Student loans are daunting and no one’s first choice when it comes to paying for school, but around 70% of students end up having to take out a loan for college expenses, so you’re not alone! Applying for student loans can be difficult if you have no credit history or help from a parent or guardian to act as co-signers. Though some private lenders and institutional loans from the schools you’re applying to may require a co-signer because of your credit or age, you do have options!
How Hard Is It Really To Get A Student Loan Without a Co-Signer?
You can get a student loan without a co-signer when you apply for federal loans through FAFSA®. However, you will have challenges getting approved for private student loans, especially if you have no credit history, which means you will need a co-signer. Only 6% of students get approved without a co-signer.
Banks, credit unions, and online lenders offer private student loans. These loans are not backed by the federal government, so lenders require that a borrower has a good credit score and income. Many young adults cannot meet these requirements, which means they need someone with solid finances back them and agree to co-sign. This makes the student and the co-signer responsible for paying off the loan. Make sure you shop around and do your research on private lenders so you can get the best interest rate possible.
What Kind Of Student Loans Require a Co-signer?
Private student loans may require you to have a co-signer if you don’t meet their credit criteria. Also, students with a cosigner for their student loan may receive better rates, depending on other criteria and their credit profile.
What Loans Can You Get Without a Co-Signer?
Federal Student Loans
Complete the FAFSA® to access these federal loans that don’t require a co-signer:
- Direct Subsidized Loans: Awarded to undergraduates based on financial need.
- Direct Unsubsidized Loans: Awarded to undergraduates and graduates without consideration of financial need.
Students with good credit may also receive Direct PLUS or Direct Grad PLUS loans without a co-signer. However, if you have no credit or low credit, you’ll need to find a co-signer — also called an endorser — to apply for these loans. You can apply for these loans without a co-signer, however, if you demonstrate extenuating circumstances that contributed to a low credit score, such as a tax lien, and complete loan counseling online.
All three of these loans have a fixed interest rate of 6% or less, and this does not change over time. Parents who use the PLUS loan will need to show they have a good credit history, even if it is a federal loan. The parent PLUS loan will have a higher interest rate of 7%. There is also a limit on the amount a parent can borrow; it is the maximum cost of attendance minus other aid that was accepted by the student.
Some State Or Institution-based Loans
State loans are offered to students who live in or go to college in that state. These programs will usually have a lower interest rate than regular private loans. The interest rate will also be fixed and your credit score is not as important.
What Are the Pros and Cons of Taking Out Loans Without a Co-signer?
|Loans do not require a credit check||Cannot apply for loans that do require a co-signer|
|Apply on your own without having to coordinate documents with a co-signer||Interest rates are much higher, around 10%|
|You are the only person accountable for paying back the loan||You will most likely have to refinance your loan after you graduate|
What Other Aid Options For Students To Close Aid Gap For Students Without A Co-Signer Who Cannot Get Approved For A Private Student Loan?
Grants And Scholarships
Federal aid might not always be enough to cover the cost of college expenses. Fortunately, there are other types of aid available, and a lot of them are free. Scholarships are a great way to go and the money adds up quickly, but make sure you check the deadlines for these and apply for them as quickly as possible.
Try appealing your aid award with your school to receive additional funds. This is a great option for students who have special circumstances that make paying for college difficult.
Financial Aid Advance
Get an advance on your financial aid for the first few weeks of the school year before you receive your reimbursement. This can help you pay for books and other necessities that you need before you receive your full aid award.
Where Do You Start If You Need To Close Your Aid Gap Quickly After Getting Accepted Or Ahead Of An Upcoming Semester?
1 – Talk To Your Financial Aid Office
Get in touch with your school’s financial aid office and ask them about additional ways to pay for college. Many schools offer work-study programs or a discount on some of your supplies. Apply to be an RA (resident advisor) to reduce your room and board costs.
2 – See If You Can Increase Your Federal Student Loan Limits
If you didn’t receive the maximum amount of federal aid, talk to your school and see if you can increase the amount. There is a limit on the federal aid, but you can always try to ask for more than you were given. If you have hit the limit, you can ask your parents to borrow with the PLUS loan.
3 – Consider Starting The Aid Appeal Process At Your School
If you have a special circumstance that impacts your ability to pay for college, try appealing your aid award with the school. Some of these circumstances include divorce, loss of income, death of a parent, and medical bills. The process consists of the student writing a letter to the financial aid office explaining the situation that the school probably didn’t know about and their reason for needing more aid.
It’s important to submit this as soon as possible so that they will consider you and make sure you provide all of the necessary documentation. Follow up with the school after a couple of weeks to see their response.
4 – Identify ways to reduce your total cost of attendance at the current institution
Take fewer classes
One way to save money is by taking fewer classes. Even if you are in school longer, you can work part-time and still go to school. Students pay per credit hour and that can really add up if you are taking fifteen or eighteen credit hours a semester.
If you are considering this option, make sure to work with your financial aid office to understand what the credit-hour constraints are at your school to maintain your financial aid.
Reduce non-tuition costs
Besides tuition, there are many other costs associated with paying for college. Try to spend less money on food, textbooks, and other school supplies. This will help you save money over time, especially if you rent used textbooks instead of buying new ones at the bookstore.
5 – Consider Increasing Your Income
Think about getting a part-time job on or off-campus to earn extra income. Even if it means taking fewer classes and staying in school longer, it’s worth it in the long run because you’ll have more money than if you borrowed everything and have to pay it back. You can even do odd jobs around campus like participating in scientific studies or working in the library.
6 – Consider attending a less expensive institution
Sometimes your dream school might be unaffordable and you weren’t given enough money to attend. Think about going to a school that is less expensive to save money, especially if it means you don’t have to take out a loan.
7 – Take A Gap Year
Gap years are a great idea, especially because many students aren’t ready, financially or mentally to go to college. You can spend the year working and saving up money to pay for school. It’s also a great time to figure out what you really want to do in life and what you want to study.
Where Do You Start If You Have Additional Time To Prepare?
Building Your Credit If You’re Under 21 To Improve Your Chances Of Getting Approved
Sign up for a credit card in high school and start building your credit. Make sure you are responsible with your spending and don’t get into debt. Get a secured credit card, where you are required to have a refundable security deposit, which acts as your limit. It prevents you from spending more than you can pay back.
Build An Employment History
If you have more time to prepare for the cost of college, get a job and work to save money. This will do two things: add more money to your savings and help make your resume stronger. Both are very beneficial in the long run.
Get Grants And Scholarships
Grants and scholarships are an awesome way to get free aid for school. Take time to apply to tons of scholarships because the money really adds up. Look for grants from your state or other programs, especially if you know what you are studying in school. These could cover the rest of the cost that the other financial aid couldn’t.