How to remove a co-signer from a student loan

A graduate mortarboard cap and diploma, as well as a male hand that is handcuffed to a stack of money, are visible.

If you're a student loan co-signer and the student fails to pay, this could be you. (Photo Credit: CC BY-ND/How to Get a Student Loan)

Have you ever agreed to be a co-signer on a friend’s student loan but regretted having done so after the fact? Let’s say you don’t talk to the person anymore, and fear risking a damaged credit rating if they default on the loan. Thankfully, Bankrate reports that all is not lost. There are ways to have your name removed from those student loan documents and improve your credit score in the process.

Student loan co-signer, know what you’re getting into

Becoming a co-signer on a student loan means you are guaranteeing the loan or the debt. If the student fails to repay the loan, it becomes your responsibility. Thus, it is wise to make sure that you’ll be able to make the payments, in the worst case scenario. If not, collectors will come to call and your credit rating will suffer severe damage, which in turn will make it much more difficult for you to obtain other forms of credit.

If you agree to co-sign on a student loan, the creditor is obligated by federal law to provide an explanation of your obligations as co-signer. You’ll want to make sure that you obtain copies of the loan contract and Truth in Lending Disclosure agreement for your records.

Release or refinance that student loan

Begin by pursuing a standard student loan co-signer release. Some private student loans allow a co-signer to cut ties if the student has made enough consecutive monthly payments on time (anywhere from 12 to 24). The student must also meet the lender’s credit standards and other requirements. Thus, the hope is that the estranged student has kept their credit history tidy.

If the lender will not allow you to obtain a co-signer release, then the student will have to refinance the loan. Refinancing enables the student to obtain an entirely new loan at a lower interest rate, and this loan pays off the original student loan. This can be done via the original lender, or through another lender if better rates and terms are available. Unfortunately, the student must have good enough credit to qualify for a refinance in the first place.

Why the student may not want you to leave

Obviously, abandoning a co-signer opens the student up to greater financial risk. If they are suddenly unable to repay their student loans and do not have a co-signer as a fallback, the lender can take them to collections. In the case of government loans, even tax return money isn’t safe.



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No co-signer? No credit history? No problem.

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