Borrowers often report that it is difficult to qualify for cosigner release on their private student loans. According to the Consumer Financial Protection Bureau (CFPB), less than 10% of borrowers who apply for cosigner release and less than 1% of borrowers overall successfully obtain cosigner release.
Lenders typically require that the borrower make 12, 24, 36 or 48 consecutive payments on-time and satisfy credit criteria to qualify for cosigner release. Generally, borrowers who show any signs of financial difficulty will not be approved for cosigner release.
To increase the chances than an application for cosigner release will be approved:
If a borrower’s application for cosigner release is not approved, the borrower should reapply after addressing the reason for the denial. For example, if the borrower is denied cosigner release because the borrower has not made the required number of consecutive, on-time monthly loan payments, the borrower should apply again after fulfilling this requirement.
If the borrower does not qualify for cosigner release, the main alternative is for the borrower to refinance the loan without a cosigner. The new loan pays off the old loan, thereby, releasing the cosigner from his or her obligation to repay the debt. Options for refinancing the cosigned loans include a private consolidation loan and non-education loans, such as a personal loan from a bank or credit union or a home equity loan. The borrower could also pay off the cosigned loan in-full.
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