6 Best Lenders To Refinance Student Loans with a Cosigner

Student loan refinancing is when you take out a new student loan to replace one or more existing student loans. You typically refinance a loan to get better loan terms.

Refinancing student loans with a cosigner has a few advantages:

• Better Interest Rates: With a cosigner who has a strong credit profile, you may be able to obtain a more favorable interest rate, thereby reducing your monthly payments and total interest cost over the life of the loan.
• Easier Qualification: If your creditworthiness alone doesn’t meet the lender’s criteria, a cosigner may make it possible for you to qualify for refinancing.

However, there may be some drawbacks to consider:

• Cosigner Risk: The cosigner is equally responsible for the loan. If you default, the cosigner’s credit can be affected. This shared responsibility should be considered and discussed thoroughly with your cosigner.
• Limited Flexibility: Some refinanced student loans may not offer the same protections and flexibility as federal student loans, such as income-driven repayment plans.

Refinancing a student loan with a cosigner can be a wise move if it leads to a significant reduction in interest rates or if it aligns with your financial goals. However, both parties should understand the responsibilities and potential risks involved.

1. Evaluate Your Needs and Goals: Determine why you want to refinance and what you hope to achieve, such as a lower interest rate or a shorter loan term. Understanding your goals will guide your decision-making throughout the process.
2. Choose the Right Cosigner: Select a cosigner with a strong credit history and financial stability. This person should be someone you trust and who understands the responsibilities involved in cosigning a loan.
3. Research Lenders: Investigate various lenders, both online and traditional banks, to find the best rates and terms that suit your needs. Look for lenders who accept cosigners for refinanced student loans.
4. Collect Necessary Documentation: Prepare all required documents such as proof of income, credit reports, and information about current student loans. Both you and your cosigner will likely need to provide these documents.
5. Complete the Application: Fill out the application for refinancing with your selected lender. Both the primary borrower and the cosigner must provide information and sign the application.
6. Review Loan Terms: Carefully review the new loan’s terms, including the interest rate, repayment plan, and any fees. Make sure both you and your cosigner understand and agree to these terms.
7. Consider Cosigner Release Options (If Applicable): Some lenders offer a cosigner release option after a certain number of on-time payments. If this is important to you or your cosigner, inquire about this feature with your chosen lender.
8. Finalize the Refinancing: Once approved, sign the new loan agreement with your cosigner. The new lender will pay off your existing loans, and you’ll begin making payments on the refinanced loan.
9. Maintain Communication with Your Cosigner: Keep an open line of communication with your cosigner, updating them on the loan’s status and any changes that may occur in the future.

Many lenders offer a cosigner release option that helps cosigners get out of a cosigned student loan.

During the loan term, if the primary applicant becomes able to meet all the requirements on their own, they can apply for a cosigner release which releases the cosigner from the loan contract. To get a cosigner release,  at least 12 on-time payments must have been made on your refinanced loan and the primary applicant must meet the credit requirement of the lender independently.

If you are considering refinancing your student loans but either don’t have a cosigner or prefer not to include one, there are several alternatives available:

• Improve Your Credit Score: If your credit score is a concern, taking steps to improve it may enable you to refinance without needing a cosigner. Paying bills on time, reducing debt, and correcting errors on your credit report can boost your score.
• Exploring Different Lenders: Different lenders have varying criteria and may offer unique loan products. Shopping around and comparing offers might lead you to a lender who is willing to refinance your loans without a cosigner and at favorable terms.
• Federal Loan Consolidation: If you have federal student loans, you might consider federal loan consolidation. This combines your existing federal loans into a single new loan with an interest rate based on the weighted average of the loans being consolidated. Unlike refinancing with a private lender, consolidation doesn’t require a credit check, so a cosigner is not necessary.
• Income-Driven Repayment Plans: For federal student loans, you may qualify for an income-driven repayment plan. This option can adjust your monthly payments based on your income and family size, offering flexibility without the need for a cosigner.
• Utilizing Employer Benefits: Some employers offer student loan repayment assistance as a benefit. If available, this assistance might reduce the need to refinance and the accompanying requirement for a cosigner.
• Applying for Individual Refinancing: If your financial situation is sound, you may qualify for refinancing on your own without a cosigner. It’s worth discussing your options with potential lenders to determine your eligibility.