Federal Student Loans alone, in many cases, do not fill the necessary college fees. Therefore, this majority of the students loan out with private lenders to fill in the total amount required for paying your college tuition fees. And the majority of the private student loan lenders require a cosigner to sign up along with you, either to give you the student loan or give a low-interest rate. For students, the cosigners are usually their parents, therefore it is necessary to know when the loan will become completely your own and when you can release them as your cosigner.
So many student loan lenders offer student loans by telling you that you can release your cosigner within two or three years of repayment of your student loans. But the same lenders who offer you with cosigner release, do not actually have a proper way or statement or provision to assign a cosigner release. This is because in case you do not pay your payments towards your student loans, then your cosigner is forced to pay and it does affect his credit. But if the cosigner is released and the borrower does not make his payments towards his student loans, then the lender is in trouble.
This brings us to the point, the lender advertises about the cosigner release but has every reason to deny the release of your cosigner.
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The CFPB report Regarding Cosigner Release
The Consumer Financial Protection Bureau published a report that confirms the denial of a cosigner release. Most student loan lenders and servicers actually are not alerting their customers( Student loan borrowers) when they are eligible for a cosigner release. This causes a majority of the student loan borrowers to not even claim the cosigner release feature. Even if some borrowers apply for cosigner release, about 90% of them are denied.
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The Denial of Cosigner Release
Lenders deny cosigner release for various factors. Some of the factors include low credit score and low income. But besides these factors, the student loan lenders have also started getting creative with the reasons that they give for rejecting the applications for cosigner release.
Forbearance in the profile of the borrower is one of the reasons that they have started quoting for denial of cosigner release, throughout the life of the loan. CFPB tells us that this hit the students who went through the recession-era the hardest as they did not have jobs when they were out of college and were forced to take a forbearance.
Another one of the “Creative” reasons that the lenders quote when applied for a cosigner release is the extra payments. People make extra payments worth of many months at once, and when they get $0 due to bills, they chill out and not pay because there is nothing to pay for that month. This practice by the lenders is also regarded as a practice that violates federal laws.
And many of the borrowers were denied a cosigner release without any reason. This practice is bad because these borrowers who apply for a cosigner release again in the future won’t have clarity on what to correct or how they should improve their application.
What to do if your cosigner release application is denied?
If you are one of the people who are denied a cosigner release, make sure that lenders have the authority of denial of the release. But you can get better. Sometimes can make a mistake while submitting your application. Know more about cosigner release.
But if you are sure that you have submitted your application properly, satisfying all the requirements given by the lender, then you can file a complaint with the CFPB or take on your lender on a social media forum. If you just want to get out of the deal with your lender, you can always opt to refinance your student loans with a new company. You can find the best companies to refinance your student loans with.
Or if you are new to student loan refinancing and want to know more, you can read all about student loan refinancing.