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If you borrow a student loan with a cosigner, you may be interested in officially removing them from the loan by applying for a cosigner release. The specific requirements for this can vary by lender, but may include things like a minimum number of on-time monthly payments and a review of your credit history.

Borrowers will likely be required to file a formal application with their lender in order release their cosigner from a student loan. Continue reading for a high-level rundown of what the process of cosigner release can look like and what other options might exist if a cosigner release is not available.

What Is a Cosigner?

Applying for financial aid typically begins with the Free Application for Federal Student Aid (FAFSA®) and Direct Subsidized and Unsubsidized federal loans, which don’t need a cosigner. If you’re unable to get a student loan yourself, a cosigner — often a parent or close family friend or relative — may be able to help secure funding.

Cosigners are just as responsible as the principal borrower to repay the loan. That means if the principal borrower doesn’t make a payment on time, the cosigner is legally required to make the payment. Late or missed payments can affect both the principal borrower’s and the cosigner’s credit history. If a debt goes into default and the lender hires a collection agency, that agency can pursue the cosigner to collect the debt.

Cosigners may decide that these risks are worth taking on to help a child or family member get through college, but cosigning can also cause stress and affect the cosigner’s credit since the loan shows up on the cosigner’s credit report . On the plus side, having a cosigner could be beneficial to the student by helping them build a credit history.

What Is a Cosigner Release?

A cosigner release is the process of removing a cosigner from a loan. Depending on the loan’s terms, the cosigner may be removed from the loan with a cosigner release after the student has graduated and met certain requirements as outlined by the lender. These requirements may include things like a minimum payment requirement. Once the cosigner is released, they are no longer responsible for the student’s debt if the student is unable to repay it.

How Does the Release Work?

Before a lender will release a cosigner, principal borrowers typically have to demonstrate that they are able to handle the loan on their own by meeting certain minimum requirements , which can vary by lender. For example, the release might not be available to a student’s consigner until that student has graduated from college and established a steady income. Cosigner release requirements may include:

Minimum full monthly payments: Typically a student will have to show that they’ve made one to two years’ worth of full monthly payments, depending on the lender. Full payments include principal and interest rate payments, and they must be on time.

Satisfactory credit: The lender will generally check the student’s credit to make sure the student can qualify for the loan on their own and meet minimum credit requirements. For example, they’ll be looking to make sure that the borrower doesn’t have any loans in default and that they have a good consumer credit report.

Employment: Lenders may ask for proof of employment and determine whether a student is meeting minimum income requirements. Borrowers may be asked to prove income with recent paystubs, W-2s, or the borrower’s most recent tax return.

Depending on your lender, there may be other criteria you have to meet.

How to Apply for Cosigner Release

First things first. If you’re unsure if the loan you have qualifies for a cosigner release, check in directly with your lender. Generally, lenders will have certain requirements that borrowers are required to meet before they can apply for a cosigner release. These may include things like making a minimum number of on-time monthly payments, establishing a strong credit history, and securing employment. Again, each lender is able to set their own criteria.

After these requirements have been met, the borrower will likely have to file a formal application with their lender to have the cosigner removed from their loan. Depending on the lender, you may be able to submit the application online or by mailing in a printed form. Read the application requirements thoroughly because some lenders may require supporting documentation, like a W-2 or recent pay stubs.

Once you have submitted an application with the information your lender requires, the lender might then issue a cosigner release.

Why Get a Cosigner Release?

A cosigner might want to be released from a student loan for a number of reasons, not the least of which is the flexibility they may gain from having that portion of their credit freed up.

First, their debt-to-income ratio will likely improve, which may make it easier to apply for new credit or get a new loan at a favorable interest rate. So if a cosigner is looking to buy a car or get a mortgage, for example — or even cosign another loan — they may be able to do so with more favorable rates.

Cosigners with other children bound for college may want to be released from one child’s loan so they can turn their attention to funding their next child’s education.

Also, the cosigner would no longer have to worry that their credit will be damaged if loan payments aren’t made on time, or that they may be responsible for payments should their student borrower drop the ball.

What Are the Limitations of Cosigner Releases?

Not all loans offer the possibility of a cosigner release. And even for those that do, it can be difficult to obtain. For that reason, when you are on the hunt for an initial loan, you might look for those that advertise a cosigner release option. That way, you’ll know the possibility is there. If your application for a release is rejected, there are other ways you may be able to relieve your cosigner.

