What You Need to Refinance Student Loans Without a Cosigner

There’s no doubt that student loans can be costly. Interest accrues daily and it can feel like most of your payment goes to interest instead of your principal balance. If you want to save money on your student loans, you might consider refinancing your loan.

Student loan refinancing makes it possible to get a lower interest rate, which can save you money on interest so you can get out of debt faster (you might also qualify for a small 0.25% discount if you sign up for automatic payments). But in some cases, you might need a cosigner to refinance. But there are ways to get a student loan consolidation without a cosigner.

Here are several ways to refinance student loans without a cosigner.

Qualify with your own credit profile

If you have poor credit, a cosigner can help you get approved for a refinancing loan from one of the private student loan lenders and expand your loan options. The cosigner uses their strong credit profile to vouch for you, the borrower, while also being on the hook for the loan should you stop paying.

Without a cosigner, you’ll need to get approved on your own creditworthiness and meet the private lenders' eligibility requirements. Typically, your credit score needs to be a minimum of 660 or above to qualify. If you have a good credit score, you may have more student loan lender options and competitive rates.

You can check your credit score through the credit bureaus, Experian, Equifax or TransUnion. Every 12 months, you can also request a free credit report from each bureau through AnnualCreditReport.com.

If you notice mistakes on your credit report, dispute them ASAP, as it could hurt your score. You can find out how to dispute errors and fix your credit reports through the Consumer Protection Bureau (CFPB).

Keep your debt-to-income ratio low

When you apply for a student loan refinancing loan, the lender isn’t just looking at your debt. It’s also looking at your total debt in relation to your current income and future income as you're applying for a new loan. This is called your debt-to-income ratio (DTI). If you add up your total monthly payments and divide by your total monthly income, you’ll calculate your DTI.

Let’s say your total monthly debt payments are $700, and your gross monthly income is $3,000. Dividing $700 by $3,000, you get 0.25. That means your debt-to-income ratio is 25%. Typically, you’ll want a DTI of less than 50% if you want to refinance student loans, no cosigner required.

If you have a high debt-to-income ratio, you can work on paying down debt and boosting your income.

Have consistent employment

Student loan refinancing companies want to know that you can afford the loan you’re taking out. That means having a stable minimum income to qualify and a good cash flow that can help you refinance student loans with no cosigner.

Having W-2 employment can work in your favor by showing income and job stability. That consistency can help you get approved for refinancing loans without a cosigner. It’s a bonus if you’re in a profession like medicine or law, as your income is likely more stable.

Business owners — who typically have a fluctuating income that’s not guaranteed — will need to provide two years of tax returns. That gives lenders a big-picture view of your annual income and whether it qualifies for a loan and meets income requirements.

If you’re between jobs or don’t have a stable income, hold off on applying for a refinance loan until you’re on steadier ground. For example, having six months to a year of employment at the same place can help make your application stronger.

Show long credit history

Another factor lenders might look at is your credit history. This includes identifying how long you’ve been a responsible borrower and how often you make on-time payments. If you have a credit history, keep your accounts open and make payments in full by the due date. That way, you not only avoid late fees but avoid damaging your credit.

If you don’t have a credit score or strong credit history, getting approved for a loan without a cosigner will be tough as lenders do a credit check.

It’s possible to build your credit through a credit card or car loan and make on-time payments. You can also consider opening a credit card only for charging food and transportation expenses and paying it off in full every month. Just remember — don’t take on debt unnecessarily just to build credit. But you want a credit history in place to make sure you meet any minimum credit score requirements.

How to get cosigner release on an existing loan

You'll need to talk to your lender if you already have a cosigner on a student loan refinance and want to release them.

See if your lender offers a cosigner release, which is the formal process of taking the cosigner off the loan. Many lenders require that the primary borrower illustrate that they’re creditworthy and can handle the loan payments on their own.

If you’re a cosigner and wondering, “Can I refinance a student loan as a cosigner?” it’s usually not possible. The primary borrower is required to initiate a student loan refinance.

As the loan holder, many factors required to refinance without a cosigner are the same as getting a cosigner release. The lender might also specify a certain time period of repayment before being eligible for cosigner release. For example, some lenders require borrowers to make two years’ worth of on-time payments before being able to drop a cosigner from the promissory note.

If you have a private student loan with a cosigner, you might be able to release them by refinancing the private loan. Since refinancing involves new terms, a new loan application, and a new lender, it’s an opportunity to drop your cosigner through the new refinancing loan.

Refinancing student loans without a cosigner

If you’re ready to refinance student loans without a cosigner and get the best rate, compare various lenders and look for any fees. For example, an origination fee.

Review their interest rates (such as variable rates vs. fixed interest rates), loan amount and repayment terms to find the right option for you. These are the most important terms that will impact the total amount you pay throughout the life of the loan. You can also see if they offer a six-month grace period or less and if they have a prepayment penalty.

If you have government loans, always think carefully about the implications of refinancing federal loans. When you refinance federal student loan debt, the U.S. Department of Education will no longer be your lender. You’ll be giving up borrower repayment plans, such as income-driven repayment plans and benefits like student loan forgiveness programs.

You may also have fewer deferment and forbearance options. Federal student aid offers various repayment options, Public Service Loan Forgiveness, and more which can make student loan payments easier and more affordable. That’s not something to take lightly. Having more flexible loan repayment options can help during tough times.

If, after assessing your financial situation, you feel it makes sense to move forward, check our top student loan refinancing options that offer cash-back bonuses. You can check out the best student loan refinancing deals, review the lowest rates and get started with the application process.