Student Loan Co-Signer Release: How to Remove Yourself From Your Child’s Loan

When your child got that acceptance letter from their dream school, you were thrilled — until you saw just how much tuition and fees would cost.

Just one year at a private school averages a staggering $33,480. By the time they graduate, your child’s education can cost well into the six figures.

Your child might have received financial aid in the form of grants, scholarships, and student loans. But often the student doesn’t receive enough aid to cover the full cost of going to school.

Students might have to turn to private student loans to fill the gap. And because they don’t have an established credit history, they likely need you to be a co-signer on that debt.

Although serving as a co-signer for your child’s loans can be a big help, it can have serious ramifications on both your finances and future goals. Once your child is on their feet, getting a student loan co-signer release can help you get your finances back in control.

What is a student loan co-signer release?

Unlike federal loan servicers, private student loan lenders look at the applicant’s credit history and income to determine if they qualify for a loan. Most students don’t have full-time jobs or lengthy credit reports, so getting approved on their own is next to impossible.

A co-signer, also called a guarantor or endorser, acts as a backup. If your child falls behind on their payments, you are responsible for making them instead.

However, if you co-signed a loan in the past, you’re not necessarily stuck with that loan forever. In some cases, you might be eligible for a student loan co-signer release. If eligible, you will be removed from the loan and your child will be solely responsible for the debt.

4 benefits of a co-signer release

Co-signing a loan with your child is a kind and generous decision, but it can have serious consequences. By getting a co-signer release, you can look forward to the following perks:

  • No longer responsible for payments: If your child does not make their payments, the lender can’t come after you for the balance due.
  • Credit won’t be affected: If your child misses payments and enters default, your credit is not damaged.
  • Greater ability to get other forms of credit: Because you’re no longer responsible for your child’s debt, lenders will not consider the loan when they review your application for other forms of credit. Without a hefty student loan on your credit report, lenders are more likely to approve you for a mortgage or car loan.

Talking with your child

If you want to be released as a co-signer, it’s a good idea to first meet with your child to discuss what that means for them before filling out the application.

For a recent graduate or young professional just getting used to the real world, hearing that they will be on their own when it comes to student loans can be frightening. They might be used to having you as a safety net when they’re short on cash.

To avoid any resentment or misunderstandings, talk about why you’re seeking a student loan co-signer release. Explain to them that the loan is holding you back from buying a car or making it impossible to get a loan to do necessary home repairs. If you can’t afford to make the payments, be honest about that, too.

Once your child understands your rationale, you can emphasize some of the benefits a co-signer release has on them:

  • Greater independence: Without you as a co-signer, your child won’t have to update you on the status of their loans and payments. That change can be freeing and a great relief.
  • Less friction in the family: When your child takes responsibility for the loan, there is less resentment in the family. Because you don’t have to worry about payments anymore, they don’t feel hounded or guilty about their financial decisions.

How to apply for a co-signer release

Unfortunately, getting released as a co-signer isn’t as easy as calling your lender and asking to be removed. In fact, not all lenders offer co-signer releases. Before you get started, make sure a release is something your lender offers.

If a co-signer release is possible, you’ll generally have to meet the following criteria:

    • You have made up to 36 months worth of payments: To be eligible for a co-signer release, the loan account must be in good standing. That means you have made regular, on-time payments.
      Unfortunately, it can be years before you can qualify. While Navient only requires 12 months of payments, for example, Citizens Bank requires 36 months of payments.
    • Your child graduated: To apply for a student loan co-signer release, your child must have proof of their completed degree, such as a copy of a diploma or official transcript.
    • Your child has a sufficient credit score and income: Your child must be able to demonstrate that they make enough money to cover the loan payments, and their credit score must meet the lender’s minimum requirements.

If you and your child meet the requirements, you’re ready to complete the application process. Every lender has their own specific process to apply for a cosigner release, and most require the primary borrower (your child, in this case) to initiate the process.

It’s a good idea to call or email the loan servicer directly for instructions, but most lenders require the following steps:

    • Complete an application: The application will ask about your child’s income, expenses, and other forms of debt.
    • Include documentation: When you mail in the application, the lender will likely require your child’s Social Security number, proof of graduation, and proof of income, such as a W-2, recent pay stub, or tax return. Some lenders will also ask for information about other debt, and will ask your child to submit a copy of their lease or car loan statement.
    • Submit your application: Either submit the application online or mail the completed form and required documentation to the address the lender listed.

Once the lender receives your application, they will typically look up your child’s credit history and review the documentation. The decision to release you from the loan or not is entirely up to their discretion, and it can take several weeks for them to make a decision.

In the meantime, make sure your child stays current on loan payments so a late bill doesn’t ruin your application.

Finally free of student loans

Getting approved for a student loan co-signer release can be a huge relief. Without that financial weight on your back, you’re free to focus on your own finances and well-being.

Because you no longer have to worry about making monthly loan payments, you can use that money for other goals like saving for retirement or building an emergency fund.

After being released from your child’s private loans, you can tackle other forms of education debt. If you took out federal Parent PLUS loans, there’s a solution to transfer them into your child’s name, too.

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