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Co-signer release is a program that allows a borrower to remove a co-signer from their student loan account after they’ve met certain requirements. That typically includes making a minimum number of consecutive on-time payments and meeting the lender’s eligibility criteria to maintain the loan on their own.
A fast co-signer release can be a big draw for students who initially need to take out a loan with their parent. Here’s what you need to know about the lenders that offer the quickest path to co-signer release.
4 companies that offer fast co-signer release
If you’re thinking about applying for a private student loan to help pay for school, getting a co-signer can help improve your odds of getting approved and securing favorable terms, but many students will want to release the co-signer once they have financial independence.
Here are four companies that allow you to remove a co-signer in two years or less.
Sallie Mae offers undergraduate loans, career-training loans and a long list of graduate loans.
With a Sallie Mae loan, you can remove a co-signer after 12 consecutive on-time monthly payments, including principal and interest – one of the fastest co-signer releases in the industry. Other requirements include:
- You’ve graduated or completed your certificate program.
- You’re the age of majority in your state.
- You’re a U.S. citizen or permanent resident.
You’ll also need to provide proof of income and undergo a credit review, which is similar to what you’d experience if you were to apply for a new loan.
CommonBond offers both private student loans and student refinance loans. Options include undergraduate loans, graduate loans, MBA loans, medical loans and dental loans.
The lender’s co-signer release program requires 24 consecutive on-time monthly payments of both principal and interest for in-school loans and 36 monthly payments for its refinance loans. There are only three other requirements:
- You must have graduated from the degree program for which you took out the loan.
- You must be at least the age of majority in your state.
- You’ll need to undergo a credit check based on the lender’s current underwriting criteria.
SoFi was the first financial institution to offer student loan refinancing, but it also offers a variety of private student loans, including undergraduate loans, graduate loans, law school loans, MBA loans and parent loans. Co-signer release is available only on private student loans.
If you have SoFi private student loans, you may be able to request co-signer release if they were disbursed after May 1, 2019. All loans disbursed prior to that date are ineligible.
To qualify, you need to make 24 consecutive on-time principal and interest payments. You also need to be the age of majority in your state and meet the lender’s underwriting criteria.
Rhode Island Student Loan Authority offers undergraduate loans, graduate loans, parent loans and refinance loans nationwide. While it’s not available on refinance loans, RISLA does offer co-signer release after 24 consecutive on-time monthly payments on its private loans.
Unlike other lenders, RISLA is transparent about what it takes to get approved for co-signer release. Eligibility requirements include:
- You’re at least 18 years old.
- You’re a U.S. citizen or permanent resident.
- You earn at least $40,000 per year.
- Your FICO credit score is 680 or higher.
- Your debt-to-income ratio is 50 percent or below.
- You have enough cash in checking, savings and investment accounts to cover at least one month of your financial obligations, and that balance has been on deposit for 30 days or more.
- You’ve never been enrolled in RISLA’s income-based repayment program.
- You don’t live in Colorado, Connecticut or Maine.
How to release a co-signer from a student loan
The application process for a co-signer release varies by lender. In some cases, you may need to fill out an application on paper and upload it to your online account or mail it to the lending institution. In others, you may be able to apply through your online account.
Because there’s no single way to do it with every lender, check with yours directly to find out what the process looks like, including where you can find the application, what information and documents you need to provide and how long the process takes from start to finish.
What should you do if you can’t release a co-signer from a student loan?
Student loan co-signer release can help your co-signer by removing the balance and payment information from their credit report. This can make it easier for them to get approved for credit, reduce their debt-to-income ratio and also avoid any potential negative consequences if you can’t make your payments in the future.
But co-signer release may not be possible for some borrowers or with all lenders. If co-signer release is not an option, here are two options to consider:
- Work on improving your credit: If you were denied because you don’t meet the underwriting criteria, work on building your credit history so you can get approved the next time you apply. In some cases, you may also need to increase your income or meet other stipulations to get approved. Check with your lender to find out the reasons for the denial and take immediate action.
- Refinance the loan: If your lender doesn’t offer co-signer release at all, you may be able to refinance the loan in your name alone. Credit underwriting requirements can vary by lender, so it’s possible to get a new loan with a lender that has less-stringent eligibility criteria. Just be sure to pay attention to the interest rate and repayment term. If it’ll end up being more expensive, it may be worth it to wait until your credit situation has improved.
There’s no right approach for everyone in this situation, so think carefully about your needs and your co-signer’s before you decide how to proceed.