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Student Loans

The Complete Funding U Student Loans Review: Is It Right For You?

Updated Jun 16, 2023   |   14-min read

Best for no-cosigner undergraduate loans

  • Funding U specializes solely in no-cosigner student loans for undergraduates.
  • It determines eligibility based on academic performance and projected career path, not credit scores.
  • Loans offered range from $3,001 to $20,000 each year.
  • Fixed interest rates range from 7.49% to 12.99%, with a 0.50% discount available for autopay.
  • Funding U assigns a dedicated loan officer to each borrower.

We chose Funding U as the best for no-cosigner undergraduate student loans because of its unique approach to eligibility. Unlike most private lenders, Funding U does not consider your credit score. Instead, it weighs factors including your grades, course load, and likelihood of graduating on time. This can appeal to students with little or no credit history who plan to attend an accredited four-year not-for-profit college in the U.S.

Funding U also assigns each borrower a dedicated loan officer to guide you through the application process. It offers fixed interest rates and just two in-school repayment options. Funding U rewards you with a $100 Amazon gift card when you earn your degree.

Funding U presents a viable borrowing option with competitive rates and terms for undergrads who can’t secure a cosigner. Keep reading to discover why it leads the pack for those focused on taking out a no-cosigner student loan.

In this review:

How does Funding U work?

Funding U launched in 2015 to provide undergraduate student loans to those unable to secure a cosigner. Its mission is to make college affordable and accessible for students focused on their studies, not their credit scores.

Funding U offers fixed-rate student loans ranging from $3,000 to $20,000 for undergraduate students enrolled full-time at accredited four-year colleges in the U.S. Eligible borrowers must be: 

  • U.S. citizens, permanent residents, or DACA recipients
  • At least 18 years old
  • Live in an approved state (38 states are eligible as of June 2023; exclusions listed below)

Funding U does not require (or even allow) cosigners and considers academic achievement over credit alone when making lending decisions. One of its primary goals is to reward responsible borrowing.

Funding U allows you to prequalify for an undergraduate student loan without affecting your credit score. If prequalified, you submit an official application. Funding U considers your grades, course load, and projected graduation date—not just your credit. 

Once you’re approved, Funding U determines your loan amount based on costs of attendance minus other aid. It disburses funds to your school to apply to tuition, fees, and other education expenses. Students may take out a Funding U loan for each academic year.

Funding U works to make the student loan process as straightforward as possible for undergraduates without a cosigner. By weighing factors beyond credit scores alone and assigning dedicated support, Funding U gives students a fair chance at financing their education.

Rates, terms, and fees

Due to its commitment to simplicity, Funding U’s no-cosigner undergraduate loans may offer less flexibility than other lenders in terms of loan amounts and repayment options. However, compared with other no-cosigner student loans, Funding U provides several benefits to borrowers.

It offers a longer repayment term and a more generous grace period than no-cosigner competitor Edly.

As of this writing, in June 2023, Funding U’s interest rates are competitive with its no-cosigner competitors. Even Funding U’s highest rate is lower than MPOWER’s flat APR, and its lowest rate is lower than Ascent’s lowest APR.

Fixed rates (APR)6.99%12.99%
Variable rates (APR)N/A
Rate discounts0.50% for automatic payments
Loan amounts$3,001 – $20,000 per academic year
In-school repayment plans$20 fixed or interest-only
Repayment terms10 years
Grace period6 months
Repayment assistanceForbearance options
Cosigner releaseN/A
Unique featuresDoesn’t consider credit score (but considers credit history)
No cosigners
Dedicated loan officer
$100 reward per loan when you graduate

What are the eligibility requirements?

The company’s mission is to provide students with the means to finance their education based on their merits and future potential.

We’ve collected information on who’s eligible for its loans:

Eligibility requirementsDetails
U.S. citizen or permanent residentU.S. citizens, permanent residents, or DACA recipients
State of residenceAvailable in 38 states (exclusions listed below)
Minimum age18 years
SchoolFour-year accredited not-for-profit colleges in the United States (Eligible school list includes more than 1,460 schools)
Enrollment statusMust be enrolled full-time
Credit scoreNot applicable
IncomeNot applicable

Funding U does not operate in the following states:

  • Alaska
  • Idaho
  • Kentucky
  • Maine
  • Mississippi
  • Montana
  • Nevada
  • New Hampshire
  • North Dakota
  • Rhode Island
  • South Dakota
  • Wyoming

How does repayment work?

When it comes to repayment, Funding U offers less flexibility than many other lenders in the industry. However, its no-cosigner requirement is unique. This might be a fair trade-off for borrowers who don’t want to ask someone to cosign.

All loans carry a standard 10-year repayment term, so Funding U expects you to repay your loan in full within 10 years after the six-month grace period, which begins after you graduate or drop below half-time enrollment. Funding U doesn’t assess a prepayment penalty if you repay your loan before the 10-year term ends.

