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Getting a student loan without a cosigner can be difficult but there are options. Both federal student loans and some private student loans offer no cosigner student loans.
A cosigner is usually needed when an individual is applying for credit or a loan and doesn't have strong enough credit and/or low to no income. As a result of the rising costs of higher education in the U.S., it has become common practice for students to ask their parents or family to cosign a student loan for them.
Cosigning a student loan on behalf of an incoming or current college student can be a risky decision. Not to mention, not all parents are able to cosign a student loan on behalf of their child.
According to our student debt statistics, 90 percent of all private student loans are cosigned. Having a creditworthy parent or guardian can help get you approved and it might even lower the interest rate on the loan – which can potentially save you quite a bit of money over the life of the loan.
But what if you can’t get – or don’t want – a cosigner on your student loans? Fortunately, there are a variety of options out there. In this guide, we cover the student loans that don’t require a cosigner.
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Federal Student Loans Without a Cosigner
Applying for financial aid is a necessary step to help students maximize their federal financial aid benefits before using private student loans. Luckily, the U.S. Department of Education offers an array of financial aid options for students. Financial aid can include grants, scholarships, and federal student loans. Federal student loan options should always be used before borrowing private student loans.
Federal student loans offer several benefits, including the possibility for subsidized interest during school, loan forgiveness programs, and income-driven repayment plans.
There are a number of different federal financial aid options available. The great thing about federal financial aid is that it doesn't require a cosigner. The most popular types of federal student loans are Stafford Loans and PLUS Loans. Here’s a brief overview of each of these student loans.
There are two main types of Stafford Loans (aka Direct Loans) available to undergraduate students and graduate students.
Subsidized Stafford Loans: These federal loans are awarded on the basis of financial need, and carry the benefit of subsidized interest. The federal government pays the accrued interest while a student is in school and during periods of deferment.
Unsubsidized Stafford Loans: These federal loans are not need-based, meaning any student who submits the FAFSA is eligible to receive this kind of aid. However, because these loans are unsubsidized, the student is responsible for paying any interest that is accrued while in school and during deferment. For the 2018-2019 academic year, the federal government set the interest rate for subsidized and unsubsidized Stafford loans disbursed after July 1, 2018, at 5.05% for undergraduates. Graduate students will pay a higher interest rate of 6.6% for Stafford or Direct unsubsidized loans.
A PLUS Loan is offered to parents of students enrolled at least half-time in eligible programs at participating and eligible post-secondary institutions or graduate and professional students at participating and eligible post-secondary institutions. PLUS Loans have higher interest rates – 7.6% for student loans disbursed after July 1, 2018 – compared to other types of federal student loans.
That being said, PLUS Loan rates can offer better rates than what's offered by private student loan lenders. PLUS Loans are issued without the necessity of a guarantor and are not awarded on the basis of creditworthiness. There is no credit check. Instead, parents using PLUS Loans must have a credit history that is clear of certain adverse events.
The Federal Perkins Loan Program was discontinued in 2017, but it provided assistance to qualifying students who could demonstrate financial need and were seeking a higher degree through an approved post-secondary school.
Private Student Loans Without a Cosigner
Unlike federal financial aid, private student loans are offered through non-government banks and lenders. There are a number of private lenders in the industry. While each lender has different underwriting and approval criteria, there is a lot of crossover. When it comes to getting approved for a private student loan, there are some clear requirements.
In general, you will need to meet the following requirements to get approved for a private student loan without a cosigner:
- Have a good credit history. Most private student loan lenders are looking for individuals with a good credit score of 660 and above. For students with little credit history, this might be a challenge. Having no credit history will make you ineligible for educational debt without a cosigner. Students should and can start building credit as soon as possible. Many banks offer "student credit cards" with low spending power. By paying your bill on time each month, you can slowly build credit.
- Have a good income. Most private banks are looking for individuals earning at least $25,000 annually. Summer jobs do count as income, however, most students don't earn that much from summer or academic year jobs.
- Be a U.S. Citizen. Unfortunately, many private financing corporations are not willing to offer student financing options with no underwriting to non-citizens.
If you are approved for college financing without a guarantor, you should expect to pay a higher-than-average interest rate. Some private student loan lenders offer fixed interest rates or variable interest rates above 10% for borrowers who apply without a cosigner. The private lenders do this to protect themselves. From their point of view, a student with no cosigner is much riskier to lend to.
