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Adding a cosigner to your student loan application can help you meet a lender’s requirements for income and credit and snag the best rates. But since your cosigner becomes just as responsible for the debt as you are, you might be eager to release them from the loan. Fortunately, some lenders offer student loan cosigner release after a couple of years of on-time repayment. Read on to learn how cosigner release works so your cosigner can get off the hook for your student debt.
- What is student loan cosigner release?
- Is cosigner release guaranteed?
- Which lenders offer student loan cosigner release?
- You can also transfer a student loan through refinancing
What is student loan cosigner release?
As its name suggests, cosigner release refers to releasing your cosigner from your loan agreement. When someone cosigns, they become just as responsible for the debt as you are.
They’ll be expected to pay in the event you fall behind, and their credit is vulnerable if you make late payments. Plus, the loan will show up on their credit report, hiking up their debt-to-income (DTI) ratio.
If your cosigner wants to get a mortgage or other loan on their own, it could be tough with a high DTI. But if your cosigner is released, their DTI will go down. They’ll no longer be responsible for the loan, and the loan account will be marked as closed on their credit report.
Is cosigner release guaranteed?
While several lenders offer cosigner release, it’s not guaranteed. Just as when you apply for a loan, you’ll likely have to meet criteria for income and credit to prove to the lender that you’re able to handle the loan on your own.
Most lenders also require a certain time period of on-time repayment. CommonBond, for example, offers cosigner release after 24 months of on-time repayment. Sallie Mae cosigner release is an option after just 12 months, and LendKey says some of its partner lenders allow cosigner release, as well.
But according to a Consumer Financial Protection Bureau report in 2015, 90% of private student loan borrowers who applied for consumer release were rejected. That number may have decreased in recent years as borrowers learn more about the requirements behind cosigner release.
If you or your cosigner are counting on cosigner release, speak with your lender about its specific criteria for getting approved.
Which lenders offer student loan cosigner release?
So, which lenders offer cosigner release? Here are a few that offer the option to release your cosigner after a certain period of on-time repayment on your student loan.
- LendKey (select partners)
- Citizens Bank
- Sallie Mae
- College Ave Student Loans
This might not be a comprehensive list, so check with your lender directly to find out what it offers.
You can also transfer a loan through refinancing
Cosigner release isn’t the only way to get a parent or other individual’s name off your loan. You can also try refinancing the loan in your name alone.
Of course, you’ll need to meet a lender’s underwriting criteria on your own. Typically, banks want to see a credit score over 650 and proof of sufficient income.
If you can qualify, you could refinance the student loan in your own name, thereby letting your cosigner off the hook.
And if none of these options are available to you right now, try your best to stay current on student loan payments. If you’re worried about falling behind, contact your loan servicer ASAP to see if you can pause payments through forbearance or another program.
Do all you can to head off a delinquency or default before it occurs, since it’s not just your credit on the line — it’s your cosigner’s, too.
Want better rates? Here are the best banks to refinance student loans:
|Variable rates start at...||Fixed rates start at...||Repayment terms||Welcome bonus||Check your rates|
|4.54%||4.49%||5 - 20 years||$200||Visit LendKey|
|4.99%||4.47%||5 - 20 years||$200||Visit Earnest|
|4.22%||3.97%||5, 7, 10, 15, and 20 years||$120||Visit Laurel Road|
|4.53%||4.40%||5 - 20 years||$100 or $200, depending on the amount you refinance||Visit Credible|
|5.09%||4.74%||5, 7, 10, 15, and 20 years||$100||Visit SoFi|
|4.53%||4.83%||5, 7, 10, 15, and 20 years||$100||Visit ELFI|