If you’re a college student, you are probably painfully aware of just how pricey higher education can be. Because of that, student loans – along with student loan debt – have been steadily increasing throughout the years.
Unfortunately, many types of student loans may be difficult for you to obtain without a cosigner. This is because oftentimes students either don’t have strong enough credit and / or just simply don’t have enough income to guarantee the loan’s repayment on their own.
While your parent(s) or other loved ones may want to help out by cosigning on a student loan for you, this can also be a risky financial move for them, as it can make them responsible for tens, or even hundreds, of thousands of dollars in repayment.
The good news is that there are financing options available today that do not require you to have a cosigner. Going with one or more of these alternatives can ease the potential financial burden on your would-be cosigner, while at the same time providing you with the funds that are necessary to move forward on your education.
Student Loans With No Cosigner Required
There are a variety of options available – both government and private – that can be explored. These include the following:
Federal Student Loans
The first step you should take in your search for financing without a cosigner is to explore the many benefits offered via federal student aid. The U.S. Department of Education provides financing, as well as grants and scholarships – so not all of the options will require you to repay the funds that are provided to you.
There are numerous funding alternatives available, but the most popular federal student aid options include the:
The Stafford Loan is actually available in two different formats. One is need-based on your income, where the U.S. government will pay the interest while you are in school, as well as during the grace period before the repayment period begins. This is referred to as a “subsidized” Stafford Loan.
The other type, an “unsubsidized” Stafford Loan, is not considered to be need-based on your income. With this type of Stafford Loan, any student who submits FAFSA (Free Application for Federal Student Aid) will be eligible to receive the aid. However, you will also be responsible for paying any of the interest that accrues – even while you are still in school.
Perkins loans are low-interest federal student loans that are made to both undergraduate and graduate students who exhibit exceptional financial need. With this type of loan, your school actually acts as the lender. Therefore, you will make your repayments to either your school, or to the loan servicer that is working with your school. You can be enrolled either full- or part-time in order to be eligible for a Perkins Loan.
PLUS loans are federal loans that graduate or professional students, or parents of dependent undergraduate students, can use to pay either for college expenses or for career schooling. The lender on a PLUS loan is the United States Department of Education, and the most that you can borrow through this type of loan is the cost of attendance (as determined by your institution), minus any other financial aid that you are receiving.
Typically, a PLUS loan will have a higher rate of interest than other types of student loans. However, the rate is still generally lower than the rates that you will find on private loans – and, these loans can be obtained without having a credit check performed on the borrower, which can be a big advantage.
Private Student Loans
In addition to the government funding options, you could also turn to the many alternatives that are available via private lenders. These sources of financing will generally need to be approved through a lender, and as a borrower, you will usually have to have a credit score of at least 660 or higher.
If you do meet all of the necessary criteria, though, obtaining private funding can allow you to obtain flexible terms on your loan such as deferring your payments, or paying interest-only for the first few years until your income increases and you are able to pay more.
There are numerous private student loan lenders. These include large banks and financial institutions as well as other financial entities such as Sallie Mae.
Factors To Consider When Applying Without A Cosigner
Although obtaining financing without a cosigner can provide the benefit of keeping your parents or other cosigner “off the hook” for the repayment, there are still some potential drawbacks to moving forward in this manner.
One of the biggest disadvantages is that you may not be able to obtain as much money as you need. Just like everything else, the cost of education is continuing to rise – and with the maximum caps on federal student financing, these funds may not provide you with enough to pay the entire tab.
Another factor to consider is the fact that when a lender has more security of a repayment, the interest rate provided on a loan is often lower. That being the case, if you apply for private funding on your own, you may end up with a higher rate of interest on your loan than you would have if you went in with a cosigner – and over time, even a slightly higher rate of interest can make a big difference in the amount of money that you will pay back.
How To Take The Next Step
In order to move forward in your quest for student funding, the best first step is to submit the Free Application for Federal Student Aid (FAFSA). This application is typically required by many colleges and universities – and it is a must in order for you to obtain financial aid, especially if you are planning to obtain funds without a cosigner. The FAFSA application can be easily completed online.
When seeking financial support, keep in mind that in addition to just borrowing the funds you need, you should also consider applying for scholarships and grants. That way, you won’t have as much to repay if approved – which can be an extremely wise financial move.