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Refinancing a Co-signed Student Loan

TheRedHat
Regular Contributor

Refinancing a Co-signed Student Loan

Hello. So I regretably co-signed a student loan for a family member almost two decades ago with Navient. Around two years ago, I took over payments for this loan when I discovered that this family member had nothing but late, returned, or nonexistent payments for as far back as I can see. The remaining balance on this loan is $5,500 (started at around $9,000) with an interest rate of 4.750% and a few years remaining til pay off. I expect to pay off this balance in less than a year.

 

While there have been zero issues since I brought the account current and never missed a payment since, I don't want to deal with Navient or said family member anymore. I've been working diligently on improving my credit and I don't feel comfortable having an open loan as a co-signer. Could I refinance this loan with a credit union so I could simply have this debt in my name only? I know it's not going to change the history with Navient, but at least it'll be a closed account. I'll take the hit for Age of Oldest Account once it falls off, if necessary. 

 

What would you do if you were in my situation? 

Last updated: 6/26/2022

FICO 8

Inquiries last 12 months (Last inquiry: 6/6/2022)     New Accounts
     
Message 1 of 7
6 REPLIES 6
RobertJ
Established Contributor

Re: Refinancing a Co-signed Student Loan

I'm sure you can, but you might have trouble beating that interest rate in the current climate.  I think if I was in your shoes, I'd just stick to your plan and pay it off as quickly as possible.  

 

These things rarely end well.  It's so sickening that people will take advantage like this.  Good for you for tackling it head on.  




Message 2 of 7
pizzadude
Moderator

Re: Refinancing a Co-signed Student Loan

Honestly if you're going to pay it off in a year then you may not save that much interest by refinancing.    Another option to consider is using a credit card / 0% balance transfer or similar promo to pay it over 12 / 18 months.

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 3 of 7
calyx
Super Contributor

Re: Refinancing a Co-signed Student Loan

I would echo the BT strategy if you think you can get it paid off on time - you can't beat 0% (especially if you can get a low transfer rate).
Alternatively, just looking into a loan with a local bank/CU might be the way to go.   Whenever I look at personal or refi loans, they aren't low enough to make the leap worth it, and 5.5 is pretty good.

F8 EQ: 802 | EX: 779 | TU: 791 | Accounts: 0/6 2/12 6/24 | Reporting: AZE8
Happy practitioner of AZE7or8or9or10 | Team Finances > FICO
Message 4 of 7
TheRedHat
Regular Contributor

Re: Refinancing a Co-signed Student Loan

Update:

 

After the person made one payment the previous month and then no payment again this month after telling me they were going to pay it, I decided to refinance with a credit union at 18% APR and just pay off the co-signed loan altogether. I know the original loan had a significantly lower APR, but if the person submits a payment that gets reversed because of insufficient funds, that 4.5% APR becomes moot because of returned payment fees. Six months or so down the road, I'll apply for a loan through a different credit union and refinance for better terms.

Last updated: 6/26/2022

FICO 8

Inquiries last 12 months (Last inquiry: 6/6/2022)     New Accounts
     
Message 5 of 7
Adkins
Legendary Contributor

Re: Refinancing a Co-signed Student Loan


@TheRedHat wrote:

Update:

 

After the person made one payment the previous month and then no payment again this month after telling me they were going to pay it, I decided to refinance with a credit union at 18% APR and just pay off the co-signed loan altogether. I know the original loan had a significantly lower APR, but if the person submits a payment that gets reversed because of insufficient funds, that 4.5% APR becomes moot because of returned payment fees. Six months or so down the road, I'll apply for a loan through a different credit union and refinance for better terms.


I'm sorry the person isn't acting like a responsible adult but I think you've made the right decision, by getting it completely under your control. 

Last HP 06-03-2022



Message 6 of 7
pizzadude
Moderator

Re: Refinancing a Co-signed Student Loan

Agreed, it's a tough lesson to learn but thankfully you don't have to worry about them missing payments now and as you mentioned hopefully you'll find a much lower interest rate when you refi.  

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 7 of 7
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