What Are the Alternatives to a Cosigner Release?

One alternative that might be worth considering is refinancing your student loan(s).

When you refinance student loans, your new lender pays off your old loan (or loans) in full, replacing it with a new one. If the principal borrower can qualify for a new loan on their own, the new lender can pay off the cosigned loan, leaving the cosigner free of the debt.

If you do decide to go this route, it’s worth spending a little bit of time shopping around for a lender that can help you manage your student loan debt better. For example, you could look for a lender that offers you lower interest rates, since this could cut your interest costs over the life of the loan.

You would still need to apply for this type of loan as you would any other, demonstrating that you are capable of paying the debt off yourself. You’ll likely need to prove that you have a history of making on-time student loan payments, too. Lenders might look at your consumer credit report, debt-to-income ratio, and income — among other factors that will vary from lender to lender.

If you do qualify for a refinanced loan on your own, then only your name will be on the new loan. At this point, your cosigner would no longer be responsible should you miss payments or default. Though the responsibility for repaying the loan will fall entirely on you now, release from the old cosigned loan can be a big weight lifted off your cosigner’s shoulders.

The Takeaway

Applying for a cosigner release may require that the primary borrower meet certain lender requirements like having graduated from college and making a minimum number of on-time monthly payments. If approved, the cosigner on the loan will be officially removed and the primary borrower will be the sole borrower.

In the event that you aren’t approved for a cosigner release, you may be able to remove your cosigner by refinancing your loan. This entails applying for a new loan, potentially with a new lender. It’s worth mentioning that refinancing won’t be the right fit for every borrower, and if you have federal student loans, refinancing would eliminate them from federal borrower protections. If you think refinancing might be a fit for your personal financial situation, consider SoFi. Refinancing at SoFi can be completed entirely online and there are absolutely no hidden fees.

Interested in refinancing your student loans? Learn more with SoFi.

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SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL MAY 1, 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
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There are several legitimate programs that federal student loan borrowers can utilize to have their federal student loans forgiven. Unfortunately, there are also student loan forgiveness program scams. Confusion surrounding loan forgiveness can create space for scammers to thrive. Most commonly, companies will promise something that cannot be done, or charge an upfront fee for something that can be done online for free.

The real trick for borrowers will be distinguishing between a company that is providing student loan counseling in a fair and legitimate way from a company that is trying to take advantage of unsuspecting students.

Is Student Loan Forgiveness a Scam?

There are millions of students paying college student loans and the idea of having those student loans forgiven can be very appealing. There are legitimate student loan forgiveness programs that are available to federal student loan borrowers who meet the program requirements.

These include programs like Public Services Loan Forgiveness or the Teacher Loan Forgiveness Program. There may be other options for forgiving student loans, depending on your background and program requirements.

What Is a Student Loan Forgiveness Scam?

A student loan forgiveness scam is when a service makes a promise that they cannot deliver on. For borrowers looking to get out of student loan debt quickly, these promises can seem promising. Unfortunately, scams may offer impossible promises like immediate loan forgiveness or may trick student loan borrowers into disclosing personal information.

Types of Student Loan Scams

Student loan scams can take many forms. Be wary of scams that come in the form of unsolicited calls, texts, or emails.

Student Loan Forgiveness Scam Calls

If you receive an unsolicited call asking you for information about your student loans, pay close attention. Some calls may present opportunities to cancel student loan debt. In general, any call offering a fast solution to pay off your student loans is a scam. The U.S. Department of Education offers legitimate forgiveness programs and opportunities to lower your student loan payments, all of which can be accessed at no cost to borrowers directly through their loan servicers.

The Federal Trade Commission (FTC) has a sample of what these calls might sound like, so you can be prepared.

Student Loan Forgiveness Text Scam

Texting is another avenue for scammers to contact student loan borrowers. These communications might include the need to “act immediately” or tout enrollment for debt relief is taking place on a first-come first-served in order to inspire a false sense of urgency.

Text scams are newer on the scamming spectrum, so consumers may not be expecting them. Instead of responding to the message, call your student loan servicer on the number listed on their website. In general, most student loan servicers will not conduct business via text messages.

Spotting Student Loan Scams

When it comes to student loan scams, the short rule of thumb is that anything that sounds too good to be true, probably is. For example, if a company claims that with an up-front fee that your loans will automatically be forgiven, it is a scam. No program exists where loans are “automatically” forgiven for a fee.

