It is possible to remove a co-signer from a student loan, but not all loans have that option built into their terms and conditions. If it’s important to you and your co-borrower to have an escape clause, each of the featured loans in this guide provide one – but you must meet all of the criteria.
Read on to learn more about how co-signer release works and discover our top picks for the fastest co-signer release student loans.
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Find the Best Student Loans for You
Sallie Mae is a publicly traded consumer bank that offers private student loans to pay for undergraduate, graduate and professional degrees, among other educational needs. Congress started Sallie Mae in 1972 as a government-sponsored entity that serviced student loans. The lender went private in 2004 and today provides a range of student loan products. Additionally, Sallie Mae Bank offers savings products and other tools to help families plan and pay for college, including a credit card that earns bonus cash back to help you pay off any student loan.
College Ave exclusively offers student loans. Founded in 2014 and based in Wilmington, Delaware, College Ave offers undergraduate, graduate and parent loans for students enrolled at schools affiliated with College Ave in all 50 states and the District of Columbia. College Ave’s advantage is speed, with applications that take a few minutes to complete and instant decisions.
Earnest is an online lender offering private student loans to college and graduate students, as well as student loan refinancing. The company was founded in 2013. Borrowers can choose their own loan terms to fund up to the full cost of their education.
SoFi is an online lender founded by Stanford business school students in 2011. Originally focused on student loan refinancing, the San Francisco-based company added private student loans in 2019. Choose from undergraduate, graduate, law or MBA, health profession, or parent loans with no fees.
Ascent Funding is an online lender offering undergraduate and graduate student loans for those with or without a co-signer at more than 2,200 eligible schools nationwide. Students who are not U.S. citizens or permanent residents or those with Deferred Action for Childhood Arrivals status – aka “Dreamers” – may apply for an Ascent loan. Ascent Funding was founded in 2015 and is based in San Diego.
LendKey’s digital platform connects borrowers who need private student loans or refinancing loans with credit unions and community banks. Since 2009, LendKey has helped more than 135,000 people by funding $5 billion in loans. The company offers fixed- and variable-rate loans for undergraduate and graduate students.
Citizens Bank was founded in the late 1800s in Rhode Island. Today, it’s one of the largest commercial banks in the U.S. Branches are concentrated in the New England, mid-Atlantic and Midwest regions.
PNC offers student loans in all 50 states for students at all stages of postsecondary education, including professional training loans and refinancing. The bank is also engaged in a number of community efforts, including financial literacy programs and PNC Grow Up Great, which supports early childhood education. For eligible undergraduate students, PNC offers opportunities to win $2,000 scholarships toward education expenses.
Sparrow, founded in 2020, is an online marketplace where students and parents can fill out a single application to see whether they qualify for loan offers from a variety of lenders. Although Sparrow is not a lender, the free service allows you to compare rates across lending partners. Sparrow is also available to international students.
Credible is a loan comparison marketplace that allows would-be borrowers to shop around for loans that meet their needs – including mortgages, mortgage refinancing, student loans, student loan refinancing and personal loans. The company was founded in 2013 in San Francisco as a tool to empower borrowers to shop rates and products.
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Sallie Mae is a publicly traded consumer bank that offers private student loans to pay for undergraduate, graduate and professional degrees, among other educational needs. Congress started Sallie Mae in 1972 as a government-sponsored entity that serviced student loans. The lender went private in 2004 and today provides a range of student loan products. Additionally, Sallie Mae Bank offers savings products and other tools to help families plan and pay for college, including a credit card that earns bonus cash back to help you pay off any student loan.
Earnest is an online lender offering private student loans to college and graduate students, as well as student loan refinancing. The company was founded in 2013. Borrowers can choose their own loan terms to fund up to the full cost of their education.
Sparrow, founded in 2020, is an online marketplace where students and parents can fill out a single application to see whether they qualify for loan offers from a variety of lenders. Although Sparrow is not a lender, the free service allows you to compare rates across lending partners. Sparrow is also available to international students.
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SoFi is an online lender founded by Stanford business school students in 2011. Originally focused on student loan refinancing, the San Francisco-based company added private student loans in 2019. Choose from undergraduate, graduate, law or MBA, health profession, or parent loans with no fees.
Ascent Funding is an online lender offering undergraduate and graduate student loans for those with or without a co-signer at more than 2,200 eligible schools nationwide. Students who are not U.S. citizens or permanent residents or those with Deferred Action for Childhood Arrivals status – aka “Dreamers” – may apply for an Ascent loan. Ascent Funding was founded in 2015 and is based in San Diego.
LendKey’s digital platform connects borrowers who need private student loans or refinancing loans with credit unions and community banks. Since 2009, LendKey has helped more than 135,000 people by funding $5 billion in loans. The company offers fixed- and variable-rate loans for undergraduate and graduate students.
