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About 45 million people in the United States have student loan debt. While many believe you are stuck with the initial loan terms, you can refinance your student loans. Two-thirds of people who have refinanced said it improved their overall finances. One way to refinance when you have poor credit is to get a co-signer who will take responsibility if you miss a payment and can help you get a better rate. There are several lenders that allow co-signers and are willing to work with students to refinance their loans.
Why would you refinance a student loan with a co-signer?
There are a few benefits to refinancing a student loan, or any loan, with a co-signer.
When someone co-signs on a loan, they’re agreeing to make payments on the loan if you stop or are unable to keep paying. When someone co-signs a loan, the lender will look at their credit history and financial situation in addition to yours when making a lending decision.
If you find a willing co-signer who has strong credit, that can make it much easier to qualify for a loan. Lenders will be more willing to approve the application, since they will see that someone with good credit is willing to be on the loan. A strong co-signer can also mean a lower interest rate, which means a lower monthly payment and less interest accruing over the life of the loan.
5 companies that refinance student loans with a co-signer
Many student loan companies are out there, but not all of them will let you refinance with a co-signer. Here are some of the best lenders that let you add someone to your loan.
SoFi is an online lender that started with student loans but now offers various financial products. Borrowers may add a co-signer to their refinance loan by logging into their SoFi account and adding the co-signer’s name and email address. SoFi will send the co-signer an invitation and continue the application from there.
SoFi is known for its member benefits, including rate discounts and career services. It also charges zero fees, not even if a payment comes in late.
SoFi does allow a co-signer to be released after 24 months of full principal and interest payments, pending approval by underwriters. Borrowers should also note that adding a co-signer adds a week or two to the refinancing process, so SoFi may not be the best option if you need to refinance quickly.
Navy Federal Credit Union
Navy Federal Credit Union (NFCU) is another great lender for students who want to refinance their loans. It has low interest rates and a choice of three repayment terms. It also offers a relatively quick co-signer release, letting you remove your co-signer after twelve consecutive, on-time payments.
The main drawback of NFCU is that you need to be a credit union member to be eligible. You can only join if you’re a member of the armed services or Department of Defense, or if you’re a DoD civilian or have an immediate family member who is a member of the armed forces.
College Ave is an online lender focused exclusively on student lending and refinancing. The site has a streamlined application and also offers plenty of resources and educational content to learn more about student lending and how loans work. The lender also boasts eleven different loan terms for its refinancing product, making it easy to customize your loan and monthly payment to fit your budget.
However, the lender is opaque about its eligibility requirements, meaning you’ll need to enter your information to see if you and your co-signer are eligible for a loan. There is also a refinancing limit of $300,000 for medical, dental, pharmacy or veterinary degrees and a limit of $150,000 for all other degrees.
LendKey is an online lending platform that matches borrowers with a variety of partner lenders. This makes it an appealing solution for borrowers who want to get multiple quotes to find the best deal, since their application will be compared against several lenders’ requirements. The loans offered through LendKey come with terms ranging from five to 20 years and no origination fees.
One major drawback is that because LendKey does not originate its loans, many details about your loan depend on which lender you’re ultimately matched with. LendKey’s advertised rates and terms represent all of its partners, so you may find yourself matched with a lender with several fees or insufficient repayment terms.
Laurel Road‘s refinancing loans offer students a wide choice of loan terms and extremely low interest rates. In addition to the standard autopay discount, you can get an interest rate discount by signing up for a checking account with the company. Laurel Road also allows students to refinance loans as early as their final semester of school.
While Laurel Road refinances most types of loans, it should be noted that many types of associate degrees are ineligible. Borrowers with an associate degree must have earned that degree in a healthcare-related field to qualify for refinancing.
Why would you refinance a student loan with a co-signer?
Refinancing a student loan, or any loan, with a co-signer has a few benefits.
When someone co-signs on a loan, they agree to make payments on the loan if you stop or cannot keep paying. When someone co-signs a loan, the lender will look at their credit history and financial situation in addition to yours when making a lending decision.
If you find a willing co-signer who has strong credit, that can make it much easier to qualify for a loan. Lenders will be more willing to approve the application since they will see that someone with good credit is willing to be on the loan. A strong co-signer can also mean a lower interest rate, which means a lower monthly payment and less interest accruing over the life of the loan.
Can a co-signer be removed from a student loan?
Removing a co-signer from a student loan is possible if you meet the requirements. Refinancing a loan is one of the easiest ways to remove a co-signer from a loan because, in effect, you’re replacing the existing loan with a brand-new one. In this case, you’ll need sufficient income and a good credit score to qualify for a new loan on your own.
Many student loan lenders also offer the option to request a co-signer release. Typically, you need to have improved your credit since you initially received the loan and have made a minimum number of timely payments. Most lenders will allow you to request a release after one or two years of payments.
Remember that not every student loan lender allows co-signers to be removed from loans without refinancing. If this interests you in the future, keep it in mind while shopping around for loans.
The bottom line
Refinancing your student loans is one option for getting better terms and interest rates, potentially saving you money. Having a co-signer can help you refinance if your credit score is poor, and several lenders allow for co-sigers. You can later remove the co-signer if needed and you meet the required qualifications.