How to Remove a Cosigner from a Student Loan
Once a student has established a consistent on time payment record for their student’s loans, it becomes possible to remove a cosigner from the account. The cosigner should be happy to know that they will no longer be responsible for the debt if the payments are not made.
Do not remove a cosigner from loan before you feel financially stable because it can harm your credit history in the long run. It is important to have a stable job and residence history along with savings in reserve to cover the payments.
Make Payments on Time
If you have not made several payments on time, for at least 6 months to a year, then reconsider removing a cosigner from the account. Making payments shows the lender the student can be trusted with the debt, and also helps to raise the credit score to allow other creditors and lenders to see the lessened risk.
Refinance the Loan
Refinancing the loan will help you get a lower interest rate (with the good credit established by making on time payments) and remove a cosigner form the loan. By having good credit, the cosigner is no longer required and therefore makes it easy to remove them.
Refinancing can leave you with several options, because you can either refinance with the current lender or shop around with several different lenders to see which one will offers the best rate. Too many inquiries to the credit report at once though, could potentially harm your credit score, so it is important to be careful when shopping around for lenders.
Contact the Lender
In the cases of most loans, refinancing is the only way to get a cosigner off the loan. Luckily for student loans, however, simply contacting the lender is usually enough to remove a cosigner. Of course the lender will run your credit to see the payment history and determine if there is enough likelihood the on time payments will continue before agreeing to remove the cosigner. If the lender believes you can handle the commitment alone, they will remove the cosigner from the loan.
Leaving a cosigner to be part of a student loan is best because it helps lessen pressure. Removing a cosigner too early can cause credit scores to plummet increasing the demand for cosigners in the future.