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Student loans are a significant issue in the United States, where consumers have more than $1.7 trillion in total student loan debt. In 2021, the average federal student loan debt per borrower was just over $37,000. And 20 years after students enter college, half of borrowers still owe $20,000 in student loans.

Broken down by degree levels, the debt increases. Graduate students who receive a degree leave school with an average of nearly $70,000 in debt. Law students are saddled with an average of $180,000; and medical students owe $250,000 on average for total student loan debt.

With so many borrowers and so much debt, it begs the question, “Should all student loan debt be forgiven?”

Who’s in Favor?

By a 2-to-1 margin, voters do support at least some student loans being forgiven, according to a poll from Politico and Morning Consult. And 53% of voters from the same poll support Biden’s extension of student loan payments through August.

Proponents of canceling student loan debt point out that the government is partially responsible for this debt crisis. Because many states slashed higher education funding after the 2008 recession, tuition at both public and private colleges has gone up steeply, and many students have been forced to take out even more in loans.

Unfortunately, the increase in student loan balances hasn’t gone hand in hand with a bump in post-college salary. The result is a national situation where borrowers owe increasingly more in student loans but don’t have the paycheck to aggressively tackle their balances.

Although the government has created income-driven repayment options that seek to keep monthly student loan payments affordable, signing up isn’t without its downsides.

Since these income-driven plans often lengthen loan terms, borrowers may pay significantly more interest on their loans over time. Also, any forgiven balance at the end of their loan term is typically treated as taxable income.

Why Forgiving Student Loan Debt a Isn’t a Slam-Dunk

There are several reasons why forgiving student loan debt may not be a straightforward positive. The first is that, according to U.S. tax laws, debt that’s forgiven is a taxable event. Under income-driven student loan repayment plans, for instance, if you make consistent, on-time payments for the life of the loan (20 or 25 years, depending on when you borrowed), any balance remaining at the end of your loan term is forgiven — but whatever’s forgiven is considered taxable income.

The second issue pundits raise with this plan is that it’s being sold as a stimulus: If the government forgives people’s student loan debt, they’ll put money back into the economy, the thinking goes. But forgiving debt isn’t the same as handing people a check.

And finally, the federal government so far isn’t planning to forgive student loans that borrowers hold with private lenders, which average over $54,000 per borrower.

Alternative Options to Canceling Student Loan Debt

Instead of targeting only student loan borrowers who qualify for relief, the government could provide a stimulus check to all Americans, and Americans could decide for themselves how to use it.

If someone has $10,000 in outstanding student loans, for example, they might prefer to use a check to put a down payment on a house or pay off high-interest credit card debt.

Then there’s the higher education system itself. Canceling or forgiving student loan debt may provide only temporary relief as long as tuition levels continue to rise. As it stands, future generations will be saddled with just as much, if not more, student debt than Americans currently have today.

Tackling Your Student Loan Debt

There’s no telling when or if some form of more long-term relief might appear for student loan borrowers. If you’re struggling under the weight of your student debt, there are strategies that might help:

•   Alternative payment plans: Federal student loans come with a variety of repayment options, one of which might suit your situation.

•   Direction of overpayments: If you make extra payments on your student loans, you may instruct your servicer to apply them to your principal, rather than the next month’s payment plus interest. This will help pay off your loans faster.

•   “Found” money: If you receive a work bonus or tax refund, applying it to your student loans can help reduce your balance faster.

•   Refinancing: Refinancing student loans (private and/or federal) into one new loan with a private lender could lower your monthly payment and interest rate, and make it easier to manage payments. Just know that refinancing federal student loans with a private lender means losing access to federal repayment and forgiveness programs.

Recommended: Can Refinanced Student Loans Still Be Forgiven?

The Takeaway

There is no quick fix for student loan debt, which will take further discussion from stakeholders on all sides.

If you are struggling with your own student loan debt, there are options to consider. You can apply for an income-driven repayment plan, apply for student loan deferment or forbearance on your federal student loans, or refinance your loans with a private lender. Keep in mind, though, that refinancing disqualifies you from federal benefits you may otherwise be eligible for.

If you do decide to refinance, consider SoFi. SoFi has a quick online application process, competitive rates, and no origination fees or prepayment penalties.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

Unpaid student loans can put a heavy yoke on personal finances. For millions of Americans, outstanding student debt means years and years of ongoing payments (averaging hundreds of dollars per month).

