Everything You Need To Know About Releasing Your Cosigner From Student Loans

According to a 2018 report released by the Consumer Finance Protection Bureau, 90 percent of applications for cosigner release weren’t approved by private student loan lenders.

The study also revealed that 90 percent of in-school student loans are cosigned. However, according to the Head of Education Loan Finance and Executive Vice President South East Bank, Barbara Thomas, borrowers who choose to go with student loan refinancing optionstypically don’t go for consigners because they often don’t need one.

While a cosigner helps you qualify for a student loan at lower interest rates, releasing them is equally essential as soon as you are enough financially stable to make the loan payments yourself. Having a cosigner is beneficial when you’re still a student with no means of earning. But after graduation and finding a well-paying job, it just doesn’t make any sense to have a cosigner. By doing so, you could be putting yourself at risk of getting impacted by their financial issues.

If you can afford to pay for your student loans conveniently and on time, now is the right time to let go of your student loan cosigner. Here are 3 questions that you should know the answers to before applying for a cosigner release:

• What’s a cosigner release?
• How do you release a cosigner from your student loan?
• How can refinancing help you with cosigner release?

What’s a Cosigner Release?

It’s the process of having your cosigner taken off from your existing student loan agreement. A cosigner release means that your cosigner will no longer be legally responsible for your student loan payment anyway.You can qualify for a cosigner release if you prove it to your private lender that your financial conditions are better, and you can pay the remainingbalance of your student loan every month out of your pocket.

Most private lending companies offer cosigner release to those borrowers who’ve made timely student loan payments consecutively for two years. Other companies may require on-time payments for a more extended period before you can qualify for the cosigner.Failure to make the payment in full and on time for even one month might resultin the eliminationof eligibility for cosigner release. It’s also important to note thatsome private lenders may not allow borrowers to have their cosigners released at all, which is why it’s critical to ask your lender if they offerthis feature before having your loan cosigned.

Student loans are approved based on the borrower’s credit score and the cosigner’s credit score. If you are worried about releasing your cosigner will mean a change in terms of your student loan,it won’t. The only difference that occurs is the removal of the cosigner from the agreement, and the rest remains the same.

Once you’re financially practical, releasing your cosigner can benefit you in the following ways:

• It shows that you can manage your student loan debt yourself.
• Eliminates any financial strain impacting your relationship with the cosigner

How Do You Release a Cosigner From Your Student Loan?

If your lender offers cosigner release and you meet the qualification criteria, the rest of the process will be easy. However, it may take some time (or years) before you can qualify for cosigner release.

Here are some steps that you may have to take to release your student loan cosigner.

Application Submission

Most private lenders have an online cosigner release application form on their websites, but you can also submit a paper application. Ensure you’re submitting a complete application with your signatures, all required documents, and accurate information for each section to increase your chances of approval.

Meeting Legal Age Requirements

Meet your state’s age requirement for entering a legal agreement. Most state laws require you to be 18 years old to sign a cosigner release except for Alabama and Nebraska, where the age requirement is 19, and Mississippi and Puerto Rico, where the age requirement is 21.

Proof of Graduation or Certification

Submit documented proof of completing a graduate or a certification programfor which you took the cosigned student loan(s).

Proof of Citizenship or Residence in the United States

Be a citizen or a permanent resident in the United States when applying for cosigner release.

Proof of Employment or Income From Other Sources

Provide documented proof of employment or other sources of income, such as a recent payroll slipissued in your name within the last three months. Some lenders may also ask for a current tax return orW2 with the payroll or proof of social security income.

On-Time and Full Payments for Every Student Loan Requested for Cosigner Release

Meet the criteria for on-time interest and loan payments for the specified period. A satisfactory student loan payment history will increase the chances of approval for your cosigner release request.  Most lenders don’t count the fixed or variable loan payments made during the six months of the grace period or in-school period toward these criteria.

Even if you’re not looking for cosigner release, it’s always a good idea to pay the minimum each month before the due date. Timely loan payments improve your credit score, eliminate late payment fees (that add to your financial burden), and help you stay on track for paying off your student loan within the scheduled period.

Maintain a Good Credit Score

The majority of private student loan companies have specific requirements for credit score. Even if your lender doesn’t have those requirements, having a good credit score can significantly increase your release request.

How Can Refinancing Help You With Cosigner Release?

If you don’t qualify for cosigner release or your student loan company doesn’t allow cosigner release, student loan refinancing options by ELFI (Education Loan Finance) could be your best bet. It’s especially great if you have several cosigned loans from different lenders. With student loan refinancing, your old loans are paid off by your refinancer, and the cosigner is released. The loans are consolidated into one new loan that you’llhave to pay during a specified loan term.

The best part? You can choose a plan with a lower interest rate for your new loan. You can even choose an extended or shorter-term period according to your financial conditions (more on the benefits of student loan refinancing here). Be sure to do your research to find the best student loan, refinancing lender.

If you have a good credit score of at least 680, a minimum income of $35,000, and a credit history of at least 36 months, you can easily qualify for ELFI student loan refinancing.

Want to learn more about releasing cosigner from your student loan using student loan refinancing? The personal loan advisors at ELFI can offer you the assistance you need to make an informed decision.