Short answer: two routes to ask about are a cosigner release, if the loan contract offers one, and the borrower paying off the loan with a new loan in the borrower’s own name. Whether a release is possible depends on your loan contract, so read the note and ask the lender. This is general information, not legal or financial advice.
What the cosigner signed up for
Under the FTC’s Credit Practices Rule, a lender gives a cosigner a separate “Notice to Cosigner” before the cosigner is obligated. It says, among other things: “If the borrower doesn’t pay the debt, you will have to” (16 CFR 444.3(c), eCFR, up to date as of October 28, 2026). For the full notice and the risks, see the risks of cosigning a loan.
Cosigner release clauses
The CFPB wrote in 2014 that lenders that offer it advertise “that a co-signer may be released from a private student loan after a certain number of consecutive, timely payments and a credit check to determine if you are eligible to repay the loan on your own”. It also said servicers may not tell you when you become eligible, “so you need to ask them how to do this” (CFPB advisory, 2014). The CFPB’s current page on repaying private student loans also says to “ask if you can apply for a co-signer release” (CFPB, read October 30, 2026). For any cosigned loan, ask whether your own contract has a release clause.
These CFPB pages are archived from 2014 and 2015. The CFPB notes that archived information may be outdated.
What the CFPB found in 2015
In a June 18, 2015 report on private student loans, the CFPB said that of the borrowers who applied for co-signer release with the lenders and servicers it surveyed, “90 percent were rejected”. It also reported that some companies’ policies penalized or disqualified borrowers who prepaid their loans, and that some disqualified borrowers who accepted forbearance (CFPB press release, 2015). Ask how prepaying or pausing payments would affect a release before you do either.
Questions to ask the lender or servicer
- Does my loan contract allow a cosigner release? Where is it in the note?
- What number of on-time payments in a row is needed, and does a prepayment or a paused payment reset that count?
- What credit, income or other checks must the borrower pass alone?
- How do we apply, and will you explain in writing if the request is denied?
- When could the borrower apply again after a denial?
- What happens to the loan if the cosigner dies or files for bankruptcy?
The CFPB’s 2014 advisory includes sample letters a borrower or a cosigner can adapt to ask the servicer about release (CFPB advisory).
Refinancing in the borrower’s own name
If there is no release option, or the request is denied, the borrower may apply for a new loan alone and use it to pay off the cosigned loan. Ask the old lender to confirm in writing when it is paid in full. The new loan has its own rate, fees and term, so compare the total cost, not only the payment. If the old loan is a federal student loan, ask what federal options you would give up first. See how refinancing a personal loan works, and joint personal loans vs a cosigner for how each role is responsible.
A $2,000 refinance, only for the math
This example is only for the math, not a typical balance. It assumes a borrower pays off $2,000 left on a cosigned loan with a new 24-month personal loan at the Federal Reserve’s August 2026 average of 11.90% APR for 24-month personal loans (G.19).
| Option | Monthly payment | Interest | Total paid |
|---|---|---|---|
| New personal loan at 11.90%, 24 months | $94.05 | $257.20 | $2,257.20 |
$94.05 x 24 = $2,257.20. Compare that with what is left to pay on the cosigned loan, including any fees on either loan. Your rate depends on your credit and the lender.
Checklist
- Find the cosigner release section in the loan contract, if there is one.
- Ask the servicer in writing for the release rules and your eligibility date.
- Keep every payment on time, and ask before prepaying or pausing payments.
- If release is not possible, compare a refinance in the borrower’s own name.
- Get written confirmation once the cosigner is released or the loan is paid off.
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Sources
- 16 CFR 444.3, Unfair or deceptive cosigner practices (FTC Credit Practices Rule) (eCFR)
- CFPB archived consumer advisory: Co-signers can cause surprise defaults on your private student loans (April 22, 2014)
- CFPB archived press release: CFPB Finds 90 Percent of Private Student Loan Borrowers Who Applied for Co-Signer Release Were Rejected (June 18, 2015)
- CFPB: Options for repaying your private education loan (page last modified September 6, 2024)
- Federal Reserve: G.19 Consumer Credit (released October 7, 2026), terms of credit, August 2026: credit card plans and 24-month personal loans
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.