If you have a feeling that you might be getting scammed, do a thorough internet search for the company. More than likely, someone else has been in contact with, and possibly taken advantage of by, this company.

The problem with relying on an internet search to look for a scam? Not every scam will have been identified through an internet search, as they change their names and phone numbers often to avoid the background research a consumer might conduct. Here are a few common techniques used by student loan scammers.

Upfront Cost & Fees

Any student loan company offering to help you for an upfront fee is a scam. According to the FTC, it is illegal for companies to charge you before providing assistance. And importantly, borrowers can get help directly from their student loan servicer or Department of Education at no cost.

Immediate Student Loan Forgiveness

Another huge red flag — organizations offering to provide immediate or complete student loan forgiveness. Most government loan forgiveness programs require a record of qualifying payments and or employment certifications depending on the program.

Requesting Passwords

Broadly speaking, legitimate companies won’t ask you to verify personal details out of the blue. If you receive a call, email, or text asking you to disclose your passwords or any other sensitive personal information, think twice before responding. Sharing personal details could allow scammers to access your loan information, or other important accounts.

Avoiding Student Loan Scams

Attention to detail and diligence in communication can help you avoid some common student loan scams. Here are eight student loan scams to avoid.

1. A Promise of Immediate Forgiveness

Beware of any promise that seems too good to be true. Student loan forgiveness takes time, period. A company can only help you fill out paperwork for a forgiveness program; they cannot forgive your loans.

2. A Request for an Upfront Fee

Many scams rely on obtaining an upfront fee for something that either cannot be done (immediate loan forgiveness) or something that can be done for free, online (apply for a loan forgiveness program). You should only agree to payment once the company has completed the service in question.

3. Private Loan Refinancing

In general, only federal loans are eligible for loan forgiveness programs. Be cautious of any company that tells you that they can get your private loans forgiven. Private loans don’t typically offer forgiveness programs.

4. A Phone Call

Many scams start with a student loan forgiveness call. The Department of Education, who directs federal loan forgiveness programs, will never call you. If they need to correspond with you, they will by mail.

5. A Request to Pay Them and Not Your Lender

No company will ever make your student loan payments for you. You can pay them for a service, sure. But it is unwise to make your student loan payments to anyone except for who you owe.

6. A Request to Stop Making Student Loan Payments

No legit company will ever recommend you stop making your loan payments. A company working in your best interest will advise you to make all of your payments on the correct repayment plan so that you’re sure to qualify for any applicable loan forgiveness programs.

7. Asking for Your FSA ID

No one should ever ask for your Federal Student Aid ID. Your FSA ID allows you to log onto the government website where borrowers manage their federal student loans.

8. Official-Looking Insignias

Fraudsters do a good job of making their websites, seals, and paperwork look like official government branding. Just because something looks official does not mean it is official, so do your research.

Reporting Student Loan Scams

If you encounter any student loan scams, you can have a few different options for reporting them. You can report scams to the Department of Education through the Federal Student Aid website .

You can also report the business conducting the student loan scam to the Consumer Financial Protection Bureau . Anyone who has been contacted by what they believe to be a scam can also report it to the
FTC .

Looking for Safe Private Student Loans?

Not everyone qualifies for loan forgiveness. Others may not actually find that it makes the most sense for their own personal financial situation. (This may be especially true for loan forgiveness programs that require you to pay taxes on the forgiven balance, such as income-driven repayment.)

Those looking for a safe borrowing option may want to consider SoFi. Private student loans from SoFi have no fees and are available to undergraduate, graduate, and professional students, or their parents.

The Takeaway

Student loan scams rely on the borrower’s lack of understanding on how their loans, and loan forgiveness program works. Pay attention to texts, emails, or phone calls that over-promise on their ability to lower your monthly payments or have loans forgiven, as these are generally indicators that there is a scam, or other unfavorable business going on. If you have any doubt, contact your loan servicer directly to avoid falling into a scammer’s trap.

No matter what path you take with your student loans, always be sure to do adequate research. It’s hard to scam someone that understands their loans, and their options for repaying them.

Interested in learning more about paying for college with a private student loan? Get a rate quote from SoFi for free in just a few minutes.