Before choosing a lender, it’s important to shop around first to find the lender that will offer you the lowest interest rate. Use our private student loan comparison tool to get rate estimates from the leading student loan companies all in one place.
Private Lenders Offering No Cosigner Student Loans
The biggest benefit of having a cosigner with good credit is that it can help secure you a lower interest rate. If you don’t have a strong application or a cosigner, your interest rates can be higher because lenders view you as more of a risk. However, obtaining private loans without a cosigner is possible.
The first thing you’ll want to do is check your credit score. If your credit history is limited, there are ways you can work on building it quickly. However, it’s likely that most borrowers won’t have that kind of time. So here are five private lenders that offer non-traditional loans and loans to borrowers who don’t have a cosigner.
FundingU is a private student loan company specialized in lending to students who do not have a cosigner. Rather than look specifically at credit score or income to determine eligibility, FundingU looks at things like major, class hours completed, internship experience, and academic record.
Ascent Independent is a loan that is geared toward independent students who are college juniors or seniors, and graduate students who do not have a cosigner. The applicant will still need to meet certain eligibility requirements, including credit, school, loan amount, and other factors in order to get approved for a student loan without a cosigner.
Citizens Bank might consider issuing student loans to borrowers who don’t have a cosigner, but you have a better chance of getting approved if you have a good credit score and a minimum annual income of $12,000. It also offers a cosigner release option after 36 months.
Commerce Bank might provide loans to students who don’t have a cosigner, although having a cosigner can help your chances of being approved. For borrowers who do have a cosigner, a cosigner release is allowed once the borrower makes 12 on-time payments and meets credit requirements.
LendKey does not charge loan application fees, and borrowers can apply for loans through its online portal. Because LendKey’s loans are funded by credit unions and community banks, they tend to charge lower rates. It ultimately comes down to the individual credit union or bank that approves the loan, but an applicant should expect to show at least three years of credit history and a minimum income to be considered without a cosigner.
Sixup offers student loans without requiring a cosigner to help bridge the gap between financial aid and the cost of attendance. Borrowers do not need a credit history, but it will be considered if they have one. And in certain cases, a cosigner might be required.
Drawbacks to No Cosigner Student Loans
Applying for a private student loan with no cosigner is possible, as you’ve seen above.
However, there are some clear disadvantages to getting a loan without an additional signee. College is getting more expensive each year, and federal financing limits don’t seem to be keeping up. While federal loan options are the best option when it comes to student loans, not everyone will be able to get by with the maximum amounts offered.
Private loans can also be tricky. As mentioned above, getting approved can be difficult, and the interest rates offered are often very high. In the long run, having a high-interest rate on a student loan without a cosigner may be very costly.
However, if you are able to graduate and get a good job, you will probably be able to receive lower refinance rates. A refinance student loan, or consolidation loan, is offered by private lenders and replaces your old loans. In the end, you're left with a new student loan and a new – ideally lower – interest rate.
Applying Without the Help of a Cosigner
To apply for a student loan without a cosigner, you can start by submitting the Free Application for Federal Student Aid, (FAFSA). Filing the FAFSA is required by many colleges and universities these days, but either way, you must file the FAFSA to get financial aid.
To be eligible for federal financial aid without a guarantor you must submit the FAFSA. It usually takes about 22 minutes to complete and you can even file the FAFSA online.
When applying for private financing without the help of cosigner, it’s a good idea to shop around. There are many student loan lenders in the industry and each offers different rates and loan terms. If you are approved without an additional signer, you might have a higher interest rate.
Shop around before signing that promissory note to ensure that you are getting the best rates available. Even 0.25% is important over the long term.
How Can I Improve My Chances of Getting Approved for an Educational Loan?
As with all types of loans, the amount you are looking to borrower directly affects your chances of getting approved. If you can lower your borrowing amount, you might stand a better chance of getting approved for a private student loan alone.
Why? Well, there’s less risk for the private lender. Asking for a sizable chunk of cash when you don’t have the credit score or income isn't a great strategy. Start by using as little student loan debt as possible. Look for scholarships and grants to lower the amount of money you need to borrow first.
Before locking yourself into a debt dilemma, you should look at grants and scholarships. At LendEDU, we even have a scholarship search tool available for students. Grants and scholarships are free money. By spending just a few minutes a day searching for scholarships, you might be able to save yourself a significant amount of money over the long term.
Unfortunately, student loans are a necessary tool for a lot of people and, if you need financing without a cosigner, start with federal financial aid before using private financing products.