Cosigning your student loan may be the ultimate favor. According to the U.S. Department of Education and the Consumer Financial Protection Bureau, more than 90% of new private student loans are cosigned, typically by a parent or grandparent.
But if you think you're ready to release cosigner, know that every lender has its own rules for releasing doing so. If you’re the borrower, reach out to the lender and get information about what it takes release a cosigner, as well as a release form.
Why you might want to release your cosigner
Much as cosigning has opened the door for many students to attend college, cosigning is not without downsides — including risks to the student and to the cosigner.
The most obvious downside is that if anything goes awry with your loan, it can wreck your relationship with your cosigner.
However, you, as the borrower, also carry risks. Some student loans contain a clause that automatically puts the loan into default after the death of the borrower OR the cosigner, regardless of whether you have been current on your payments. A default, of course, can hurt your credit.
How to say goodbye to your cosigner
You and your cosigner do not have to be attached at the hip forever — meaning until you pay off your loan.
As we said above, every lender has its own rules releasing a cosigner. If you’re the borrower, reach out to the lender and get information about what it takes release a cosigner, as well as a release form.
Read the requirements carefully. You may be required to:
- Show that you’ve consistently made on-time payments (typically at least 12 principal and interest payments)
- Prove regular income, and
- Pass a credit review.
You can do this usually apply to release your cosigner online or by snail mail. As with all such documents, keep copies of everything you submit.
Know that your cosigner may need to submit a request to be released too.
Understand that it may take a few weeks or even a month to hear back with your lender's decision.
If you don’t get approved to release your cosigner, there is another way out: refinancing yours student loan.
If you’ve been making timely payments, your credit score has probably gone up enough for you to refinance your loans without a cosigner.
How does refinancing work? Check out Everything You Need to Know About Student Loan Refinancing.