Student Loan Cosigner Release – A How-To Guide

Posted by Frank Gogol

Disclosure: Stilt is a lending company. Nonetheless, we are committed to recommending the best loan products to our readers when their needs are outside Stilt’s loan offerings. 

Tuition fees in the United States are really expensive. Though it’s worth every penny when you get your qualification, getting the money could be difficult. You most likely already know that, because you have some kind of student loan and that in itself required some effort. You couldn’t just get credit. You first had to find a cosigner to qualify for your loan and that person’s name is connected to your credit to this day. Perhaps you have been working for a while now, your credit score has increased over time, you have completed a number of successful loan payments, and you’re wondering whether it is possible to release the cosigner from your loan. It’s easier than you think.

You could qualify for student loan cosigner release. If so, you may be able to release the cosigner from your student loan, giving you the freedom you need to steward your credit. Here you can find the information you need to perform a successful cosigner release.

What is Student Loan Cosigner Release?

Some time ago, you decided to pursue tertiary education and immediately were confronted by the cost. A student loan was your best option at the time, but your credit score wasn’t yet strong enough to satisfy the loan requirements. So you got a cosigner who offered their creditworthiness to support your application. This means they are also liable for your loan if you fall behind on payments.

Fast forward to today and you have advanced since then. You have a job, you’ve already completed a number of payments but you would like to fly solo now. You no longer require your cosigner and to be honest it would be nice to relieve them from the responsibility. This is where student loan cosigner release comes in.

Student loan cosigner release will release the cosigner from also owning responsibility for your student loan. Their credit report will no longer be connected to your student loan and they are no longer liable to settle your loan if you default. Lenders may have different names for the process but it entails the same basic function. It removes the cosigner from your debt. Let’s see how it actually works.

How Does a Student Loan Cosigner Release Work?

Lenders call it different things and their application processes may differ as well. We like to make things simple, so here is a basic explanation of how the average student loan cosigner release works.

Eligibility

Initially, you couldn’t qualify for your student loan on your own. That is why you needed your cosigner to get the loan approved. So you need to somehow prove you can manage the obligation if you want to accept responsibility for the loan on your own.

Here follow some basic eligibility criteria which you need to fulfill before you could apply for a student loan cosigner release.

  • Graduate – Get your qualifications. You need a physical copy of your degree or certificate to serve as proof.
  • Complete enough payments – The lender wants to see you complete a predetermined number of payments. This will help prove your ability to settle the loan by yourself. Each lender has its own number of required payments which may range between 12-48 months.
  • Fulfill employment requirements – The lender would like to verify your employment and your income. Your most recent paychecks could help prove this.
  • Meet credit requirements – Your credit score and credit report must be strong enough to support the application without any help from a cosigner. You’re asking for a cosigner to be released, thus your creditworthiness must be strong enough to carry the debt by yourself.

The above-mentioned criteria could differ among the different lenders, though the basics remain, even with releasing a cosigner from an auto loan. The lenders want to know whether you have graduated and started working yet. They need to know you earn a stable income which will help you settle the debt. And hopefully, by now you have strengthened your credit score so that you won’t need the help of a cosigner. The whole purpose of the exercise is to prove to your lender you are able to settle the debt without any help. Build a compelling case before you apply for a cosigner release. Your eligibility is a key component.

Application

You must perform a formal application to become the only borrower on your student loan. Your current credit agreement still contains the name of your cosigner. A legal process must follow for the cosigner to be released. Ask your lender how to apply for your cosigner to be removed from your student loan.

Cosigner Release

Let’s assume your application is in and your lender has approved your request. The cosigner is released from your student loan. A new credit agreement is drafted and you are the only borrower responsible for it. Now you won’t need the input of your previous cosigner anymore. You can manage your credit matters by yourself.

How to Request that Your Cosigner Be Released

As mentioned before the cosigner release application process may differ from one lender to another but it remains roughly the same. You need to check whether you are eligible for a cosigner release and then apply it in the required manner. Let’s assume you are eligible for the purposes of this exercise. How do you request your student loan cosigner release?

Get a cosigner release application. You can get an application form from your lender (or alternatively from online service providers) that looks roughly like this. Please make sure your application form format is accepted by your lender before you submit it. Complete your application, attach all supporting documents, and submit it at the appropriate department (or email address) at your lender. Make a copy of your application and keep it for your own records.

Remember to get some form of confirmation that your lender has received your application. The process will run it’s the course now as your lender reviews the evidence at hand to come to a decision. Ask them how long it may take and monitor their progress. They may contact you to gain more information. Supply any additional information as fast as possible to reduce the waiting period and follow the correct inquiry procedures if your lender takes too long to reach a decision. Your cosigner could soon be released.

Benefits of Student Loan Cosigner Release

Have you perhaps wondered why it’s a good idea to release a cosigner? These benefits will help to explain.

  • Fewer loans to help more students – The cosigner is released from your student loan. Perhaps your cosigner is your parent and releasing them from your student loan allows them to cosign a loan for someone else like your sibling. They have fewer debt responsibilities on their credit report and could use that breathing room to support other people.
  • Room for more credit – Maybe the cosigner asked to be released from your loan. Release them to reduce their exposure to debt which allows them to apply for more credit of their own.
  • Responsibilities reduced – Your cosigner can have some peace of mind now. They are no longer required to service your student loan if you default. They can continue without worrying about your debt.

It’s easy to release your cosigner as long as you are eligible. It will not only please your cosigner but it may benefit your relationship with them as well. They are no longer legally bound to your credit and therefore no longer affected by your financial decisions.

Student Loan Cosigner Release through Refinancing

Perhaps you need to find a way to release your cosigner as soon as possible. Your current lender’s eligibility requirements are perhaps beyond your reach for now. How could you still release the cosigner?

You could refinance your student loan at a different lender which will have the same effect as a cosigner release. You become the principal borrower of that debt at a new lender as your old credit agreement is replaced. The cosigner no longer has any connection to your credit facility. You should, however, know the pros and cons of refinancing before you go through with it.

What Are the Pros and Cons of a Refinancing?

It’s either a good thing or a bad thing depending on how you use it. A refinancing deal has to refinance costs associated with it. You need to check whether you’ll save enough money in the process to cover the refinancing costs. Accomplish that and it will help justify the decision. Here follow some pros and cons which may help you to make the decision.

Refinancing pros:

  • Reduced interest rates
  • Reduced monthly payments
  • Switch to a fixed interest rate to stop raised interest rates from increasing your debt expenses

Refinancing cons:

  • A fixed interest rate will not allow you to capitalize on cheaper installments when the interest rates are lowered by the Fed
  • Financing costs could be more expensive than the money you’ll save over the remainder of the loan (especially when you have few months of payments left)
  • The loan term may reset which leaves you with an increased number of future payments which causes more interest to accrue. You may be settling a debt that is more expensive than your first loan.

These pros and cons could help you decide whether it’s worth it. You could even use this advice for other types of loans, like an auto loan refinancing loan.

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Conclusion

Student loans help millions of people in the U.S. to get a higher education. It also requires millions of people to cosign on the student loans of their children and loved ones receiving the education. How is it possible to remove a cosigner from a loan especially considering that student loans may take several years to be settled?

You could apply for a student loan cosigner release. It will remove your cosigner from your student loan so they may have more freedom to apply for more credit of their own. Contact your lender and ask how you can release your cosigner. If that doesn’t work you can always consider refinancing your student loan. Apply today!

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