Best for fixed APR
The Rhode Island Student Loan Authority is a nonprofit quasi-state authority that provides college financing to students and parents. The lender specializes in providing loans to Rhode Island residents and students, though not all loans have residency requirements.
A co-signer is someone who is legally obligated to pay off the loan if the borrower doesn’t pay it, says Michael Lux, attorney and founder of The Student Loan Sherpa, a website dedicated to student loan education, strategy and borrower advocacy.
And it goes beyond just an obligation to repay. A co-signed loan shows up on the co-signer’s credit report. This is why borrowers and co-signers will sometimes look for a loan that has a co-signer release option, says Elaine Rubin, director of corporate communications for Edvisors, a consumer resource for college financial aid. “A co-signer release means after meeting all the terms and conditions, the co-signer’s responsibility can be removed from that loan,” she says.
For the co-signer release to be approved, however, the borrower must make a specified number of on-time payments, as well as meet all of the lender’s other requirements.
If you want to be removed as a co-signer, make sure you understand the details of the lender’s co-signer release option, if it has one. “There could be some tricky things in there,” says Rubin. Here’s how it generally works, but keep in mind that the process may vary depending on the lender.
- The borrower must graduate. Lenders typically require that the borrower has completed his or her degree or certificate program before the co-signer can be released.
- The borrower must make a set number of consecutive on-time payments. “Generally, this is anywhere from 12 to 48 months,” says Rubin, though the length of the monitoring period depends on the lender. And consecutive means that if the loan goes into forbearance or deferment at any point, it may take longer to qualify for co-signer release.
- The borrower must formally apply for the release. Some lenders may have an application right online, while others might ask to be contacted in writing or by phone. Then the borrower will need to show proof of income, which he or she can do with documents like W-2s, pay stubs and tax returns, to demonstrate there doesn’t need to be a co-signer on the loan.
- The borrower needs to pass a credit check. The lender will also pull the borrower’s credit report to make sure he or she doesn’t have negative items such as delinquencies, defaults or bankruptcy in his or her credit history.
- Get confirmation that the co-signer is released. The borrower and the co-signer should get documentation that the co-signer release is approved and hang onto it. It might also be a good idea for the co-signer to check his or her credit report after a month or two to make sure the loan is no longer showing as an open account.
Keep in mind that it can be challenging to get approved for a co-signer release. For example, Sallie Mae disqualifies applicants who have had any student loans in hardship forbearance or modified repayment programs in the 12 months before they apply. Such meticulous rules could help explain why a 2015 Consumer Financial Protection Bureau Study found that private student lenders rejected 90% of co-signer release applications.
When choosing a student loan, it might be important that there is an out for you after the borrower graduates. But how fast you can be removed from a loan should not be the sole criteria you think about when you and the borrower select a private lender. Here are some important factors to consider:
- Focus first on the loan cost. “When people are picking loans, they should focus much more on interest rates and payment terms,” says Lux. Favorable terms and less interest will make it easier for the borrower to make on-time payments and will cost you less over time.
- Research the lender’s reputation. “It’s pretty easy to find some reviews from experts and borrowers,” says Lux. And while there are always going to be some complaints out there, comb through to look for red flags. For example, if people report that it’s hard to contact a specific lender, that might be a company to avoid.
- Look for lender-specific benefits. Some private student lenders offer autopay savings or other discount opportunities, and you might also find lenders with desirable deferment options. You should also verify that the lenders you’re considering have a co-signer release option.
Find the Student Loan That’s Right for You
Getting released from a loan should only have a positive impact on the co-signer’s credit. “The loan will remain in the co-signer’s credit history, but when you remove the obligation of that loan debt, it could open up their eligibility for other types of credit now that their debt-to-income ratio has decreased,” says Rubin.
Although the debt-to-income ratio does not have a direct impact on credit score, it is a key factor in your ability to borrow. For example, if you want to qualify for a loan product or get better rates with a home refinance, a lower DTI will put you in a more favorable position, says Rubin.
The other big plus is a released co-signer no longer has to worry about a credit score getting dinged if the student borrower misses a payment.
Best for fixed APR
The Rhode Island Student Loan Authority is a nonprofit quasi-state authority that provides college financing to students and parents. The lender specializes in providing loans to Rhode Island residents and students, though not all loans have residency requirements.
Best for co-borrowers
The Massachusetts Educational Financing Authority is a state-chartered nonprofit established in 1982 to offer low-cost financing options to college students and their families. You can live anywhere in the U.S. and access Boston-based MEFA’s private student loans, including undergraduate, graduate or refinancing options.
Best for small loan amounts
EDvestinU is the nonprofit student loan lending and refinancing organization of the New Hampshire Higher Education Loan Corp. Undergraduate and graduate loans and student loan consolidation are available to borrowers with both fixed and variable rates available in select states and Puerto Rico.
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