How Do I Release a Student Loan Co-Signer?
Written by
Yaël Bizouati-Kennedy
Edited by
Nicholas Morine
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Getting a student loan can be complicated, and one way to improve your odds is to get a co-signer (or guarantor). Many borrowers resort to this option for a variety of reasons — for instance, some lenders require one if the borrower doesn’t have a solid credit history.
As the Consumer Finance Protection Bureau explained: “Having a co-signer may allow a student to borrow at a lower interest rate if the co-signer has a good credit record.”
And according to LendEDU, about 90% of all private education loans are co-signed.
But What If You Want a Co-Signer To Be Released?
While this is very helpful, at some point, a co-signer might want to be released from the loan, as this can carry some serious consequences for them.
In addition, some borrowers might also want to release their co-signers, as this could be beneficial for their credit history.
But not all lenders have the same requirements when it comes to releases.
“The first thing to understand is that not all student loans offer the option to release a co-signer,” said Andrew Latham, certified financial planner and director of content at SuperMoney.com. “Generally, private lenders provide the option if you meet their eligibility requirements, but they don’t always make it easy.”
According to Latham, to secure a co-signer release, it’s not just about the time you’ve had the loan but about how you manage it. You’ll often need to demonstrate consistent on-time payments over a specified period, maintain a satisfactory credit history free from delinquencies and ensure your loan is in active repayment status. Additionally, certain loans, depending on their origination date or type, might not even be eligible for cosigner release, he said.
For example, Sallie Mae noted that some private lenders allow a borrower to release their cosigner after a certain period of time. Each lender has different requirements.
With Sallie Mae, a student can apply to release you as a cosigner after they make 12 on-time principal and interest payments and meet certain credit requirements — like passing a credit review — according to Sallie Mae’s website.
Joe Camberato — CEO of NationalBusinessCapital.com — added that prerequisites vary. For instance, College Ave mandates waiting at least halfway through the term for a co-signer release.
“Typically, most lenders require the borrower to establish his or her financial independence before greenlighting a co-signer release. It’s a precaution to ensure that the new agreement won’t be a financial burden for the borrower, and that the co-signer’s responsibilities are fulfilled,” said Camberato.
Interestingly, he noted, it’s the borrower who initiates the cosigner release request — not the cosigner.
Camberato added that while the lion’s share of benefits target the cosigner, the borrower gets some benefits from the release as well.
“Beyond honing credit by responsibly managing repayments, borrowers gain early lessons in how credit systems operate,” he said.
In addition, he noted that the borrower might not have a credit card or credit history entirely, so — at this point — he or she doesn’t have any experience with using credit systems.
“This firsthand experience proves invaluable when they’re trying to get an auto loan or navigating a mortgage down the line,” he said. “Sure, it might be a bit nerve-wracking initially, but it’s one of the most effective ways to get a feel for the world of credit. Even if a borrower stumbles after releasing a cosigner, he or she has ample time to bounce back.”
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