.

Who Is Responsible for Paying the Bill?

The simple answer is that both the primary borrower and the cosigner are equally responsible to repay the loan. This means that even if there is an agreement that the student will pay all of their student loans, the lender will expect the cosigner to pay if that obligation is not being met. Parents and students should discuss the responsibility of repaying the loan, the consequences of missing a payment and the expectations if there is an issue. Having a plan in place can help you be prepared before problems arise.

A cosigner is equally responsible for repaying the student loan.

How Does Cosigning Affect Credit?

Most 18-year-olds won’t have much of a credit history, so they will likely need a cosigner. When a parent agrees to cosign, they are helping their student get approved for a loan, potentially get a lower interest rate and build their credit profile. Since each party is equally responsible to pay off the loan, both of their credit scores will be affected. So it’s important to make payments on time and to keep your student loan in good standing no matter who is paying the bill.

How Involved Is the Cosigner?

The cosigner and student should have an arrangement that makes sense for them. Some students may want or need more guidance than others, and some cosigners may prefer to be more involved. It won’t be the same for everyone. Cosigners have the same access to loan information as the primary borrower, so they can check in and keep an eye on account activity even if the student is primarily responsible for making payments. Establishing clear communication and discussing the terms before a loan is taken out will help both parties understand the agreement. Talking about what happens if there are issues with repayment is also critical so there’s a plan in case it’s needed.

When parents cosign a student loan for their child, they are helping them pay for college, but they are also taking on the repayment obligation. Managing expectations and talking openly throughout the process can help both the parent and student understand their obligations and roles in the arrangement.