When you apply for a student loan, you may be required to get a consigner. That person, usually a relative, is doing a good deed for you in helping you get the loan.

Here are some things you need to know about what it means for you – and for the cosigner.

Cosigner Liability

  1. The cosigner is 100% liable for repayment of the student loan.
  2. If you don’t make payments when they are due, the cosigner’s credit report will show the delinquency.
  3. If the lender sues you for nonpayment, the cosigner will also be sued.
  4. If the student loan lawsuit goes to judgment, the cosigner may be subjected to wage garnishment, bank account freezes, and a lien on his or her real estate.

Cosigner Release

  1. Unless the cosigner is released by the lender, liability remains intact.
  2. An agreement signed by the cosigner and anyone else does not affect liability unless the lender also signs the agreement.
  3. Each lender has different rules to releasing a cosigner from liability. For example:
    1. Sallie Mae states that, “[T]o qualify for cosigner release, the borrower must have successfully completed school, made 12 consecutive on-time principal and interest payments for Smart Option Student Loan or Career Training Smart Option Student Loan (other Sallie Mae private loan products may have different minimum on-time principal and interest payment requirements, please contact us for details at 1-888-272-5543), meet age of majority requirements, and meet the underwriting requirements when the request for cosigner release is processed. The borrower’s account must remain current until the request for the cosigner release is processed. The borrower must be a U.S. citizen or permanent resident at the time the cosigner release is processed.”
    2. Wells Fargo says that, “The student borrower may request that the cosigner be released from the loan after the first 24 consecutive monthly payments are made on time and the student borrower meets certain credit requirements. In the event of the death or total and permanent disability of the student borrower, the loan can be forgiven and the cosigner won’t be responsible for repayment. Please note that the student borrower must be a U.S. citizen to be eligible for cosigner release.”
  4. Usually, the student must apply for the release.
  5. You can get the cosigner off your student loan if you refinance or consolidate your student loans with a new lender.

Beware The Dangers Of Student Loan Cosigners

The landscape is difficult for those who cosign for student loans, as well as for those who need someone to help them qualify for financing.

If you understand the risks and how to minimize them, you may find that a cosigner can provide much needed security with a minimum of hassle.