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SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.
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Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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There are a few different options when it comes to financing a college education, and it’s important to understand the pros and cons of each. Then, you’ll likely be better able to develop a funding strategy that fits your unique situation.

Depending on your academic qualifications, you may have been awarded scholarships or grants, which is funding that won’t (typically) need to be repaid. Any expenses not covered by a scholarship will need to be financed, often through a combination of work-study, personal funds, or student loans.

It is fairly common for college students to take out student loans to finance their education. There are two main types of student loans — private student loans and federal ones. We’ll compare and contrast some of the more popular features of both private and federal student loans and explore some features that can help you determine what makes the most sense for your financial situation.

Recommended: How Do Student Loans Work? Guide to Student Loans

Federal Student Loans

Federal student loans are funded by the federal government and, in order to qualify, you must fill out the Free Application for Federal Student Aid (FAFSA®) every year that you want to receive federal student loans. We’ll delve more into FAFSA soon — but first, here are some important distinctions to consider.

Subsidized vs Unsubsidized Loans

Federal loans can be subsidized or unsubsidized. If you’re an undergraduate student and you have a certain level of financial need, you may qualify for a subsidized loan. The amount of money you qualify for will be determined by your school . They’ll also determine how much money you should receive in subsidized loans, if any.

If you are granted a subsidized loan, the U.S. government will cover, or subsidize, the cost of accrued interest on the loan while you are a full- or half-time student. Your interest payments are also covered with subsidized loans during the six-month grace period after graduation as well as during any periods of loan deferment.

If you receive unsubsidized federal loans, you will not need to demonstrate financial need when applying and, as with subsidized loans, your school will determine the amount you can receive, based on what it will cost you to attend. But with unsubsidized loans, you are responsible for the principal amount of the loan as well as any interest that accrues throughout the life of the loan.

Direct PLUS Loans for Parents and Graduate Students

Direct PLUS Loans are another source of federal student loan funding. To qualify for graduate PLUS Loans, you need to be a graduate-level or professional student in a program that offers graduate or professional degrees or certifications and be attending college at least half-time.

Or, parents can also apply for a Parent PLUS loan if they’re the parent of a dependent undergraduate student attending an eligible school at least half-time. “Parent” can be defined as biological or adoptive — or, under certain circumstances, you can be a step-parent.

To obtain a Direct PLUS loan, you cannot have an adverse credit history (you can learn more about that
here ). Plus, you (and, if applicable, your dependent child) must meet the general eligibility requirements for federal student aid.

Recommended: The Differences in Direct vs. Indirect Student Loans

More About the FAFSA

If you plan to apply for any of these types of federal loans, you’ll need to fill out the FAFSA form. Be aware of your state’s FAFSA deadline — FAFSA funding is determined on a rolling basis, so the sooner you can apply, the sooner you may qualify.

Benefits of Federal Student Loans

First off, you won’t be responsible for making student loan payments while you are actively enrolled in school. Your repayment will typically begin after you graduate, leave school, or are enrolled less than half-time. Interest rates on federal student loans made after July 1, 2006 are fixed and are typically lower than interest rates on private student loans.

And depending on the type of federal loans you have, the interest you pay could be tax-deductible. Aside from Direct PLUS Loans, credit history doesn’t factor into a federal loan application. When it comes to federal student loan repayment, there are several options to choose from, including several income-driven repayment plans.

And if you run into difficulty repaying your federal student loans after graduation or when you drop below half-time enrollment, there are deferment and forbearance options available. These programs allow qualifying borrowers to temporarily pause payments on their loans should they run into financial issues — but interest may still accrue. The loan type will inform whether a borrower qualifies for deferment or forbearance.

Borrowers can contact their student loan servicer for more information on these programs.

Qualifying borrowers can also enroll in certain forgiveness programs, such as Public Service Loan Forgiveness (PSLF). These programs have strict requirements, so borrowers who are pursuing forgiveness should review program details closely.

Federal Student Loans Pros and Cons

Here is a recap of some of the pros and cons of federal student loans.

