To Cosign or Go It AloneEmail This Article
When you decide to refinance your student loans with a private lender, you have another choice to make: Apply with a cosigner or apply on your own.
Assess your credit
Refinancing existing federal and/or private student loans into a new private refinanced loan requires a full credit check to determine:
1. If you qualify
2. What your interest rate will be
3. Your loan terms and conditions
If you haven’t had enough time to build a strong credit history and high credit score, you will need a creditworthy cosigner to get approved for a refinance loan.
Don’t feel discouraged! Most recent graduates, including those with advanced degrees, need a cosigner.
Want to go it alone?
Let’s say you’re confident that you won’t need a cosigner.
Here’s what you need to consider before flying solo:
A cosigner with excellent credit may help shave a point or two off of your interest rate. But now that you have a good job and established credit, maybe you want to refinance your student loans on your own, or refinance specifically to remove a cosigner from existing loans. Usually, you will need strong credit and at least two full years of income history. Depending on your credit, you may end up with a higher interest rate on your own than if you applied with a cosigner. If you’re willing to pay a higher interest rate to have the loan in your name only, then this may be the right option for you.
What you’re really asking when you ask someone to cosign
When you ask someone to cosign for you, you are asking them to take equal responsibility for repaying the loan. The loan will show up on their credit report, and they will be obligated to pay the money back if you don’t. Any payments you miss will ding their credit as well as yours.
They aren’t just helping you; they are putting their financial well-being on the line as well.
Private student loan refinance cosigner release
Many lenders offer a cosigner release option. You may qualify if you make a certain number of consecutive principal and interest payments on-time, meet credit requirements, and show proof of income. If your request for cosigner release is approved by your lender, your cosigner will no longer share responsibility for paying back the loan. If you’re not approved, check with your lender to find out when you may be able to apply again.