Being a cosigner on a student loan can be a huge burden.
If the primary borrower falls behind on the loan, cosigners must make payments. Even if things go according to plan, cosigners may find it more difficult to qualify for additional lines of credit or a mortgage.
Fortunately for many cosigners, it is possible to get removed from the student loan. Securing a cosigner release isn’t always easy, but between the traditional route and a popular shortcut, many borrowers can secure a Navient Cosigner Release.
The Navient Cosigner Release Requirements
The basic requirements for a release on a Navient student loan are fairly straightforward.
The primary borrower on the loan must do the following:
- Make 12 consecutive on-time principal and interest payments on a standard repayment plan,
- Provide proof of graduation or successful completion of course of study and proof of income,
- Be a U.S. citizen or permanent resident and reach the age of majority (18 in most states),
- Apply for a Cosigner Release, and
- Pass a Credit Check
It’s worth noting that the cosigner is not required to take any action to get the release. The borrower must complete all requirements.
For most borrowers, getting the cosigner release comes down to making a year’s worth of payments and passing the credit check.
Sadly, both the application and the credit check can present significant hurdles. The good news is that the refinance shortcut can eliminate both these obstacles.
The Navient Application
The full Navient cosigner release application is available here.
Borrowers will be required to provide proof of income. According to Navient, the following forms of proof are acceptable:
- current year W-2 or 1099-MISC,
- copy of a paystub issued within the last 60 days,
- SSI/disability award letters issued within the current calendar,
- current year statement of retirement income or annuities, or
- most recent Federal tax return
Borrowers may also be required to submit additional information at Navient’s discretion.
For the most part, the Navient application may be tedious, but it is relatively straightforward.
Ultimately, it is the credit check that presents the biggest issue for most borrowers, even those with high incomes and credit scores.
The Cosigner Release Timeline
According to Navient, processing a cosigner release application typically takes about 30 days, but it can take longer if additional documentation is required.
Upon approval, it can take an additional 30 days before the debt falls off the cosigner’s credit report.
Navient reports to the credit agencies at the end of each month. If a cosigner release is granted just after the credit bureaus have been updated, the cosigner will likely have to wait the full 30 days for the credit report to reflect the release.
However, Navient can provide cosigners letters documenting the release if necessary.
Passing the Credit Check and the Problem with Traditional Cosigner Releases
All borrowers applying for a cosigner release will have to pass a Navient credit check. This credit check includes a hard-pull of the primary borrower’s credit report. (A hard-pull means that the credit check will count as a credit inquiry and potentially hurt the applicant’s credit score.)
Navient does not share the minimum credit score or minimum income necessary to pass the credit check.
The problem with passing this particular credit check is that Navient has almost no incentive to approve these applications. With a cosigner on the student loan, two people are legally obligated to pay off the debt. If the cosigner is released, only one person is responsible.
Traditionally, when someone is applying for credit, banks and lenders want to loan money to creditworthy individuals. If they never approved anyone, they would go out of business. In a cosigner release situation, the lender has already lent the money. They gain nothing by granting the release.
Perhaps unsurprisingly, cosigner release rejections have been the source of complaints to the Consumer Financial Protection Bureau. One CFPB report found that cosigner release policies in the industry were “often opaque” and “created substantial roadblocks for borrowers.” The same report found a 90% rejection rate. The report did not break down the numbers by individual lenders.
Due to the challenges of getting a release approved, refinancing the debt has become a popular shortcut to a cosigner release.
A Shortcut to a Cosigner Release
When a student loan is refinanced, the student loan refi company pays off the old loans, and a new student loan is created.
The traditional appeal to student loan refinancing is that the terms of the new loan can include lower interest rates and a lower monthly payment.
Because getting approved for a student loan refinance is much easier than getting approved for a cosigner release, borrowers have been using a refi as a strategy to remove cosigners. By refinancing, cosigners are removed from the debt.
Readers of this site have reported the most success using SoFi or Splash Financial to get approved without a cosigner, but there are about 20 different national lenders that provide refinance services.
The Problem with Refinancing and Making a Decision
A new loan with new repayment terms is typically the advantage of refinancing. However, these new terms can potentially be a disadvantage.
Borrowers who have Navient loans with extremely low interest rates may find that the refinance shortcut is not the best route.
Those who are unsure of the best approach may want to consider applying for a release through Navient and starting the refinance process.
At present, the best interest rate currently offered by refinance lenders is about 2%. Those who have interest rates with Navient below 2% may find that jumping through hoops to get the cosigner release is the best approach.