How to Take Out Student Loans Without a CosignerDecember 10, 2020
Borrowing student loans can be helpful to cover your educational expenses. One big decision, however, is deciding whether to move forward with or without a cosigner for your private student loans.
When you borrow private student loans, your lender will run a credit check to determine whether you qualify. The credit check will also help determine your interest rate on private loans. If you don’t have a high credit score, you may need a cosigner to qualify for the best possible interest rate.
Pros of Taking Out Student Loans Without a Cosigner
If your credit score is strong, you can choose to take out student loans without a cosigner, it just may take some work. Here are a few benefits to consider:
Less Reliance on Others
If you are able to qualify for a student loan without a cosigner, it may be a better option for you because you will be relying less on others for financial assistance. Although you as the borrower are responsible for making the monthly payments, the cosigner can be on the hook for the payment if you are unable to make them. Relying less on others will give you freedom from any financial tension between you and your cosigner.
Reduced Financial Burden for Loved Ones
Even if you have a willing parent or relative who can act as your cosigner, you may be concerned about creating a financial burden for them. Without a cosigner, you don’t have the possibility of the loan becoming their responsibility.
Cons of Taking Out Student Loans Without a Cosigner
While there are pros to applying for student loans without a cosigner, you may also face challenges. Be sure to consider the drawbacks, in addition to the benefits:
May Be Harder to Qualify
If you don’t have a cosigner, it may be harder to qualify for a student loan. Private lenders have certain eligibility requirements, two of which often include a minimum income and credit history. The general eligibility requirements for private student loans are discussed below.
May Have Higher Interest Rate
Even if you can qualify for a loan without a cosigner, you may not earn the interest rate you were hoping for. If you’re approved for a high interest rate, you may pay more in interest over the life of the loan.
Your credit score and history will be the main determining factors of your interest rate. If you have a higher credit score, you may be able to qualify for a lower interest rate. However, if you are lacking a strong credit history and score, a cosigner may be advantageous for you.
If you are determined to get a student loan without a cosigner, you must meet certain lender eligibility requirements. The requirements will vary by lender, but in general, the criteria include:
- You must be a U.S. Citizen or a permanent resident
- Required to be enrolled in school in an eligible program at least half-time
- Be the age of majority, usually 18, at the time when you are applying
- Meet minimum income requirements
- Have a good credit score, a minimum of at least 670 will be required by most lenders
- A minimum length in credit history will be required, usually at least two years
Pursuing Loans Without a Cosigner
There are some scenarios where it is possible to pursue borrowing private student loans without a cosigner, here are some ways to accomplish that:
- If you are already making a steady income and have exceptional credit, you would most likely be able to qualify for a student loan without a cosigner. Just be sure to enroll in enough classes to be considered in school half-time, as this is a necessary requirement for many lenders.
- If you are interested in attending school and a cosigner is not an option, be sure to establish a steady income. Consistent earnings will help you meet the minimum student loan income requirements. It’s even better if you can begin working at an employer that provides tuition reimbursement.
- If you have a steady income but are having difficulty meeting the minimum credit score requirement, work on improving your credit score. Some ways to help with that are to start and stick to a budget. If you have other debts, work on paying them off or at least reducing the balance and make on-time payments to all your bills.
- If you do not have access to a cosigner, be sure you are maximizing any other aid you can receive for school. Try applying for scholarships and grant money by filling out the FAFSA and take advantage of any other available federal aid.
Taking out student loans without a cosigner is possible. Consider the scenarios above that might make it possible to pursue your dream school and work toward your long-term goals.