It can be hard to balance paying back what’s owed on student loans while meeting immediate expenses (like, paying rent) or pursuing long-term financial goals (like, saving up for a mortgage down payment).

But, the impact of student loan debt on the economy goes deeper than dinging individuals’ wallets, affecting entire job sectors.

Student loans now account for almost 40% of outstanding consumer debt in the U.S., outpacing the amounts owed on motor vehicle loans, for example, by more than $355 billion.

For a wide-angle view of student loan debt and the economy, it’s useful to know just how much money is owed by borrowers across the U.S. on educational debt. In 2023, the cumulative total of student loan debt in the U.S. surpassed $1.7 trillion, according to data from the Federal Reserve.

Understanding How Many Americans Have Student Loans

This educational debt load affects tens of millions of Americans. More than 43 million borrowers have federal student loan debt, with the average balance per individual being $37,338. To obtain a bachelor’s degree, the average student borrower takes out more than $31,000 in student loans.

For those with master’s degrees, student loan debt is even higher. The average master’s degree holder’s student loan debt is $83,651, which is 141% higher than the average student debt balance.

Given these massive numbers, it becomes clearer how the U.S. college student loan debt crisis and the economy are enmeshed in a tangled tango.

Reviewing Effects of Student Loan Debt on the Economy

If the total amount of student loan debt held by Americans sounds staggering, it’s because it is. That total — $1.757 trillion — is more than the GDP of countries such as Australia, Spain, and Mexico.

And, it’s more than double that of Saudi Arabia and Switzerland. It even outpaces the global box office totals of the 20-highest grossing films in history — a list that includes blockbusters like, Avengers: Endgame, Avatar, and Titanic — by more than 50 times!

With these numbers in mind, let’s dive deeper into the drag that this massive amount of educational debt continues to have on the U.S. economy.

Does Student Loan Debt Hamper Spending?

For the average individual paying off a student loan, typical payments amount to $200 to $299 each month. For many — especially those embarking on a career and earning an entry-level salary — this ongoing financial obligation can put a deleterious dent in funds they could otherwise spend elsewhere.

Student loan repayments can place a very real squeeze on the money that individuals have available each month for buying, investing, saving, or starting a business.

More money spent paying back student loans, in practice, means less money in pocket or saved. Consumer-driven economies grow when people (aka consumers) spend their hard-earned money. So, millions of people redirecting income towards loan payments can significantly slow or stifle economic growth. If someone is struggling to pay off their student loans, they’ll have less money to spend on purchases that help fuel the economy, businesses, and the workforce. The more young people there are who struggle to pay off loans, the greater this economic dampening effect that occurs.

During periods that require economic resilience, such as in a recession, reduced spending can be especially nefarious.

Consumer spending can help to stimulate a floundering economy, mitigating or reversing sudden downturns in specific sectors.

When that spending doesn’t happen during a downturn, it can take longer for the economy as a whole to bounce back.

For those with student debt, it can also be harder to weather a financial crisis, compounding the pain of higher unemployment and lower spending.

How Do Student Loans Affect the Housing Market?

With less money to spend, it’s no surprise that people with student loans have fewer funds for big ticket items, such as buying a home or saving for retirement.

And, since home ownership is a major driver of wealth accumulation, delaying when one buys a home can impact an individual’s net worth for decades to come.

How Do Student Loans Stifle Entrepreneurship?

Small businesses contribute to the economy in major ways. In fact, they’re responsible for 1.5 million jobs annually and generate 44% of economic activity in the U.S.

Future business owners may not be able to turn toward traditional means of financing, such as small business loans, when saddled with student loan debt. It can be harder to get approved for financing when your debt-to-income ratio is high due to loans.

And, when an individual with student debt does become an entrepreneur, they’re at risk of falling behind on student loan payments if their incoming income decreases.

Paying Off Student Loans Can Benefit Individuals and the Economy

When examining student loan debt and the economy, it may be helpful for borrowers to research additional ways to pay off existing student loans — both for their own financial well-being and the future growth of the U.S. economy on a whole.

Here are some strategies that could help those with outstanding student debt to pay down their educational loans faster.