Pros	Cons
Aside from PLUS Loans, borrowing a federal student does not require a credit check.	Federal borrowing limits may mean that students aren’t able to borrow enough funds to pay for college.
Undergraduate students may be eligible to borrow Direct Subsidized student loans. The borrower isn’t responsible for paying interest that accrues on subsidized loans while they are enrolled at-least half time, during the grace period, and during qualifying periods of deferment or forbearance.	There is a borrowing limit on Direct Subsidized student loans and not all students will qualify for subsidized loans, since they are need-based.
There are deferment and forbearance options if borrowers run into financial difficulty during repayment.	Depending on the type of loan interest may accrue during periods of deferment or forbearance.
There are deferment and forbearance options if borrowers run into financial difficulty during repayment.	Depending on the type of loan interest may accrue during periods of deferment or forbearance.
Borrowers have access to federal repayment plans, including income-driven repayment plans.
Fixed interest rates that are generally lower than interest rates on private student loans.
Borrowers have the option to pursue federal loan forgiveness through programs like Public Service Loan Forgiveness.

The CARES Act and Federal Student Loans

The CARES Act, passed in March 2020 in response to COVID-19, includes provisions to help borrowers with federal student loan repayment. The bill temporarily pauses payments on most federal student loans, without interest, through May 1, 2022.

Additionally, the CARES Act suspends involuntary collections and negative credit reporting during the same time period.

While required payments are paused, borrowers are still able to make payments on their loans if they so choose. 100% of payments made during this time will be applied to the principal balance of the loan.

Borrowers enrolled in forgiveness programs will not be impacted by the nonpayment of their loans during this time. The Education Department will consider this time period as if the borrower had continued making payments.

Private Student Loans

Private student loans are not funded by the government. To apply for them, you can check with individual lenders (banks, credit unions, and the like), with the college or university you’ll be attending, or with state loan agencies.

Because these loans are available from multiple sources, each will come with its own terms and conditions. So, when applying for private student loans, it’s important to clearly understand annual percentage rates (APRs) and repayment terms before signing as well as the differences between private vs. federal student loans.

Since private student loans are not associated with the federal government, their repayment terms and benefits vary from lender to lender. Some private loans require payments while you’re still attending college. Unlike federal loans, interest rates could be fixed or variable. If you are applying for a variable-rate loan, it’s a good idea to check to see how often the interest rate can change, plus how much it can change each time, and what the maximum interest rate can be.

When applying for a private loan, the lender typically reviews your financial history and credit score, which means it may be beneficial to have a cosigner.

Again, be sure to ask your lender about repayment options in addition to any deferment or forbearance options.

These will all vary by lender, so it’s important to understand the terms of the particular loan you are applying for.

Private loans can help fill the monetary gap between what you’re able to cover with grants, scholarships, federal loans, and the like, and what you owe to attend college. It’s never a bad idea to take the time to do your research, shop around, and find the best loan options for your personal financial situation. For a full overview, take a look at SoFi’s private student loan guide.

Determining Whether a Student Loan is Federal or Private

To find out if the student loan you have is a federal student loan, one option is to check the National Student Loan Data System (NSLDS). This database, run by the Department of Education, is a collection of information on student loans, aggregating data from information about student loans, from universities, federal loan programs, and more.

Borrowers with federal student loans can also log into My Federal Student Aid to find information about their student loan including the federal loan servicer.

Private student loans are administered by private companies. To confirm the information on a private student loan, one option is to look at your loan statements and contact your loan servicer.

Options for After Graduation: Consolidation vs Refinancing

After graduation, depending on one’s student loan situation, borrowers may wish to consider consolidation or refinancing options to combine their various loans into a single loan.

What is Student Loan Consolidation?

The federal government offers the Direct Consolidation Loan program that allows borrowers to combine all of their federal loans into one consolidated loan.

Loans consolidated in this program receive a new interest rate that is the weighted average of the interest rates of all loans being consolidated — rounded up to the nearest one-eighth of a percent. This means that the actual interest rate isn’t necessarily reduced when consolidated. If monthly payments are reduced, it is most likely because the repayment term has been lengthened. Additionally, only federal student loans are eligible for consolidation in the Direct Consolidation Loan program.

What is Student Loan Refinancing?

Borrowers with private student loans might consider refinancing their loans. Essentially, refinancing is taking out a new loan. Depending upon individual financial situations, applicants could qualify for a lower interest rate through refinancing.

When an individual applies to refinance with a private lender, there is typically a credit check of some kind. Each lender reviews specific borrower criteria, which varies from lender to lender, which influences the rate and terms an applicant may qualify for.

