If you’re shopping for private loans and you have a cosigner on board, it’s a good idea to look at student loan lenders with cosigner release.
In this article, we’ll go over the top student loan lenders with cosigner release, and what you should expect from cosigner release agreements.
Student Lenders That Offer Cosigner Release
1. College Ave
College Ave offers great resources for cosigners, including an easy application process and help along the way. College Ave also provides the peace of mind that comes with cosigner release.
- Have made the recent 24 consecutive payments on the principal and interest on time (going into forbearance at any point resets the clock on those 24 payments);
- Be at least halfway through the repayment term;
- Not have adjusted the payment plan due to financial hardship at any point during the last 24 months;
- Be able to show income over the previous 24 months that is equal or greater than twice the outstanding balance on all of their College Ave loans; and
- Undergo a credit check showing they haven’t made late payments on any other credit obligations over the last 24 months.
To learn more about College Ave cosigner release, click here.
LendKey is a unique student loan option and slightly different from other student loan lenders with cosigner release. Rather than acting as a lender itself, LendKey connects borrowers to community partners and helps manage student loans. The individual lenders are responsible for whether or not they allow cosigner release.
LendKey states that some participating lenders may offer the benefit of cosigner release, and that cosigner release is subject to lender approval.
- Have made the required number (variable by lender) of consecutive, on-time payments as indicated by the agreement;
- Not have a delinquent account;
- Show proof of income and meet income requirements;
- Pass a credit check with a satisfactory credit history;
- Not have any bankruptcies or foreclosures; and
- Not have any loan defaults.
If you receive a student loan through LendKey, make sure to verify that your specific community lender does offer student loan cosigner release.
For more details on each of these requirements, and more information about LendKey cosigner release, click here.
CommonBond is another one of the relatively few student loan lenders with cosigner release. CommonBond, like College Ave, offers many resources and tools for borrowers and their cosigners.
Another area where the two lenders are similar is in their requirements for cosigner release. But while College Ave has five requirements for borrowers to qualify, CommonBond has four. Additionally, CommonBond lists an age requirement, where College Ave does not.
- Have made at least 24 consecutive monthly payments on time on the loan’s interest and principal (going into forbearance at any point resets the clock on those 24 payments);
- Have graduated from the degree program with which the loan was associated;
- Be at least 21 years old; and
- The borrower must meet CommonBond’s current underwriting criteria at the time of cosigner release, which includes a credit review.
To learn more about CommonBond cosigner release, click here.
Like LendKey, Splash Financial is an online lender supported by banks and credit unions. However, Splash is even more unique amongst student loan lenders with cosigner release in that the company only offers student loan refinancing. If you need to take out a new private loan for college, you’ll have to shop elsewhere.
Typically, a borrower refinances student loans as a way to reduce their interest rates. A borrower who relied on a cosigner before may now have higher credit, and be able to qualify for better terms on their own.
But refinancing your loans with a cosigner can qualify you for even lower rates. And with Splash, you may have the option of cosigner release to make that option more viable for the person signing the loan with you.
As with LendKey, there are several student loan lenders with cosigner release which participate with Splash Financial. The requirements for cosigner release vary based on the lending partner.
Splash notes that borrowers with a cosigner can request cosigner release after 12 consecutive months of on-time payments, after which a credit check will take place.
U-Fi is an online lender that offers new private student loans and student loan refinancing. U-Fi is backed by one of the largest student loan servicers in the U.S., Nelnet, and it allows for easy cosigning on student loans.
- Have made 24 consecutive, on-time monthly payments on the principal and interest;
- Be current on their payments at the time of the request;
- Demonstrate the ability to assume full responsibility for the loan or loans via a credit check;
- Be the age of majority in their current state of residency (usually 18, but sometimes up to 21);
- Provide sufficient proof of income;
- Have no student loans in default.
To learn more about U-Fi cosigner release, click here.
6. Citizens Bank
Citizens Bank is the 13th largest retail bank in the United States, offering a range of financial services. One of the products offered by the company is private student loans. If you don’t qualify for a loan on your own, you may be able to sign loan terms with a cosigner.
Citizens Bank is one of the most established student loan lenders with cosigner release options, but they also have stiffer requirements than others in terms of monthly payments.
- Have made 36 consecutive monthly payments on time on the principal and interest (forbearance starts the clock over);
- Meer credit and eligibility requirements;
- Not have applied for and been denied cosigner release in the last year before the new application; and
- Be at least the age of majority.
For the full Terms and Conditions on Citizens Bank cosigner release, click here.
PNC is another well-established institution that offers checking and savings accounts, money management, and loans—including student loans.
Of all the student loan lenders with cosigner release listed, PNC lists the fewest requirements for cosigner release. However, it also requires the highest number of monthly payments before cosigner release can be requested.
