Student Loans Without a Cosigner — What You Need to Know
But what if you can’t get a cosigner for a student loan?
How to Get a Loan Without a Cosigner
Start with Federal Student Loans
First of all, when you get federal student loans, you don’t need a cosigner. You aren’t subject to credit checks or income requirements with federal student loans. Fill out a FAFSA each year you’re in school to get the maximum amount available for federal loans.
However, the cost of college has increased so much in recent years that federal loan amounts haven’t kept up. You’re probably going to need more than the government will allow you to borrow each year. That means you probably need to turn private student loans.
Can You Get a Private Student Loan Without a Cosigner?
“Banks advertise that you can get a loan without a cosigner if you meet their credit requirements and/or have an income of $18,000 or more,” says Jeannie Tarkenton at Funding U. “Statistically speaking, though, of all student loans originated by banks to undergraduates, only 2% are approved without a cosigner.”
Going the traditional route isn’t likely to get you access to the funding you need without a cosigner. On the other hand, though, there are some lenders willing to take less traditional items into consideration when lending.
One of these lenders is Tarkenton’s own Funding U. “We lend to students in all grades, focusing on students who are on track to graduate on time and achieving solid grades,” she says. “We also look at students whose projected income — based on their major — shows they will be able to manage their total student loan payments.”
Tarkenton also points out that there are other companies that offer private student loans without cosigners:
- Ascent: Only available to juniors and seniors with FICO scores above 660.
- SixUp: Focuses on students who are first generation college students and eligible for Pell grants, although others can also apply.
What Are Eligibility Requirements for No Cosigner Private Student Loans?
Because lenders like Funding U take a slightly different approach to determining who’s “creditworthy” for their private loans, Tarkenton says some of the eligibility requirements are more about making sure the student is likely to graduate and get a job that allows them to repay the loans later.
Some of the things these lenders look for, says Tarkenton, include:
- Enrolled full-time at a four-year not-for-profit institution
- Maintain good academic standing (you might be required to provide transcripts)
- Relatively high graduation rate for the school of enrollment
While your credit might be considered, depending on the lender, the fact that you show that you’re willing to do well, and that you’ve chosen a career path that allows you to repay your loans is likely to weigh heavily in the decision of these somewhat alternative private student lenders.
Check the website of each lender you’re considering to see at which point they consider your credit.
What to Consider When Choosing a Private Student Loan
Before you move forward with any lender, it’s important to carefully research your options.
“Remember, you are the consumer and you have the power to choose or reject a lender — just like they choose or reject you,” says Tarkenton. “Take the time and effort to make a good decision.”
When getting a private student loan — especially without a cosigner — Tarkenton suggests paying attention to some of the following features:
Your interest rate matters quite a bit when choosing a private student loan. The higher the interest rate, the more you’ll pay overall. Compare rates to find the best possible rate you can for your situation.
“If you can, pay the monthly interest due on your loan,” says Tarkenton. “That way your loan balance won’t increase while you’re in school.”
How to Make Larger Payments
Tarkenton also suggests checking with your lender to see how you can make bigger payments once you’re done with school. This will help you pay off your loan faster, as well as save you money on your interest.
Find out if the private lender has a forbearance or hardship program. If you run into trouble and can’t make payments, being able to skip payments temporarily without a credit penalty can be a big help. Realize, though, that these programs are often short-term and that you’ll be expected to pick back up with payments after a set number of months.
Where Does the Lender Send Your Loan?
Pay attention to whether the lender is school-certified or self-certified. With a school-certified loan, the lender will send the money directly to your school to cover your expenses. On the other hand, if it’s a self-certified loan, the lender sends the money to you instead. It’s up to you to make sure that money is used for school costs.
Understand the Impact of Student Loans on Your Credit
“This is a commitment that has far-reaching consequences in terms of your individual credit score,” says Tarkenton. She points out that your credit score is used to help you achieve future financial milestones such as buying a car or a house.
Before you sign the papers, make sure you understand what you’re getting into, and the consequences if you miss payments. If you are facing a problem, it’s best to speak with your lender as quickly as possible to see if you can work something out.
How to Make Changes to Your Account
Tarkenton also says it’s important to understand how to access and change your account information. Many private lenders like Funding U offer online account access. You can go in and change your address when you move, as well as make payments. Knowing how to manage this process is vital if you don’t want to miss an important communication from your lender.
Before you make a decision about private student loans without a cosigner, Tarkenton suggests asking questions.
“It’s the lender’s responsibility to answer all your questions and provide you all information in writing,” she says. “Read it. Ask your parents or someone else for help if you don’t understand. And if a lender won’t give you clear answers, don’t take a loan from them.”
When creating your plan to pay for school, start with merit scholarships, grants, and savings. Then, as needed, use the FAFSA to apply for federal student loans. If you still have a funding gap, it’s time to turn to private student loans.
Carefully consider whether a cosigner is necessary or desirable. If you don’t want a cosigner, or if getting a cosigner isn’t an option, look for resources like Funding U that offer loans to students without the need for a cosigner.
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This post is sponsored by FundingU.