There are two ways to transfer responsibility for your cosigned private student loans to your child: through cosigner release or student loan refinance. This article will deal with both topics but primarily focuses on student loan refinance.
Shifting Who’s Responsible for Paying the Loan
Ultimately, the goal of getting your name removed from a cosigned loan is to shift who is responsible for paying the loan…from you to your son or daughter. And this means legally, not just a verbal commitment that has been made. If you’re looking to free up some cash flow, reduce your debt-to-income ratio, put more money into your retirement, or simply pay other debt, transferring responsibility for private loans can be a wise move.
Cosigner Release Option
For a private student loan that you cosigned with your child, there may be a cosigner release option available. This means after making a set number of on-time payments, your son or daughter can demonstrate their own creditworthiness and proof of sufficient income. In doing so, the lender can then remove you from the loan and shift responsibility entirely to your child.
Ask your lender(s) about their policy since the qualification period may vary from one lender to another. If cosigner release is unavailable, or if you’re looking for a way to transfer the loan sooner than the waiting period allows, student loan refinance is a good solution.
Student Loan Refinance
You’re probably already familiar with student loan refinancing and the fact that it allows you to combine multiple loans from multiple lenders. Cosigned private loans are one of the types of loans that can be included. If your son or daughter can qualify for a refinance loan on their own, this can be a good way for you to be released as the cosigner.
Here are the other advantages of student loan refinancing:
- Lower interest rate
- Longer repayment term with lower monthly payments
- Convenience; fewer loan servicers to pay each month
- Ability to combine private and federal student loans together, including Parent PLUS Loans (Note: your son or daughter would simply list your PLUS Loan(s) on the application and provide your name as the borrower.)
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Private Student Loans
Student loan refinance is another type of private student loan; one that combines different education debt under one roof. Just like in-school private loans, a refinanced loan is based on creditworthiness. This is important to note because you’ll want to get an understanding of your child’s ability to qualify for the loan.
When completing the application, your son or daughter can include the in-school, cosigned private student loans you helped them borrow. And some lenders will also permit a child to assume non-cosigned education debt you borrowed on their behalf, such as Federal Parent PLUS Loans.
Federal Student Loans
The only type of federal student loan that can be cosigned is a Parent PLUS Loan. Unfortunately, the federal PLUS Loan does not offer cosigner release. This is true regardless of how many on-time payments have been made, or whether your cosigner can assume the debt on their own.
Parent Plus Loans
If you had a cosigner (also known as an endorser) on your Parent PLUS Loan, there are two options for cosigner release.
- Student loan refinancing with a private lender. (Some lenders allow you to transfer your debt to your child through refinancing. Your son or daughter would simply list your Parent PLUS Loan on their refinance application.)
- A federal Direct Consolidation Loan
Federal Consolidation Loans
Similar to refinance, federal consolidation loans allow you to combine multiple loans together. However, this is limited to federal loans, including Parent PLUS Loans with an endorser. Consolidation can release the endorser (cosigner) from the loan because the underlying loan will be paid in full once consolidated. But the consolidation would be in your name. The government does not allow your child to assume your PLUS Loans in a federal consolidation under their name, even though you’ve borrowed the loan on their behalf.
Of course, this does not address cosigned private student loans, but it is something to consider if you’re looking to release a cosigner from federal PLUS loans outside of refinancing.
- Refinancing is the only option that allows you to combine cosigned private loans with Parent PLUS Loans (along with others), thereby removing a cosigner or removing yourself as the cosigner
- Federal consolidation loans are eligible to be included in a refinanced loan
Public Service Loan Forgiveness (PSLF) Program
Before including a cosigned Parent PLUS Loan in a student loan refinance, you should know that benefits and protections such as PSLF would be forfeited. Once your federal loans are paid in full and the debt is restructured with a private lender, all federal assistance programs are lost. This not only includes loan forgiveness, but also deferment and forbearance eligibility, along with Income Driven Repayment (IDR) plans.
Income Driven Repayment (IDR) Plans
Some unique benefits provided in the federal student loan program include Income Driven Repayment plans (or IDR). You may have also heard about the newer Repayment Assistance Plan (RAP) which is available if you’ve borrowed new loans on or after July 1, 2026. Essentially, these alternative payment plans give you an opportunity to adjust your monthly payments to something more affordable based on a percentage of your income. Some plans even take your family size into consideration.
If you’re looking to transfer a Parent PLUS Loan (cosigned or not) to your child, know that you would be sacrificing income-driven repayment plans in the process. Refinanced student loans do not offer comparable repayment arrangements.
You may find that some lenders give you a choice regarding the length of repayment (i.e. 7 years, 10 years, 15, years, etc.). But income-based payment amounts are not offered.
Good Credit Scores
Having a good credit score is essential when applying for student loan refinancing. Lenders require a strong FICO® Score (in the ‘good’ to ‘very good’ range or higher). And a cosigner, such as a spouse, can be added. Cosigners can also help with getting a lower interest rate.
Credit History
When it comes to transferring a cosigned private student loan, there are a couple of things to note regarding credit history.
- After the loan has been transferred to your son or daughter through the refinance, your credit profile will show the loan as paid in full. The specific impact to your credit score will depend on several factors, but typically individuals can expect to see some improvement in their overall score due to reduced overall debt.
- If your son or daughter does not already have a clear understanding of their credit history before applying for a student loan refinance, encourage them to go to annualcreditreport.com for a free copy of their credit history. It’s a good idea to ensure the report is accurate and does not contain any fraudulent activity.
Loan Servicer
Throughout the application process, continue to make regularly scheduled payments to your loan servicer. They will send written confirmation once the loan has been paid in full.
Interest Rate
You can find competitive interest rates for student loan refinancing starting around 4.47%. And some lenders may offer the choice between a fixed or variable rate.
If you choose to consolidate your Parent PLUS Loans in the federal program, the interest rate would be a weighted average of all the underlying loans, rounded up to the nearest one eighth percent.
Loan Term for Refinancing
The loan term will depend on the total overall balance being refinanced. The higher the balance, the longer the repayment term; although there is no prepayment penalty for refinanced student loans.
Shorter Repayment Terms
A shorter repayment term will save money in total interest paid over the life of the loan. Of course, payments can be accelerated at your own discretion, as well.
Reduce Your Monthly Payments
A primary motivation for transferring parent loans is to reduce your monthly payments. Again, refinancing and cosigner release are the only two options to remove your obligation for cosigned private loans, whereas federal consolidation allows you to remove a cosigner (endorser).