Paying More than the Minimum Due

Student loans are generally subject to interest. Interest is a percentage charged by the lender on what’s been borrowed. Practically speaking, student loan interest accrues over time. So, borrowers who are unable to pay off their loan balances quickly typically end up spending more in interest over the entire life of the loan.

In most cases, the longer student loan debt goes unpaid, the more the borrower will owe, as unpaid interest gets added to the base dollar amount that had been borrowed from the lender. This is called compounding, and most student loans compound their interest daily. This can get confusing quickly, so here’s a student loan calculator so you can see exactly how much you’re spending on interest over the life of the loan.

Many lenders allow borrowers the option to submit a “minimum payment.” In the short term, paying a lower amount per month can free up some income or cash. But, paying the minimum does little or nothing to tackle the outstanding loan balance — typically, the borrower is just paying the accruing interest.

Paying more than the minimum can help reduce the length of time it will take to pay off an existing student loan — shrinking the principal balance as well as the amount of interest paid (aka total money spent) during the life of the loan.

While increasing monthly payments may not be manageable for every individual, paying a little extra when the opportunity presents itself can still help borrowers to eliminate student debt faster.

If nothing else, borrowers may want to apply a share of occasional windfalls, such as a work bonus or tax refund, towards outstanding student debt.

Applying for Loan Forgiveness

Under some circumstances, the government will even forgive federal student loans, essentially canceling out the remaining debt. Some teachers and public servants are among the groups that may be eligible for federal student loan forgiveness programs.

It’s worth noting that this Public Service Loan Forgiveness (PSLF) program is not available to all workers (including some in the public sector) and applies only to federal, not privately held, student loans.

Refinancing Student Loans

Refinancing a student loan with a private lender may result in lower interest rates and/or the ability to pay off what’s owed in a shorter amount of time for well-qualified borrowers.

Student loan refinancing replaces an outstanding educational debt (e.g., a student loan or loans) with a new loan. As such, the new loan can have different terms and interest rates.

For some student loan holders, refinancing allows them to reduce their monthly payments or the total interest paid over the life of the loan.

It’s worth remembering, though, that refinancing federal student loans with a private lender means that the borrower will forfeit federal benefits, such as access to income-driven repayment plans or public service forgiveness programs.

Paying Off Student Loans Faster

Student loans have the potential to keep taking a big bite out of the economy. But, unpaid educational debts undoubtedly hurt the borrower even more, creating accruing interest and loan balances that can take years and years to pay off.

Refinancing educational debt with SoFi could potentially save borrowers money. SoFi’s loan refinancing comes with no application fee, a quick and easy online application, and competitive rates.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

Whether you’ve been turned down for a private student loan or you’re applying for the first time, it’s important to understand how a cosigner can impact your loan application.

Having a cosigner on a student loan is a bit like a letter of recommendation to get into college. A cosigner can reassure the bank or lender that you are capable of repaying the loan. A cosigner is not always required for student loans, such as with most federal student loans. Depending on a student’s financial history, employment, and what type of loans they’re applying for, the likelihood of requiring a cosigner will vary.

Read on to learn more about what a cosigner is and when it may make sense to add one to your student loan application. This article will also discuss some of the risks involved with being a cosigner, and some tips on how to ask someone to be a cosigner on a student loan.

What Is a Student Loan Cosigner?

A cosigner is a person who agrees to repay the loan if a borrower defaults or is otherwise unable to pay their debt. Adding a cosigner to a student loan application could help the primary borrower secure a lower interest rate, depending on the cosigner’s financial and credit history.

When a cosigner takes on a student loan with the borrower, they’re assuming equal responsibility to repay the loan. Any negative actions on the loan, such as a late payment or defaulting, could harm the cosigner’s credit.

How to Decide If You Need a Cosigner on a Private Student Loan

Before deciding whether you need a cosigner on a private student loan, you’ll want to fill out the Free Application for Federal Student Aid (FAFSA®). This will determine how much aid you’ll receive, and help you and your family determine how much of a gap you’ll need to fill with other sources of funding.

Once all other options are exhausted, students could look into private student loans and consider a cosigner. When considering a cosigner, there are several factors to evaluate, including the type of loan you’ll be applying for, your credit history, credit score, income, and any history of missed payments. Continue reading for a more in-depth discussion of these factors.

1. What Type of Student Loans Are Being Considered?

The type of loans you’re applying for may affect your need for a cosigner.

