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Removing a Cosigner From Student Loans

Removing a Cosigner From Student Loans
Rebecca Safier
Rebecca SafierUpdated June 14, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Editor’s Note: Since the writing of this article, the Biden administration has extended the pause on federal student loan repayment through Dec. 31, 2022. If the timing is right for your loan server and you meet other qualifications, it’s possible to remove a cosigner from your loan.After you’ve graduated from college, you might be interested in removing your cosigner. After all, sharing debt can increase your cosigner’s debt-to-income (DTI) ratio. Plus, you know that your cosigner’s credit is at risk if you miss payments or default. You feel ready to be solely responsible for your loan.Fortunately, there are a few ways to remove cosigner from student loans, even if the loan server is one that doesn’t offer a release for the cosigner.

What Is a Cosigner on Student Loans?

A cosigner is an individual who applies for a student loan with you in order to boost your chances of approval or help you get lower rates. Most private lenders require you to have good credit and a source of income to qualify for a private student loan. Here’s the challenge: if you’re a college student, you probably can’t meet those requirements on your own. That’s where a cosigner comes in. Their credentials can make up for your lack of credit and income and help you qualify. According to a MeasureOne report, 92% of new undergraduate student loans originated with a cosigner in the 2021-22 school year. 

Can a Cosigner Be Removed From a Student Loan?

While adding a cosigner to your loan application can help you qualify, this arrangement might not be so beneficial to your cosigner. For one thing, their debt-to-income ratio increases, which could make it harder for them to take out a mortgage or other financial product. For another, their credit will be impacted by your student loan repayment. If you make late payments or default, their credit score could be damaged. If you want to let your cosigner off the hook, it may be possible to remove your cosigner from your student loans. 

Removing a Cosigner From a Student Loan

Sharing student loan debt could be a burden to your cosigner, but fortunately, there are some avenues for removing your cosigner from your student loans.

Student Loan Cosigner Release

Some private lenders offer a student loan cosigner release to qualifying borrowers. When you release your cosigner, they will be removed from the debt and will no longer be responsible for it. Cosigner release is not automatic. Rather, you will need to apply after a certain period of on-time payments, usually 12 months or more. Your lender may run a credit check to make sure you’re financially able to take on the loan on your own. Nor do all lenders offer cosigner release at all, so you’ll need to check with yours to see if it provides this program. A 2015 Consumer Financial Protection Bureau report found that 90% of cosigner release applicants were rejected. More recent data is not available, however, so it’s possible that this option has become more common in recent years. Either way, it’s worth applying and communicating with your lender about its requirements for removing your cosigner from your student loans. 

Refinance Student Loans

Another option for removing your cosigner is refinancing your student loans in your own name. When you refinance, you exchange one or more of your old loans for a new one from a private lender. You’ll need to meet a lender’s criteria for income and credit to qualify. Depending on your credit, you may qualify for better rates than you have now. Getting a better rate could reduce your long-term costs of borrowing. Along with removing your cosigner and snagging a better interest rate, refinancing lets you combine multiple loans into one to simplify repayment. Plus, you can choose new terms for paying back your student loans, which in turn will adjust your monthly payments. Before refinancing, it’s important to note that refinancing federal loans turns them private. As a result, you lose access to federal income-driven repayment plans, forgiveness programs, and other benefits. However, if you’re refinancing to remove a cosigner, chances are you’re refinancing private student loans anyway. You might lose access to whatever benefits your current lender provides, but you could gain access to new ones. Some refinancing lenders offer special benefits to customers such as economic hardship protection, forbearance, and even career coaching. If you’ve had a subpar experience with your current lender, you might appreciate the change that could come from refinancing. Sometimes it is even possible to refinance with bad credit.And if you qualify to refinance on your own, you can assume full responsibility for your student loans and release your cosigner from the student loan debt

Consolidate Student Loans

Besides refinancing, you may also be eligible for Direct Loan consolidation. Direct Loan consolidation is available for federal student loans. It doesn’t lower your interest rate, though. When you consolidate, your new rate will be the average interest rate on your student loans rounded up to the nearest one-eighth of one percent. Similar to refinancing, however, consolidation does allow you to combine multiple loans into one and choose a new repayment term. Most federal loans don’t require a cosigner, but there’s one exception. PLUS Loans, which are available to parents and graduate students, require an endorser if you have adverse credit. Similar to a cosigner, an endorser shares responsibility for the debt. If you want to remove your endorser from your PLUS Loan, you can apply for Direct Loan consolidation. It’s free to consolidate your loans, and you can submit your application on the Federal Student Aid website. Before you do, however, it may be worth discussing the details with your loan servicer to make sure you’re going about the process the right way for your individual situation. 

The Takeaway

Once you graduate from college, you might feel ready to claim your financial independence. If sharing debt is a burden on your cosigner, you might be able to remove cosigner from student loan through cosigner release or refinancing. If you can qualify for refinancing, you might also have the added bonus of lowering your interest rate and simplifying repayment. Just remember that refinancing federal loans means losing access to federal benefits, which may not make sense depending on your individual situation. If you’re interested in refinancing, make sure to shop around for the best rates. Lantern by SoFi can help you compare offers to refinance student loans

Frequently Asked Questions

How do I get my name off a cosigned student loan?
How long does it take to remove a cosigner from a student loan?
How do you release a cosigner?
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About the Author

Rebecca Safier

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
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