Most people are aware that student loan debt is a huge, and growing, problem in our society. Nationally student loan debt exceeds credit card debt and is second only to mortgage debt in total dollars owed. Most student loan borrowers realize there are ways to reduce payments on student loans (e.g. income based repayment) and ways to delay payment (e.g. deferment and forbearance) but very few ways to actually make the student loan debt go away. With that as a backdrop, I want to discuss a bright spot in the student loan landscape, the co-signer release.
A co-signer is a person that’s responsible for a debt if the primary obligor, usually the student, fails to pay. Many student loans, both federal and private, will require a co-signer as a condition to obtaining the loan. Typically the co-signer is a parent or grandparent of the student. The trouble with co-signing is not new. In fact, the Bible discourages co-signing in Proverbs 6:1-5. These verses urge a person who has cosigned to diligently work to resolve the matter. Sage advice. A co-signer release terminates the obligation of the co-signer.
Here’s what you need to know about obtaining a co-signer release of federal student loans including loans with Sallie Mae and Navient:
- Only the borrower can request co-signer release;
- The borrower must provide proof of graduation or successful completion of a certification program, proof of income, and proof of citizenship or legal residency;
- The borrower must have made 12 consecutive, on‐time principal and interest payments immediately before applying;
- The borrower must pass a credit review that demonstrates a satisfactory credit history and the ability to assume full responsibility of the loan(s) individually when the release request is processed;
- The borrower must not have been reported as 90+ days delinquent in the past 24 months;
- The borrower must not have existing student loan(s) in default;
- The borrower must not have student loan(s) in forbearance or a modified repayment program.
The procedure is simple, complete a short form and send it to the lender. Click below for forms and details for the largest student loan lenders.
Most private student loan lenders have similar programs for co-signer releases. The Consumer Financial Protection Bureau has information and sample letters to request a private student loan co-signer release.
Once released, the student loan(s) will no longer be owed by the former cosigner but will remain an obligation of the primary borrower. If you are the former co-signer that means no more worrying that someday the primary borrower will default leaving you on the hook. The release can also improve your credit because you are no longer responsible for the student loan(s).
At the Law Office of Michael Primus we have helped thousands of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Contra Costa, Alameda or Solano counties and have debt problems, contact us for a free in-office consultation. We have offices in Walnut Creek, Antioch, and Hercules.