Cosigner Release Information
Learn how a Citizens Bank Education Refinance Loan® affects cosigner responsibilities
If you signed on as a student loan cosigner in the past, you may want to know if or when you can remove your name and absolve yourself of cosigner responsibilities. Fortunately, once a borrower is individually approved to refinance student loans that you cosigned, you are freed from financial responsibility. This is a little different than cosigner release, but ultimately has the same outcome.
Read on to learn how refinancing affects cosigner responsibilities and whether refinancing student loans could help borrowers pay down their school debt. You can also find out how an Education Refinance Loan from Citizens Bank can help borrowers lower monthly payments, making it easier to manage student loan debt.
How does a cosigner's role change with student loan refinancing?
Refinancing an existing student loan effectively turns it into a new loan with new terms, payments and loan agreement. Because of this, a cosigner will be removed from a loan if the borrower refinances and chooses to not utilize a cosigner. This action frees them from their cosigner responsibilities and will be reflected on their credit report. (The loan in question will show as being closed and paid in full.)
Borrowers will need to prove that they have a good credit score and a steady source of income in order to refinance a student loan without a cosigner. In the case of the Education Refinance Loan, graduates of bachelor's degree programs and higher will also need to demonstrate a solid payment history by making a minimum of three complete, on-time payments of principal and interest on their current loans before applying. Students who did not complete a bachelor's program or higher must show 12 months of complete, on-time payments of principal and interest to qualify. For complete details about application requirements, visit the Education Refinance Loan Eligibility and Loan Limits page.
If a borrower has little or no credit history, Citizens Bank recommends they apply for an Education Refinance Loan with a credit-worthy cosigner, such as a spouse or parent. Having a cosigner may help the borrower secure lower monthly payments and a lower interest rate, and can make it easier for them to pay down their student loan debt. However, it is important to remember that the responsibilities associated with being a cosigner would be similar to that of any original private student loans; if the borrower cannot make payments, the cosigner will be responsible for the loan. Before you agree to cosign, speak with the borrower to make sure that they understand their financial obligations and the importance of making their monthly payments on time and in full. For more information, speak with an Education Finance Specialist.
Get peace of mind with the Education Refinance Loan's cosigner release option
Once the borrower has been approved for an Education Refinance Loan, they will need to begin repayment immediately. If the borrower has chosen to apply for the Education Refinance Loan with a cosigner, after the borrower has made 36 consecutive, on time payments of principal and interest, Citizens Bank makes it easy for cosigners to remove themselves from an Education Refinance Loan via a cosigner release option1. This allows cosigners to exit a loan before it is paid off, which may help improve your debt-to-income ratio, improve your credit score and make it easier to apply for mortgages, car loans and so on.
If you are a cosigner on a student loan, consider talking to the borrower about refinancing their loan with Citizens Bank. Our Education Refinance Loan may help them lower their monthly payments, making it easier to pay down their student loan debt. For more information about this loan and its cosigner release option, speak with an Education Finance Specialist today.