Many private student loans allow for, or even require, a co-signer. Most of the time, the co-signer is not the person actually enrolling in school. The cosigner is the student’s parent, spouse, boyfriend, girlfriend, cousin, or friend. The cosigner believes, genuinely, that she is helping the student go to school to get an education. All the cosigner is doing (says the conventional wisdom) is enabling the student to get that loan that will pay for tuition, so that the one they love can get ahead in life. And that loved one will, of course, get employed upon graduation and promises (promises!) to pay that loan back.

What many people do not realize, however is this: The cosigner is just as legally responsible for the loan as the borrower.

What does this mean? If the borrower can’t or doesn’t pay, the co-signer is still on the hook. Even more disturbing, many private student loan contracts have what I call a “death and bankruptcy clause” that can be quite dangerous. Under this clause, if the co-signer or the borrower dies or declares bankruptcy, the entire balance of the loan will become due immediately, and if not paid in full, the loan goes into default. This means that if either the borrower or the co-signer experience some sort of catastrophic health or financial breakdown during the life of the loan, the loan can be in danger of defaulting, putting the other party in grave danger. This is particularly worrisome where a borrower has a private student loan cosigned by an elderly grandparent, or a parent is the co-signer on a private student loan where the child has become unable to pay.

Luckily, there may be a way out. Many private lenders allow for something called a “co-signer release,” where the lender will agree to release the co-signer from all legal responsibility on the loan under certain conditions. These conditions vary from lender to lender, and the specifics may be outlined in the loan’s original promissory note. In my experience, these conditions are often either a “buyout” (a lump-sum payment by the co-signer), or an installment arrangement (a series of on-time monthly payments over the course of time, ranging from 12 to 48 months). If the condition is met, the co-signer is released from all legal responsibility on the loan.

If you are a co-signer or borrower and you are concerned about the long-term financial stability or health of the other signer on the loan, a co-signer release may be a good pre-emptive measure to protect yourself from an unnecessary (and, arguably, unfair) default. If you want to learn more, review your loan promissory note and contact your private loan lender to get some more information about the process and requirements.