Federal Student Loans

For the most part, federal loans do not require a credit check or a cosigner. The federal loan types that do not require a cosigner include:

•   Direct Subsidized Loans

•   Direct Unsubsidized Loans

•   Direct Consolidation Loans

The exception is a Direct PLUS Loan, which does require a credit check. Borrowers interested in a Direct PLUS Loan may need an “endorser” for the same reasons they may need a cosigner for a private student loan: if their credit history and other financial factors are lacking.

A Direct PLUS Loan can help graduate students and parents of undergraduate students pay for the entire cost of school attendance, minus any other financial aid. Direct PLUS Loans are the only federal student loans that look at an applicant’s credit history, thus the potential need for an endorser.

An endorser is the equivalent of a cosigner — they agree to repay the Direct PLUS Loan if the borrower defaults or is delinquent on payments.

Private Student Loans

If an applicant doesn’t meet the lending requirements on their own, they might need a cosigner to obtain any private student loan. To qualify for a private student loan, you typically have to check more boxes regarding financial history than you would for a federal student loan.

According to a report by MeasureOne, 92% of private undergraduate student loans and nearly 66% of private graduate student loans originated in the 2021-2022 school year had a cosigner. Based on this, it is more likely than not that a student will add a cosigner on their private student loan application.

Both Federal and Private Student Loans

Once a student has a full understanding of the financial aid they qualify for after submitting their FAFSA, they can determine if federal student loans and other federal aid like scholarships and grants will cover the cost of their education or if they need to supplement the amount with a private student loan. While the borrower might not need a cosigner for federal loans, they might require one for private student loans they might take out.

2. Are You an Undergraduate or Graduate Student?

The necessity of a cosigner may vary depending on whether a person is applying for graduate or undergraduate private student loans.

Undergraduate Student

Undergraduates are generally more likely to need a cosigner on their private student loans. That’s because undergraduates typically haven’t established a lengthy credit history. Without an established credit history, there is no track record for lenders to evaluate. In addition, undergrads might not have a steady income, which can also affect whether they are approved for a loan without a cosigner.

Graduate Student

The type of schooling a person is pursuing won’t have an impact on the need for a cosigner. However, a person’s credit history and income will still factor into the decision.

3. How Does Your Credit Score Factor into the Decision?

Most private lenders will look at an applicant’s credit score (among other factors) to determine eligibility. Having a lower credit score may make it more challenging to get a loan without a cosigner.

FICO® Scores (the most common credit scores used by lenders and financial institutions) range between 300 and 850. If a person wants to check their score, many websites offer free credit scores or credit score monitoring (just be sure to read terms and conditions carefully).

It’s possible to get a free credit report annually from AnnualCreditReport.com. It is important to note that this is not the only site where someone can request a free credit report. For example, they can get their credit report directly through the credit bureaus or on other online sites.

Ultimately, it’s up to each individual lender to consider the credit score and other financial factors before approving a loan, and every lender has different criteria.

4. How Long Is Your Credit History?

A person’s credit history gives lenders a sense of their ability to pay on time, or ability to pay off debt in full. The length of a person’s credit history makes up about 15% of their FICO® Score.

Length of credit history is determined by Average Age of Accounts (AAoA). Lenders take the lifespan of a person’s accounts and divide by the number of accounts that person holds. A potential borrower can determine this number by figuring out how long they’ve had each account in their credit history, then dividing by the number of accounts.

The real sweet spot for credit history comes at the seven-year mark. From that point, early negative marks on accounts might have faded away. It shows lenders that a borrower can pay loans and maintain accounts over time.

There are a number of factors at play in lending decisions, but a short credit history could mean that adding a cosigner is beneficial.

5. What Is Your Employment Status?

Lenders want to be sure that you can repay your debts, so they’ll generally also evaluate an applicant’s income.

Employed Full-Time

Generally, if a person is employed full time at a salaried job, it shows lenders they have the capability to repay the loan they’re borrowing. Lending requirements vary based on the lender, but having an established income history may help an applicant avoid needing a cosigner.

Employed Part-Time

While part-time employment can still be beneficial for a loan application, it’s possible that a cosigner might help boost the application. The applicant’s debt-to-income ratio will come into play — that is, how much debt a person owes (credit cards, rent, other bills) divided by the income they earn before taxes and other deductions.