Recommended: The SoFi Guide to Student Loan Refinancing

But what if you have both federal and private loans? If you combine your federal loans through the Direct Consolidation Loan program and refinanced your private loans, you’d still have two payments. SoFi can refinance federal and private student loans together to give you one convenient payment. It’s important to note, however, that the benefits and protections offered with federal student loans don’t transfer when loans are refinanced by private lenders, so keep that in mind.

To get a sense of how refinancing might impact your student loans, take a look at this student loan refinancing calculator.

Refinanced Student Loans Pros and Cons

Refinancing student loans can have pros and cons. This table details a few to consider.

Pros	Cons
Potential to secure a more competitive interest rate depending on factors like borrower’s credit score and income history. This could result in a substantial reduction of accrued interest over the life of the loan.	Not all borrowers will qualify to refinance or be approved for a lower interest rate than on their existing loans.
Potential borrowers can apply with a cosigner to potentially secure a more competitive interest rate.	Interest rate and loan terms are set by the lender and are based on factors including the applicant’s credit history.
Refinancing allows you to have a single monthly payment with the lender of your choice.	Refinancing any federal loans eliminates them from borrower protections, including deferment options, income-driven repayment plans, or the option to pursue Public Service Loan Forgiveness.
The loan term can be adjusted — either shortened or extended — when student loans are refinanced.	Extending your loan term will generally result in lower monthly payments, but will typically result in increased interest costs over the life of the loan.

Can You Refinance a Private Student Loan to a Federal One?

It’s not possible to refinance private student loans into federal loans. Because private student loans are made directly with private lenders, not the federal government, it is not possible to refinance them into federal student loans.

Combining Federal and Private Student Loans

Refinancing federal loans with a private lender is the only option that allows borrowers to combine both federal and private student loans into a single loan. While refinancing may allow borrowers to secure a competitive interest rate or preferable terms, it’s very important to understand that when you refinance federal student loans, they no longer qualify for federal benefits or borrower protections.

Refinancing may make sense for federal student loan holders who do not plan to take advantage of any federal programs or payment plans, but it won’t make sense for everyone. When you are evaluating whether you should refinance student loan debt reflect realistically on your professional and financial situation. For example, borrowers who are enrolled in income-driven repayment plans or are pursuing Public Service Loan Forgiveness, may find that refinancing their federal student loans doesn’t make sense for their personal goals.

The Takeaway

Refinancing won’t be the right choice for everyone. Again, refinancing federal loans eliminates them from the federal benefits and borrower protections — including the current CARES Act protections. Consulting with a financial professional could be helpful as you determine which repayment strategy fits best with your financial goals.

Those who are still interested in refinancing could consider SoFi, where there are no origination fees and no prepayment penalties. You can choose between a fixed or variable rate loan. And borrowers who unexpectedly lose their job could qualify for SoFi’s unemployment protection program, which allows the suspension of monthly payments for up to 12 months.

Learn more about whether student loan refinancing or a private student loan with SoFi could be the right financial solution for you.

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SoFi Student Loan Refinance
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Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
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Weighing your child’s college education against keeping your own debt manageable is a tough balancing act. Parent student loans could help you fill gaps when other student aid falls short.

There are a variety of student loans available to parents who are interested in helping their child pay for college. Parents can consider either federal or private student loans. Parent PLUS Loans are federal student loans available to parents. Private lenders will likely have their own loans and terms available for parent borrowers.

It’s important to note here that figuring out how to fund your child or children’s education is a personal and individualized decision. Continue reading for an overview of the different loan types available to parents and some important considerations to make before borrowing money to pay for your child’s education.

Types of Parent Student Loans

Parent borrowers can consider borrowing a federal student loan or private student loan. Here are a few of the different types of loans to consider.

Parent PLUS Loans

Parent PLUS Loans are federal student loans that are available to parents of dependent undergraduate students through the Department of Education. They offer fixed interest rates — 6.28% for the 2021 to 2022 academic year. On the plus side, eligible parents can borrow up to the attendance costs of their child’s school of choice, less other financial aid.

The amount eligible parents can borrow is not limited otherwise, so this can be a useful loan to fill in whatever tuition gaps aren’t covered by other sources of funding. These loans also provide flexible repayment options, such as graduated and extended repayment plans, as well as deferment and forbearance options.

As far as federal loans go, interest rates on Parent PLUS Loans are relatively high. So, it may be worth considering having your child take out other federal loans that carry lower interest rates. Parent PLUS Loans may also come with a relatively high origination fee of 4.228% for the 2021 to 2022 academic year .

