Parents Should Never Co-Sign Their Kids’ Student Loans, Warn These Experts—Here’s Why It Could Delay Retirement

When it comes to your children, you may have the urge to help them with everything regardless of the circumstances. However, if your child asks you to co-sign a private student loan with them, experts suggest exercising a great deal of caution.

Students Can Benefit From Having a Co-Signer

To finance your college education, you might rely on loans from the federal government, scholarships, funds from a 529 savings plan, and more.

Yet if that money doesn’t cover the cost of college, you may have to turn to private student loans—something that could become more likely as the One Big Beautiful Bill imposes limits on the amount of federal student loans that undergraduate and graduate students can take out.

Unlike the federal government, private lenders typically require a credit check for qualification. Since high school and college students are young, they may have insufficient credit scores and income to be eligible for a student loan on their own.

Enter: a co-signer. By getting a co-signer, a student may be able to qualify for a private loan and receive more favorable terms on it, such as a lower interest rate. This is because the lender will evaluate both the co-signer’s credit score and income in addition to the primary borrower’s.

According to SoFi, 90% of private student loans need cosigners.

“As a creditor, you go for the deepest pockets,” said David Demming Sr., certified financial planner (CFP) and President of Demming Financial Services Corp.

Why Parents Should Be Wary of Co-Signing

By becoming a co-signer, a parent also becomes responsible for that debt, which can become a problem if the primary borrower fails to make payments on time and in full.

In those situations, a co-signer’s credit score can be harmed and they can even have their wages garnished if a lender wins a court judgment against them. Michelle Crumm, CFP and President of Belle Eve Financial, suggests that parents make sure their own finances are in order—particularly their retirement savings—before helping their children.

“Parents think it’s a generous act, but in actuality, it’s something that carries so much financial risk that it’s actually not being generous—they’re doing something that [could] harm themselves, which in essence, harms the kid later, too,” said Crumm.

Be Okay With Some Discomfort

When having conversations about co-signing, experts recommend that parents be firm yet honest with their children.

“It’s okay to say, ‘no, you need to go to an in-state school because out-of-state school costs twice as much,’ said Crumm. “It’s okay to push back… That’s hard. Those are tough conversations.”

No matter how uncomfortable, Crumm says it’s best to be realistic with your children.

“We don’t encourage a parent to initiate this [co-signing] as a first choice. It should be a last choice,” said Demming. “If the child can qualify and get reasonable terms on their own, that’s part of being an adult and being independent.”