Lower student loan rates got you thinking of co-signing? Think again

On Friday, President Barack Obama signed the student loan interest rate compromise into law, reducing the federal student loan rate from 6.8 percent to 3.86 percent, but that doesn't mean it's a good time for parents to co-sign their children's loans.

More than 43 percent of student loans are in deferment, according to a TransUnion study. Making matters worse, the rate of unemployment and underemployment for college graduates is at its highest level in 11 years, so deferments and delinquencies are not likely to go down anytime soon.

(Read more: Half of new grads are jobless or underemployed)

Therefore, Suze Orman warns potential co-signers, "once you co-sign on a student loan, that is your loan, and for whatever reason the student can't pay for it on time, you are going to get stuck paying for it."

Student loan debt continues to rise, and parents continue to contemplate whether they should add their name to the bill. Orman says emphatically, "I don't think so."

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Suze Orman's Top 5 Reasons Not to Co-Sign:
—You have the same responsibility to the debt as the student
—You have to pay the lender if the student misses a payment
—You can't discharge student loans in bankruptcy
—You could ruin your FICO score if the student is late on their payments
—You could increase your debt-to-income ratio

Over the past two years, student loan debt has grown by 20 percent, to $1 trillion, according to the Consumer Financial Protection Bureau. Data from the Project on Student Loan Debt shows that 96 percent of graduates from private for-profit colleges have student loan debt averaging about $33,000.

It is estimated that the new student loan interest rate law will save an undergraduate student about $1,500 over the life of the loan. That still leaves a pretty hefty balance for a co-signer to undertake if the student defaults.

Watch The Suze Orman Show for more on cosigning a student loan.

—By CNBC's Sakina Spruell. Follow her on Twitter @SakinaCNBC.

Learn more about how to make the most out of your money every Saturday night on The Suze Orman Show on CNBC.