- Have made at least 48 consecutive monthly payments, on time, on the principal and interest (with no periods of forbearance or deferment within that timeframe);
- Provide proof of income; and
- Pass a credit check.
To learn more about PNC student loans and cosigner release, click here.
What is Cosigner Release on Student Loans?
Recent high school graduates often have little to no credit history. While this isn’t usually an issue for federal student loan eligibility, it is a problem if you’re trying to get a private student loan. Luckily, students with low or no credit can qualify for many private loans with the help of a cosigner.
If you’re shopping for a private loan and you’ll have a cosigner, it’s important to keep the needs of your cosigner in mind. If you are the prospective cosigner on a loan, it’s even more important to look towards the future and understand your responsibility.
A cosigner release is an agreement with your lender that you make at the time of signing. The agreement ensures that the cosigner is released (or removed) from the loan terms once specific requirements have been met.
Some basic requirements that apply to most lenders with cosigner release are:
- The primary borrower (the student) must have graduated from college;
- The primary borrower must be employed and earning a minimum specified income;
- The primary borrower’s credit must be independently approved; and
- The primary borrower must have made a minimum number of monthly payments on the loan (usually within a range of 12 to 48 payments).
The requirements for cosigner release are different for each lender. Below, we’ll outline the top student loan lenders with cosigner release, including their requirements and benefits.
Benefits of Cosigner Release on Student Loans
Whether you’re the student or the cosigner, using only student lenders with cosigner release can have multiple benefits. For the cosigner (usually a parent) those benefits include freeing up your credit and lowering your debt-to-income ratio so that you can invest in other things.
This added flexibility can give you better peace of mind, as well as the ability to:
- Apply your credit elsewhere.
Removing yourself as a cosigner can improve your credit and allow you to qualify for better rates on home or auto loans.
- Cosign on other student loans.
If you have multiple children who need assistance paying for school, you’re freed up to cosign on their private loans.
It’s not just cosigners who take on risk when they sign a loan together with a borrower. As a primary borrower signing a loan with a cosigner, you also accept the possibility of added complications down the line.
As a student borrower, only choosing student loan lenders with cosigner release can help you:
- Avoid auto-default caused by the death of your cosigner.
Defaulting on a student loan usually only happens if a borrower fails to make payments for at least 270 days. But if you take out a loan with a cosigner, the death of your cosigner could cause your loan to auto-default. And hat’s the last thing you want to deal with when you’re already facing the loss of a loved one.
- Take full accountability for your loans.
In addition to the practicalities of simplifying your loan with you as the primary and only borrower, cosigner release will allow you to take control of your loan repayment and, in turn, your credit. You can choose to restructure your payments, as well as refinance if you so choose, without input from your cosigner.
For both parties, choosing student loan lenders with cosigner release offers the significant benefit of helping you:
- Protect your relationship.
When your financial stability is tied to that of your family member, you may become prone to disagreements on the topic of money. After all, if the student misses a payment (or multiple payments), it directly and negatively impacts the parent or cosigner. By choosing student loan lenders with cosigner release only, you can escape these potential mishaps as soon as possible.
An Alternative to Cosigner Release: Refinancing
Even if you choose a lender that offers cosigner release, you shouldn’t rely on this option too heavily. According to the Consumer Finance Protection Bureau, only about 10% of applications for cosigner release are approved. This may be due to applicants applying before they meet the requirements, so it’s a good idea to make sure you read the fine print before submitting your request.
If you’ve been denied, or if you’ve chosen a lender who doesn’t offer cosigner release, you have another option: refinancing your loan to release your cosigner.
To qualify for cosigner release, you usually need to undergo a credit check—and often an income check, too. Since your credit must be better than it was when you took out the loan, you may qualify for better rates by refinancing, anyway.
However, it’s essential to make sure that refinancing is the best option for you all around. If you have to trade a higher interest rate or unideal terms for the removal your cosigner, refinancing may not be the best option. Instead, you should probably keep making payments and wait until your credit improves.
Student Loan Lenders with Cosigner Release: Making Sure You Have this Feature
If you choose a lender other than those listed above, make sure to check whether or not the lender offers cosigner release. If they do offer the feature, look into the fine print to see what the lender’s cosigner release agreement entails.
By making sure you have this option in place—and knowing what milestones you’ll have to reach to release your cosigner—you can create a fool-proof exit plan and execute it in the minimum amount of time.
And now that you know of some of the top student loan lenders with cosigner release, you can go forward informed and well-prepared.
Compare the Best Student Loan Refinance Rates
Here are our top student loan refinance picks for 2019
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Student Debt Relief Loan Refinancing Advertiser Disclosure
“College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)College Ave Refi Education loans are not currently available to residents of Maine. (2)The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. (3)$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. (4)This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 12/14/2020. Variable interest rates may increase after consummation.”
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.