What we like:
Personal customer service
|Fixed APR||11.49% w/ AutoPay|
|Loan Terms||10 years|
|Loan Amounts||Loans up to $10k per school year|
Funding University is a private student loan company that offers student loans without a co-signer to career driven undergrads. The company was started because it’s founders saw that students who were serious about their school work and who made an effort to gain work and internship experience before they graduated were statistically more likely to land a good job after they graduated. Not only that, but their average starting salary was around $48,127.
For that reason, Funding University saw these types of students as a good credit risk and decided to offer student loans without co-signers to them at competitive interest rates. While the company has been around since 2015, you likely haven’t heard about them before because they previously focussed on lending to student borrowers in their home state of Georgia. Given the success of those loans, they decided to expand in 2018.
Funding-U covers 20 states accounting for 1/2 of the U.S. population. They plan to add even more states next year. Students who aren’t eligible will be added to Funding-U’s waitlist and will be notified as soon as loans become available in their state.
Funding U’s Student Loans With No Co-Signers
Funding University’s student loans will likely be incredibly popular since many parents and students search in vain for student loans without co-signers. That’s because 90% of student loans require a co-signer since most undergraduate students do not have a credit history and don’t have the income required to qualify for traditional private student loans on their own. For that reason, parents need to co-sign, but that creates a number of problems for parents and students.
The biggest problem is that many parents are unable to qualify to co-sign student loans because they don’t make enough money or their credit score isn’t high enough and that means that their children have a difficult time finding funds to pay for school.
Other parents might easily be able to qualify as a co-signer, but co-signing their children’s student loans means they could be required to pay their children’s student loans if their kids are unable to repay them. Parents also fear that late payments or defaults on student loans could impact their credit. Since co-signed student loans are included in the co-signer’s debt-to-income ratio, it could also impact parents’ ability to borrow money for other things like for a mortgage or an auto loan.
Rather than looking at your credit score or income, how much you can borrow and whether you qualify for a Funding University loan is determined by things like class hours completed, graduation date, academic record, major, employment or internship experience, and any other academic or extracurricular activities that show that you are on track towards your professional and academic goals.
To apply for a loan from Funding University, you will have to fill out some preliminary information online in order to determine your eligibility and get prequalified. This is different from most student loan applications which often require you to submit a significant amount of financial information, including your credit score. You can see if you may be eligible for a Funding-U student loan with our free application here.
Pre-qualified students move on next to the loan application which takes 5-10 minutes. You need 3 items to complete your loan application:
- Academic Transcript
- Financial Aid Award Letter
Most students who are pre-approved for a loan will have a 10-minute phone consultation with one of Funding University’s loan advisers prior to loan closing. Because they’re focussed on making sure that their terms are transparent and that their borrowers understand their loans, they talk borrowers through the prospected loan terms and interest rate and explain next steps.
Funding-U requires interest only in-school payments each month. The lender wants students to establish good monthly payment habits, keep their loan balance down, and build up their credit history. Repayment starts 6 full months after graduation (November for most students). Funding-U works directly with students after graduation to help them transition into repayment on both their Funding U and other federal and private loans.
One difference with Funding University loans is that they require borrowers to provide an update each semester on their academic, employment, and career prospects.
The loans offered by Funding University are competitive. You can borrow between $3,001-$10,000 per academic year at one fixed interest rate.
2018-2019 Fixed Interest Rates & Loan Maximum
Senior: 11.99% fixed interest rate and $10,000 loan maximum per school year
Junior: 11.99% fixed interest rate and $10,000 loan maximum per school year
Sophomore: 11.99% fixed interest rate and $11,000 loan maximum per school year
Freshman: 11.99% fixed interest rate and $10,000 loan maximum per school year
Drawbacks of Funding University Loans
While there are a lot of benefits to getting a student loans without co-signer like the ones Funding University offers, there are some drawbacks involved in their model. The first thing to consider is the interest rate. If you get it a traditional private student loan that is co-signed by your parents, you’ll likely qualify for a lower interest rate which will make repaying your loan easier and ensure that you pay less in interest over the course of your loan.
The Bottom Line
Ultimately, whether Funding University is the right option for you depends on your financial situation, your career prospects, your parents’ financial situation, and their willingness to co-sign student loans for you. Because many parents can’t or won’t co-sign student loans for their kids, Funding University provides an opportunity to access funds that students wouldn’t otherwise have at reasonable rates.3.12 Funding University
Author: Jeff Gitlen
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