Applying for Parent PLUS Loans

To apply for a Parent PLUS Loan, parents will have to fill out the Free Application for Federal Student Aid, or FAFSA®. In addition to the FAFSA, there is a separate application form for Parent PLUS Loans . Most schools accept an online application. For any questions, contact the school’s financial aid office.

Unlike other federal student loans, there is a credit check during the application process for Parent PLUS loans. One of the eligibility requirements is that borrowers not have an adverse credit history. Though, parents who do not qualify for a Parent PLUS Loan due to their credit history, may be able to add an endorser in order to qualify. An endorser is someone who signs onto the loan with the borrower and agrees to make payments on the loan if the borrower is unable to do so.

Repaying a Parent PLUS Loan

​​PLUS Loan terms are limited to 10 to 25 years, depending on the chosen repayment plan , and do not offer income-driven repayment plans like other federal loans do (although they may be eligible for the Income-Contingent Repayment Plan if they are consolidated through a Direct Consolidation Loan).

Parents have the option of requesting a deferment if they do not want to make payments on their PLUS loan while their child is actively enrolled in school. If a parent does not request deferment, payments will begin as soon as the loan is disbursed.

Keep in mind that interest will continue to accrue during periods of deferment, so deferring payments while your child is in school may increase the overall cost of borrowing the loan.

Private Parent Student Loans

In some cases it might make sense to turn to private lenders for student loans. If you have a solid credit history (among other factors), you may be able to secure a reasonable interest rate.

Recommended: Private vs. Federal Student Loans

Before taking on a private student loan, here are some things to be aware of:

•   Always read the fine print.

•   Origination fees will vary from lender to lender.

•   There may not be flexible repayment options, and private loans typically don’t offer deferment or forbearance options the way federal loans do.

•   Also, the amount you may qualify to borrow will likely vary.

The application process for private parent student loans will likely vary based on the individual lenders. Repayment terms and options will also generally vary by lender.

Keep in mind that private student loans don’t offer the same borrower protections, like deferment options, as federal student loans. For this reason, they are typically borrowed after other options, like using savings, federal student loans, and scholarships, have been exhausted.

Cosigning Private Student Loan for Your Child

Cosigning a private student loan with your child means that you both have skin in the game. Cosigning a loan typically means each party is equally responsible for the debt. So if your child stops paying, you’re still on the hook for all of the debt.

Most college-age students have had little chance to build their own credit, so having parents — with better, or at least longer, financial histories — as cosigners might mean a better rate than if they applied on their own.
Parents can work out a plan in which both parents and children make payments, or it may even make sense to have a cosigned loan on which only the child makes payments.

Considerations Before Borrowing a Parent Student Loan

As a parent, of course you want the best for your child and to help them in any way you can. Whether or not you decide to take out a student loan to put your child through school is a decision to weigh carefully.

Your choice will likely have a lot to do with your own financial situation. Consider how taking out student loans may affect your own financial goals, especially retirement.

Staying on track for retirement requires a concerted effort during your earning years. That is in part because it can be more difficult to borrow money to cover your retirement expenses when you’re retired, because you will no longer be earning an income to help you pay back borrowed money.

So, before taking on student debt for your children, you’ll probably want to make sure you’re saving enough for your own future. After all, your children likely have decades of potential earnings after they graduate, during which time they can work to pay off their student loans. You, on the other hand, may not have as much time to pay off new debts and save for other goals.

It may also be worth considering how taking on new debt could affect things like your credit score and your debt-to-income ratio. Lenders consider these factors, among others, when deciding whether to loan you money.

That said, if you feel you are financially strong enough to take on student loans for your child, there are a number of loan options available to you.

The Takeaway

Parent student loans can be borrowed by a student’s parents and used to help pay for educational expenses like tuition. Before borrowing a parent student loan, parents should evaluate their own financial situation and goals, such as retirement savings.

Parents interested in borrowing to help support their children’s education can choose between federal and private parent loans, or may consider cosigning a loan for their child. If you’re considering borrowing a private parent student loan, consider SoFi. The application process is entirely online and borrowers have the option of making interest-only payments while their child is enrolled in school or starting the repayment process up front.

SoFi is a leader in the student loan space — offering private student loans to help pay for school. See your interest rate in just minutes, no strings attached.

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SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
website .
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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