The Problem Of A Cosigner On A Student Loans
There are complications involved with a cosigner on a student loan, and they can negatively affect both the student/primary borrower and the cosigner. The only solution is to get the cosigner released as soon as possible.
The risks for cosigners for staying on a student loan
The vast majority of student loans involve cosigners, which is usually a parent or grandparent. The existence of a cosigner on a loan typically results in a lower interest rate, since it reduces the …show more content…
However, since student loans usually extend over many years, it is highly desirable – from the cosigner’s point of view – to be released from the loan. While the cosigning may have been entirely necessary in order for the primary borrower, as a student, to qualify for the loan, once a student graduates, he or she should have the financial strength to carry the loan by themselves.
As well, the longer that the loan is in existence, the higher the likelihood is that it will incur either late payments or even an eventual default. Should that happen, the cosigners credit will be negatively affected. No cosigner will want derogatory credit information springing from a loan that they cosigned for many years earlier.
There’s a time and a place for having a cosigner on a student loan, but getting them released should be a priority by the primary borrower.
Why YOU should want your cosigner released from the …show more content…
citizen or permanent resident at the time the release is processed
Meet the age of majority in their state (be old enough to enter into a legally binding contract)
Private student loans
If you have a loan from a private lender, exactly how to get a cosigner released from a student loan will depend upon that lenders own policies. For example, one prominent student loan lender, Citizens Bank, does allow cosigners to be released from the loan.
A cosigner may be released after 36 consecutive on-time payments of both principal and interest. Of course, this creates a strong incentive for the student to make all payments on