Is it possible to get a private student loan without a cosigner?
When applying for federal student financial aid for college, student borrowers have a number of different options based on their individual financial situation as well as that of their family. There are, however, a large number of students who must also turn to private loans in order to cover some or all of their college costs. These loans are obtained from sources such as banks or credit unions and because of this, they may have differing qualification and repayment criteria.
In many ways, a private student loan can be more flexible for their borrowers. In addition to the potential for lower interest rates than government student loans, private student loans can also have higher borrowing limits. This means that students who are in need of an especially high amount of funds for graduate school or similar obligations can often turn to private lenders for their needs.
Types of Private Student Loans
There are essentially two types of private student loans. These include school channel loans and direct-to-consumer loans. The former are loans that are verified and disbursed directly to the college or university that the borrower is attending. Such funds are then applied towards the student’s tuition and other school related expenses. In return for this, the interest rate on school channel loans is typically lower than the rate on direct-to-consumer private student loans.
In a direct-to-consumer loan, the funds from the lender are disbursed to the student borrower directly. This gives the borrower much more freedom to use the funds as they see fit in paying for their educational and related expenses.
How to Obtain Private Student Loans Without a Cosigner
While a cosigner is often needed in order to be approved for a private student loan, it is possible to qualify without one. Typically, the terms of the private student loan without a cosigner will vary per lender. This is because, unlike government student loans, private student loans are not dictated by the terms of the U.S. Department of Education’s loan specifications.
In this case, there are some things to consider when applying for a private student loan without a cosigner. First, it may be difficult to locate a lender that is willing to make such a loan, as it represents a very high risk to the lender.
Should a student borrower locate a private lender that is willing to make the loan without a cosigner, it is likely that the interest rate will be quite a bit higher than if there was a cosigner present.
Some factors that could help a student to obtain a private loan on their own can include a good credit history with no negative remarks, and regular payments made on other previous loans (if any). In addition, the student may wish to start out by applying for a smaller amount of loan. This way, they may be able to build up stronger credit, and thus be able to borrow additional amounts of education related funds from private lenders in the future.