While you’re in school, Funding U offers two repayment options: 

  • Interest-only payments 
  • Flat $20 payments

The aim is to help you get into the habit of making regular payments and reduce your overall loan cost. However, unlike some lenders, Funding U doesn’t offer an option to defer payments while in school.

Here’s what interest-only payments might look like for two loans:

Loan amountAPRMonthly interest-only payment

Note: These calculations assume the interest is calculated and paid monthly and do not consider any capitalization of unpaid interest. In practice, unpaid interest may capitalize, meaning it is added to the loan’s principal balance and would result in higher future payments.

The set 10-year term and in-school payment requirement can make Funding U’s loans cost less overall than loans that allow for longer repayment terms or full in-school deferment if the interest rates are identical. 

But remember: These features also mean you’ll start paying back your loans sooner and have higher monthly payments once you enter full repayment, as you can see in the example table below.

Here’s an example of a Funding U loan compared with a loan from a different student loan company that allows a 15-year term and allows the borrower to defer payments while in school:

Funding ULender 2
Loan amount$20,000$20,000
Term10 years15 years
In-school repayment24 months at $20 per monthNone
Balance at start of repayment$19,520$20,000
Monthly payment$252.90$209.12
Total repayment$30,348$37,641.60

Note that these calculations are just examples. Actual payment amounts might differ based on the specific terms of your loan.

How can Funding U improve its private student loan?

Funding U’s approach to student loans is unique. Still, it could improve in several areas:

  1. Its maximum loan amount of $20,000 per year may be inadequate for students who need more financial assistance to cover their educational expenses. Ascent offers no-cosigner student loans; its maximum aggregate is $200,000 for its non-cosigned credit-based loan. MPOWER’s no-cosigner student loans have a maximum limit of $100,000 per year.
  2. The absence of the option to add a cosigner could be challenging for students with poor credit history. Cosigners increase eligibility for loans and help qualify borrowers for better interest rates. If you need a cosigner for your student loan, consider Sallie Mae, which we picked as the best lender for cosigners because of its short cosigner release period. College Ave is our top-rated student loan, and it also allows cosigners.
  3. Funding U’s service availability is another area for growth. As of June 2023, the lender doesn’t operate in all 50 states, leaving numerous students unable to access its services. Ascent is nationwide, so you’re eligible in all 50 states.
  4. Funding U’s one repayment term of 10 years could be limiting or inconvenient for borrowers who prefer several options based on their financial situation. Ascent’s non-cosigned credit-based loan offers more flexibility with multiple repayment terms catering to borrowers’ varying requirements.
  5. Unlike Funding U’s required in-school monthly payments, Ascent allows borrowers to defer repayment (meaning they make no monthly payments) while in school.
  6. Funding U doesn’t offer loans for summer school classes, graduate programs, or less than full-time enrollment. Ascent offers a specific undergraduate loan, which you might qualify for with no cosigner. MPOWER also has a graduate student loan, and Edly will loan $10,000 per semester for summer classes.

Funding U has a unique niche in the student loan market, but these potential enhancements could broaden its appeal to a larger student population. Consider the following lenders if you’re seeking features Funding U doesn’t provide:

Funding U limitationAlternative lendersCosigner required?
Maximum loan amount is $20,000Ascent, MPOWERNo
College Ave, Earnest, Sallie MaeYes
Borrowers can’t add a cosignerAscentNo (offers cosigner and non-cosigner loans)
College Ave, Sallie MaeYes
Only 1 repayment termAscentNo
College Ave, EarnestYes
No in-school deferred repaymentAscentNo
College AveYes
Not available in all 50 statesAscentNo
College Ave, Sallie MaeYes
Loans not available for summer schoolEdlyNo
College Ave, Earnest, Sallie MaeYes
Not available for graduate programsAscent, MPOWERNo
College Ave, Earnest, Sallie MaeYes
Not available to students enrolled less than full-timeAscent No
Sallie MaeYes

How do Funding U private student loans compare to other lenders?

To better understand Funding U’s position in the marketplace, comparing its offering with those of other lenders that offer no-cosigner loans is useful. These include Ascent, Edly, and MPOWER

Here’s how they stack up:

Funding UAscentEdlyMPOWER
Our rating4.6 stars4.7 stars4.4 stars4.5 stars
Best forBest for no-cosigner loansBest for deferred repaymentBest for income-based repaymentBest for international students
Rates (APR)6.99%12.99% (fixed)9.46%15.88% (fixed)Repayment is based on students’ income15.01% (fixed)
Loan amounts$3,000 – $20,000 (each year)$2,001 – $200,000 (aggregate)$5,000 – $15,000 per academic year

$10,000 per summer semester

$25,000 lifetime limit
$2,001 – $100,000 per academic year
Repayment terms10 years5, 7, 10, 12, or 15 yearsTypically 5 or 7 years10 years
Grace period6 months9 months4 months6 months
View ratesView ratesView ratesView rates

Is Funding U a reputable lender?

