Features

• If the primary borrower does not make the required payments on a student loan, the cosigner becomes responsible for making those payments. If you, as the cosigner, cannot pay or refuse to pay, it will affect your credit rating. As a result, you may find it difficult to get approved for new lines of credit. Typically, the only way for a loan to be canceled is for the borrower or cosigner to pay off the full loan amount.
  
  

Solutions

• When the primary borrower defaults, you may be able cancel the debt through negotiations with the lender. Find out whether the lender will accept a lump sum payment. If it will not, you must continue to pay off the loan until it is paid off. If the borrower begins making payments again, you will not be required to continue making payments.
  
  

Considerations

• If a student is accepted into a loan deferment program, you may not be held responsible for the college loan. The deferment program allows him to postpone payments until he is financially able to pay. Once the deferment period expires, he may need to sign new loan terms with or without a cosigner. A cosigner release is also available under certain loan programs. The primary borrower must have a history of on-time payments and meet age requirements to have a cosigner released from her obligation.
  
  

Significance

• A student loan may be eligible for cancellation if a student, primary borrower or cosigner has died. The lender will review the loan terms and require the original signed death certificate before discharging the loan. In some cases, a bankruptcy judgment can discharge a college loan for the borrower or cosigner. The loan could be discharged under a financial hardship ruling.