Of course, all lender requirements vary, but significant, consistent income can factor into whether the applicant will still need a cosigner.

Only a Student (Not Employed)

If an applicant is not employed, lenders may be more inclined to approve a loan if there’s a cosigner who is able to show stable income.

6. Have You Ever Declared Bankruptcy?

Lenders can and do consider all aspects of a person’s financial history before granting a loan, bankruptcy included. Declaring bankruptcy negatively affects a person’s credit score, which private lenders pay close attention to with a loan application. A bankruptcy filing can stay on a person’s credit history for a decade.

Bankruptcy filings can affect a credit score in a number of ways, and depending on how long ago it took place, the effects on a person’s score will vary.

7. Have You Defaulted on a Loan?

The terms of each loan are different, but after a period of nonpayment, the loan enters default. Defaulting on a loan stays with a person’s credit history for at least seven years and typically negatively affects their credit score.

If a person has defaulted on a previous loan, they’ll likely need a cosigner on their student loan to potentially bolster their lend-ability.

8. Have You Ever Missed a Payment?

On-time payments each month can help show lenders that a person is a responsible borrower. Missing payments or consistently making late payments can have a negative impact on a person’s credit score. Payment history accounts for approximately 35% of an individual’s FICO® Score.

Consistently missing payments that have affected a person’s FICO® Score might cause a potential lender to require a cosigner. It could also cause concern for a potential cosigner, so students might want to keep that in mind.

A solid history of on-time payments shows a lender that a person is a responsible candidate for a loan and might not need a cosigner.

Choosing a Cosigner

As stated near the beginning of this post, the majority of private student loan borrowers have a cosigner. But not all cosigners are built the same, and choosing the right person to cosign a loan could be as important as the terms of the loan itself.

A cosigner should not only have a strong financial history, but also a strong relationship with the applicant. A cosigner might be a parent or blood relation, but they don’t have to be. A cosigner ideally has a stable financial history and a relationship to the applicant where they feel comfortable discussing money.

Asking Someone to Be a Cosigner

There’s a common misconception that cosigning on a loan is as easy as signing a contract, but it actually means more than that. When a person asks someone to be their cosigner, they shouldn’t shy away from discussing the challenging topic.

It may make sense to talk about worst-case scenarios with a cosigner, and make it clear it would be their responsibility to take on the payments if you default. Discuss how you could repay the cosigner in the event that you can’t make payments.

Risks of Cosigning

Beyond the worst-case-scenario discussion, cosigners should know the additional risks they take on when cosigning a student loan:

•   Credit score. Cosigning a loan will affect a person’s credit score, since they’re taking on the debt as well. Even if the borrower makes on-time payments and doesn’t default, the cosigner will see a change in their credit score by taking on the additional debt. It could potentially benefit their score.

•   Liability. If the borrower defaults on the loan, it becomes the cosigner’s responsibility to pay for it. A lender can come to collect from the cosigner, seizing assets and garnishing paychecks to cover missed payments.

However, the cosigner doesn’t need to stay tied to the loan forever. Private student loans may have a cosigner release policy in place. After a duration of on-time payments and additional paperwork, a lender may release the cosigner from the loan, leaving the borrower on their own.

It might sound easy, but a cosigner release isn’t a guarantee and not all private loans will offer this option. Read the terms of your loan carefully to understand the requirements for cosigner release.

The Takeaway

Like every college application, each loan application is a little different. Certain aspects of a person’s credit history or employment might make them more compelling to a lender. Other elements, like late payments or a limited credit history, might make a person less compelling to lend to.

Adding a cosigner to a private student loan is common and can improve your chance of approval, sometimes even with a lower interest rate than if you applied on your own.

If a student has exhausted all of their federal student loan options, private student loans could be an option worth considering.

SoFi offers private student loans with no origination fees, no late fees, and no insufficient fund fees. Plus, SoFi offers flexible repayment options to help students find the loan that fits their budget.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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You may have a few different options if you are looking to open a credit card account with an additional person. Being a joint account holder and an authorized user are two different ways that two people can share the same account. However, there are a few important differences that you’ll want to be aware of.

