Why do International Students Need Cosigners

Every system has its requirements. In your home country, you may not have heard about cosigners before. But in the USA, you need a cosigner as an international student, and here are the reasons for this.

Poor credit score and credit history

Every lender wants to be certain you can pay back the loan they are giving you. So, how do they know if you’ll be able to repay your loan as and when due? This is where credit score and credit history come in. You must have been borrowing for a long time to have a high credit score and credit history. But you’re an international student in the USA trying to get a loan for maybe the first time. You see now that your lender would find it hard to trust you to repay your debt.

Insufficient Students Income

Let’s face it, how much are you earning while studying? You may not be working at all as it is, but your private loan lender requires you to be receiving income if they’ll give you a loan. This is an assurance to them that they’ll get their money back. However, you may not have acquired all the required skill set from college that big employers need. You may be working while studying, however, but the lender may not be satisfied with your income.

Very High-Interest Rates

Some students manage to be creditworthy – especially if they’ve stayed in the country they’re studying for a long. They may also have sufficient income to service the loan repayment, however. But then there’s a new challenge – high-interest rates. The private lender doesn’t want to lose in any way, so they may make up for your loan insecurity by charging you a much higher interest rate. You may be able to afford to repay the loan even with the high interest but in the long run, it could be very detrimental and limit your repayment options.

You may want to know how to repay your loans quickly. See our 7 Practical Tips On How to Pay Off Your Student Loans very fast.

With all these limitations, you then see why you need a cosigner. The US citizen cosigner who is creditworthy will turn the table around for you and you’ll get the best loan to pay for your schooling.

Requirements Cosigner Must Meet

So, if you decide you like the idea of cosigners, the next step is finding one. This can prove very difficult because the private lender requires the cosigner to possess the following:

Good Credit Score and Credit History. You need a cosigner in the first place for this reason – to provide additional security on your loan. Therefore your cosigner must prove that they can make the payment for you if the need arises. The lender gets this proof, however, from the cosigner’s credit history and score. You’ll basically be looking for a cosigner with a credit score of 690 and above for full cover.
US Citizenship or Permanent Resident. Getting a US citizen or permanent resident to cosign your student loan is usually a very challenging task for international students. This is because you are new to town and may not know enough of this kind of people to trust you enough to cosign for you.
A Stable Source of Income. This is a vital requirement for cosigners. They must not have an income source that fluctuates. The private lender will usually ask your cosigner for recent pay stubs to prove that they will be able to make payments.
The Willingness to Cosign a Loan on Your Behalf. Again, this boils down to trust. How will you get a US citizen who may not be your family or relation to sign on your behalf? Cosigners are usually careful to agree to cosign on international students’ behalf. This is because their credit will be hurt if the international student fails to make the necessary payments on the loan. Not very many people won’t mind taking this risk.