As a parent, you want only the best for your child. Starting college can be an exciting milestone, and if you’re pitching in financially, you’ll want to explore all of your options. Many parents use student loans as a way to help pay for their children’s college education; just make sure you understand the details before you make that commitment.
If you’ve thought about taking out a private student loan to pay for college expenses, you may be wondering about taking out your own parent loan vs. cosigning a student loan with your child.
As you weigh your options, consider the following:
Cosigning a private student loan
College students without established credit history usually won’t be able to qualify for a private student loan on their own; as a result, they will need help from someone with established credit and income (often a parent) to get approved.
When you cosign a private student loan, you’re taking equal responsibility with the student to pay back the loan. The loan will appear on both of your credit reports, so timely payments will positively affect both the student borrower’s and cosigner’s credit score, while delinquent or missed payments will have a negative effect on both borrower and cosigner.
Cosigning a private student loan can help your child begin establishing a favorable credit history, as long as payments are made on time.
It’s important to discuss repayment expectations with your child if you plan on cosigning a private student loan. Will you or your child be making the payments, or will you be sharing the financial obligation? Especially if you are counting on your child to contribute to the loan payments, make sure your child fully understands the commitment and the potential negative effects to your credit score if s/he misses a payment.
If you cosign a student loan and later want to be removed, there are a few options that may be available. In some cases, the student may be able to request a cosigner release once they’re on their feet and able to meet the lender’s criteria that demonstrates they can take full responsibility for the loan. Qualification is usually based on positive payment history, income verification, and/or sometimes a credit review or other requirements (such as the amount of the repayment period that has elapsed). The policy usually varies by lender, so you’ll need to check with each one individually, and don’t assume this will be an option. Another avenue to consider is student loan refinancing. After graduating and starting their career, many students find their credit has improved, and they have sufficient income to refinance their student loans without the help of the original cosigner.
Taking out your own parent loan
On the other hand, you may decide that you’d rather take full responsibility for at least a portion of the loans for school. In this case, a parent loan may make sense for you. Unlike cosigning, you will be solely responsible for this loan until it is paid off. Even though you are using the money to pay for your child’s college education, because it is your own loan, it won’t have any impact on your child’s credit. There are two types of parent loans – private parent loans or the federal Parent PLUS loan.
Traditionally, the federal Parent PLUS Loan has been one of the most common ways parents help pay for their children’s education. While this program has helped many families cover college costs, recent legislation passed by Congress in July 2025 will limit the amount parents can borrow under the Parent PLUS loan program. With the passage of the “One Big Beautiful Bill”, Parent PLUS loans will be limited to $20,000 a year per student, with a max lifetime borrowing limit of $65,000 per student. It’s important for parents to consider all borrowing options—like private parent loans or cosigning a loan with their student—and how it might impact their family.
Again, it is important to discuss repayment plans with your child. It’s one thing if you plan on making the payments yourself throughout the term of the entire parent loan. But if you expect your child to pitch in after a certain point, it’s crucial to remember that legally, the repayment responsibility falls completely on you (the parent borrower) if those payments aren’t made.
If you’re still on the fence about whether to cosign a student loan or take out a parent loan on your own, try our free credit pre-qualification tool. While pre-qualification isn’t an official loan application or promise of approval, it also doesn’t affect your credit score. Our tools can show which loan options you and your child may qualify for and the rates you could personally expect to help you decide which loan type is the best fit for you.
| Cosigning On A Student Loan | Taking A Parent Loan | |
|---|---|---|
| Approval | Based on student and cosigner's combined credit profile. | Based solely on the parent's established credit and income. |
| Interest Rate | Leverages the combined credit strength of both the student and cosigner. | Priced solely on the parent's credit and may not offer the same rate advantages. |
| Repayment options | Full Principal & Interest, Interest Only, Flat Pay, and Deferred Repayment options available. | Interest Only or Full Principal & Interest payments begin immediately. |
| Responsibility | Both the student and cosigner share equal responsibility for repaying the loan. | Parent has sole financial obligation to pay back the loan. |
| Cosigner Release | Student can request cosigner release once established and meets lenders release criteria. | N/A |
| Credit Impact | Loan appears on both credit reports, helping the student build their credit history. | No positive or negative impact to student's credit history. |
Cosign A Student Loan