When you add an authorized user to your account, the authorized user can benefit from the good credit and payment history on your account. This can be one strategy to help a trusted friend or family member build their credit. With a joint credit card account, however, both people apply at the same time and both account holders are legally responsible for all purchases and debt on the account, regardless of which person actually makes the purchase.

Read on to learn more about this topic, including:

•   What is a credit card authorized user?

•   What is a joint account holder for a credit card?

•   What are things to consider before adding an authorized user?

•   What are things to consider before opening a joint credit card account?

•   How to know whether a joint credit card vs. an authorized user is right for you?

What Is a Credit Card Authorized User?

An authorized user on a credit card, sometimes called a supplementary credit card, is an additional user who is added to the account of the primary cardholder. The authorized user gets their own physical card and can make purchases. The authorized user may benefit from the good credit or a positive payment history on the account; it could help them establish or maintain their credit. However, they are not responsible for any of the purchases or debt.

How an Authorized User Impacts Your Credit

There are many factors that affect credit scores, but adding an authorized user to your account is not one of them. If you add an authorized user to your account, your credit will not be checked, and there should be no immediate impact on your credit. You will want to keep in mind, however, that you are responsible for any purchases made by authorized users. So if your authorized user spends more than you anticipate and you have trouble making the full monthly payment, it could impact your credit score.

Things to Consider When Adding an Authorized User to Your Account

Here’s a quick look at some things to consider when adding an authorized user to your account:

Recommended: How Many Credit Cards Should I Have?

What Is a Joint Credit Card Account Holder?

Unlike adding an authorized user to your account, you will typically obtain a joint credit card by applying for one with another person. With a joint credit card, the credit of both prospective cardholders is evaluated and used to determine eligibility. If approved, both cardholders are equally and separately liable for all of the debts and purchases on the account, regardless of who actually made the purchase.

How a Joint Account Impacts Your Credit

When you apply for a joint account, the credit of both people is reviewed, and then the applicants are possibly approved to receive a card. This will generally show up on each potential account holder’s credit report as a new inquiry, which may temporarily lower each person’s credit score by a few points. Additionally, both joint cardholders are responsible for all of the debt, regardless of who actually uses the credit card. So if one person spends more than expected or has trouble paying the bill on time, it may negatively impact both cardholders’ credit scores.

Things to Consider Before Opening a Joint Credit Card Account

Here’s a quick look at some things to keep in mind before opening a joint credit card account:

Joint Credit Card Account Holder vs Authorized User

Consider the differences between these two arrangements:

•   A joint credit card account is one where two people jointly open and use the account, with both people equally responsible for all of the debt.

•   An authorized user vs. a joint credit card has a key difference: The authorized user is not liable for any purchases they might make — instead the primary cardholder is responsible for all charges.

•   Being an authorized user may be one way to help establish your credit if the primary cardholder already has good credit and continues to use the account responsibly.

Recommended: What Is the Minimum Age to Be an Authorized User on a Credit Card?

Choosing the Right Option

A joint credit card account typically only makes sense for two people that are in a committed relationship in which they are already sharing their finances. And you will also want to keep in mind that many major credit card issuers do not offer joint credit card accounts.

An authorized user, on the other hand, can make sense if you want to help build the credit of someone who is starting out. By adding them to your account, you may help them establish their credit.

The Takeaway

An authorized user and a joint credit card account are different ways that two people can share a credit card account. With a joint credit card account, both people open the account together and are equally and separately liable for all charges on the account. With an authorized user on an account, only the primary cardholder is responsible for the charges. Those differences may help you decide which (if either) arrangement is right for you.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Is a joint credit card holder the same as an authorized user?

No, having a joint credit card account is not the same as having an authorized user on your account. With a joint credit card, both account holders are equally and separately liable for all charges on the account, regardless of who actually makes the purchase. With an authorized user account, only the primary cardholder is responsible.

Is it better to be an authorized user or have your own credit card?

When you are an authorized user on a credit card, you can make purchases and may be able to establish your credit, but you’re not responsible for any of the charges. Being an authorized user can make sense especially if you are just starting out. However, it may make sense at some point to work towards having your own credit card account where you don’t have to rely on anyone else.

Can you have 2 names on a credit card?

Generally there won’t be two names on a credit card, even if it is a joint account. In both the case of a joint account and being an authorized user, each person will get their own credit card with their name on it. Depending on the card issuer, the credit card account number may be the same or may be different.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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