Funding U isn’t accredited by the Better Business Bureau (BBB), meaning it hasn’t sought or secured this organization’s endorsement. The BBB rates businesses based on several factors, including customer complaint history and transparent business practices.

Even without BBB accreditation, Funding U boasts an A-minus rating. As of June 2023, it has faced four BBB complaints over the last several years. 

However, when addressing these issues with customers directly and publicly, Funding U took responsibility for three errors while clarifying how it would prevent future complications. The fourth complaint, Funding U stated, came from an applicant-related issue.

Being relatively new to the lending scene, Funding U is working to build its reputation and collect online reviews. But considering its efforts in dealing honestly with customer concerns and improving areas of weakness, we regard Funding U as a reputable lender.

Does Funding U have a customer service team?

If you’re considering a loan and want to contact Funding U, you can do so by emailing [email protected].

Unlike other lenders, Funding U does not publicize phone or chat options for prospective borrowers.

Funding U relies on Scratch Services, a third-party servicer, for management and communication related to loan repayment.

For current borrowers, Scratch Services offers comprehensive support from 9 a.m. to 8 p.m. Eastern Monday through Thursday and 9 a.m. to 5 p.m. on Fridays. Borrowers can contact Scratch Services by phone, online chat, or mail.

How to apply for a Funding U student loan

Compared to other lenders, the application process with Funding U is streamlined. Since Funding U focuses on no-cosigner loans, you only need to provide your information.

Here’s a step-by-step guide to apply for a student loan from Funding U:

Step 1: Check your eligibility

Start by clicking “Apply Now” on the website to determine your eligibility. 

Source: Funding U

You’ll enter essential information about your school, grades, major, state of residence, and how you plan to make the minimum required in-school payments. This only takes a few minutes.

Source: Funding U

Once Funding U determines you’re eligible for a loan, it will prompt you to advise how much you want to borrow and agree to a credit check as part of the preapproval process,

Source: Funding U
Source: Funding U
Source: Funding U
Source: Funding U

Step 2: Get preapproved

After submitting your application, you should hear back within a few days. You’ll now provide your verification documents, including:

  • A state-issued ID
  • Your most recent full transcript
  • Your financial aid award letter
  • Your tuition bill

You’ll also get in touch with your dedicated loan officer.

Step 3: Sign the final documents

You’ll receive and sign your final loan documents to complete the process. Following final approval, Funding U disburses the funds to your school and applies them evenly across that year’s remaining terms. For instance, if you apply in the fall, it will disburse half the funds for the fall and half for the spring term.

What if I’m denied a student loan from Funding U?

If you’re denied a student loan from Funding U, don’t lose hope. By law, all lenders must inform you why your application was rejected or guide you on how to request that information within 60 days. 

Funding U allows you to reapply if your information has changed or you think you entered some of your data in error. The lender encourages applicants to consider reapplying the following semester.

If the denial was due to credit history issues, applying with a cosigner at another lender could be wise. A cosigner is a person who agrees to repay your loan if you can’t. Their credit history can improve your chances of loan approval if you have a limited or poor credit history. 

Lenders such as Sallie Mae, our top pick for the best private student loan for cosigners, and College Ave—our top student loan for borrowers—permit adding a cosigner to your loan application.

How we rated Funding U student loans

We compared Funding U to six student loan lenders specializing in no-cosigner student loans. Its editorial rating reflects how it compares to those six lenders.

We considered 26 factors, including rates, repayment terms, fees, unique benefits, and more. In the end, we picked Funding U as the best no-cosigner student loan for undergraduates.  

Funding U FAQ

Does Funding U offer private or federal student loans?

Funding U offers private student loans. Unlike federal student loans, these loans aren’t provided by the government. Instead, they come from Funding U as a private financial institution. 

Find out more about the differences between federal and private student loans and why we recommend maxing out available federal loans before using private student loans.

Does applying with Funding U hurt my credit?

We could not confirm whether Funding U does a hard credit inquiry, which can cause your credit score to drop by a few points. We confirmed it considers your credit history but not your FICO score to determine eligibility.

Does Funding U require a cosigner?

No, Funding U doesn’t require a cosigner for its student loans. It focuses on the student’s academic progress and future earnings potential rather than relying only on credit history or a cosigner. 

Students with a solid credit history or a cosigner might find better rates elsewhere.

What can Funding U student loans be used for?

Funding U student loans are intended to cover educational expenses. These include tuition, fees, room and board, and other school-related costs. However, remember that the lender will disburse funds to the school, not you.

How long does it take to receive funds from Funding U?

After you apply and get final approval, Funding U sends the money to your school. The exact time frame depends on your school’s disbursement schedule.

Can Funding U student loans be forgiven?

Funding U doesn’t offer loan forgiveness programs for its private student loans. Private student loans aren’t eligible for federal forgiveness programs.

Recap of our Funding U student loans review

Student loanBest forOur rating
No-cosigner undergraduate loanNo cosigner4.6 out of 5View rates