Ben Todd | Apr 16, 2017 | 3
Student Loans without Cosigner 101
Have you ever thought to yourself, “I want to go to college and get a better career but how can I afford it?”
Well there are several answers to this question. Some college students pay their way with scholarships, which allows them to get the help they need without having to pay it back at a later time. Another option students have if scholarships can’t give the full amount of aid needed is student loans. Scholarships are aid received by an agency that doesn’t require that you pay the loaned money back to the lender. In the case of a loan most agencies require the student to have a cosigner. Some however, which are the ones preferred most by students, do not require a cosigner. According to research, in the 2008-2009 school year, college students took out both federal and private student loan equaling to more than $95 Billion.
What does this mean? Most students who want to attend college are going to require student loans to fund their education. That’s a fact. Now, if you’ve found this page, you are no doubt looking for a student loan without cosigners. Now before we launch into how to get no cosigner student loans, it’s important to be aware that there are OTHER financial options out there beside loans. For one, there are a variety of scholarships and grants that can help supplement your school costs. Indeed, through grants and scholarships, you might not even need to find a student loans without a cosigner (i.e. Grants, Scholarships and Federal Student Loans may be enough). Grants don’t only have to come from the government or non-profit organizations.
Now, if you are looking for student loans with no cosigner, there are some options.
What Are Student Loans?
When lots of kids graduate high school they are faced with the reality that their family alone can’t pay for their college expenses. Another thing they soon realize is that with no credit, or sometimes even bad credit, they are unable to receive a private student loan.
There are a options are loans that can be paid back over a long period of time with low interest rates. These types of loans are made for those who want to further their education but need assistance. These loans are referred to as ‘student loans’ and come in a variety of flavors.
- Federal Student Loans – Loans backed the government and distributed to students by lenders.
- Private Student Loans – Non-government backed loans.
What is a No Cosigner Student Loan?
If a student is looking for a type of assistance that will not cause them to stress and worry about the debt owed back to the lender, no cosigner student loans are the most likely to meet their needs.
So what exactly is the whole “cosigner” clause? Well when you apply for a loan and your credit is bad or you have no credit (i.e. you are too young to have built up any credit history), the lender considering giving you the loan wants someone with good credit to “cosign” the loan for you. The cosigner, by cosigning for the loan, assumes responsibility for the loan debt if the borrower fails to make payments or defaults on the debt. Basically, if you can’t make your payments on the loan and run, anyone cosigning the loan will be stuck with the legal responsibility for that debt. As you can imagine, this makes getting a cosigner difficult. Usual cosigners are direct family members (parents) that are willing to take the risk to help fund their child’s education.
There are many different options for student loans out there. Let’s start by this article by directly addressing how to get student loans without cosigners.
Let’s be clear here: there are only a couple options for this type of loan.
- Federal Student Loans
- Alternative Student Loans (with special no cosigner clauses)
First off, your absolute best bet (for US or Canadian students) is to get a Federal Student Loan (or in Canada, a Canada Student Loan). This is basically a government-backed student loan that does not require the student to repay the loan for the duration of their schooling (this is called a subsidized student loan) — should you qualify for the unsubsidized version of the loan. Federal student loans don’t require a credit check and since credit is not looked at, it’s a no cosigner student loan.
Now ideally, federal student loans will cover the full cost of your education. And for a portion of the students out there, they do.
But for some people, federal loans don’t cover it all, leaving the student in need of more money.
This is where Alternative student loans come in.
Alternative student loans are basically “private student loans.” There are loans not-backed by the government and offered directly by loan institutions. These student loans are almost always student loans with credit checks. Now, if you don’t have good credit (and few new students do), you’ll need a cosigner.
But what if you can’t find a cosigner?
Well there IS a bit of a solution for some of you here. If you can’t get a cosigner because your parents don’t want to cosigner because they end up with another loan (something that’s becoming more prevalent with the whole recession) or your relatives are wary about being responsible for you, there is good news. That’s student loans with cosigner release.
You see, many private lenders are in fierce competition with each other to prove their loan products are superior than competitors. As such, some private lenders give out reduced interest rates, longer “grace periods” for loan repayments after school, and the “new cosigner release” deal.
What is “Cosigner Release”? This is basically a clause on a private student loan the allows a student AFTER SUCCESSFULLY GRADUATING FROM COLLEGE to request their cosigner to be removed financial obligation.
In plain English: if you take out a student loan with cosigner AND a cosigner release clause, once you successfully graduate from college, your cosigner will no longer be responsible for your loan. This is HUGE! If you can commit to finishing school, your cosigner is basically off the hook. Now, if you don’t finish school, your cosigner will STILL be responsible so keep this in mind.
But for those people who have people who MIGHT cosigner but are unwilling to because of the risk, cosigner release basically takes care of that, giving you a good chance of being able to sway reluctant cosigners.
In the next section, we’ll discuss the basics of student loans, the various options available
Types of Student Loans
There’s a number of student loans. Lets discuss them.
Figuring out which student loan is right for you
There are many different types of financial aid for students attending a college or university. Some loans are subsidized and some are unsubsidized. Subsidized student loans are loans you are not required to pay interest on as long as you are enrolled in school. The federal government pays your interest for you as long as you attend. Unsubsidized student loans are loans which strictly require you to pay back the interest while you are still in school. Every loan student that gets financial assistance for educational purposes gets it from one of these types of loans. Everyone has specific characteristics and opinions that can lead them to different types of student loans. Which kind of student loan is the right one for you? Most private student loans and some other types of loans available cannot be dismissed through filing bankruptcy. This means if something happens and you can’t pay off your loan, then the debt can haunt you for the rest of your life.
Some of the different types of student loans available
- Pell Grant-This is a type of federal grant aid you are not required to repay. It’s not a loan, but we mention it here since, if you qualify for Federal Student loans, you will likely qualify for SOME grant aid automatically in your application. This grant helps low income students that have not received their first bachelor’s degree. There are many ways for a student to receive this aid. Sometimes the credit is held on an account at the participating college, other times the aid is sent in the form of a check to the student, and often times it is a mixture of both.
- Stafford Student Loans– These are fixed-rate student loans for all students who attend college at least half-time. With this specific type of loan the student doesn’t have to pay any of the money back while still attending school. The great part about this loan is you don’t have to have good credit to be considered for it.
- Perkins Loan-Another low-interest loan that doesn’t always have to been paid back in full. In some cases when students move on to teaching, public, or military careers they can have all or part of their loans dismissed.
- Chase Student Loan– A private student loan that allows student to borrow money for tuition, books, and other school related financial assistance. Students have the option to wait until after graduating to start repaying the loan.
- Federal Plus Loans-This type of loan is based upon credit history and the cost of attendance.
These loans are available for full and half-time undergraduate students. Repayment for this type of loan usually begins after the student graduates from the college or university.
- Debt Consolidation loan-This type of loan is used to get students with loans out of debt. This type of loan can save to thousands of dollars in interest rates. It allows the student to pay off their loan quick and easy.
- International Student Loans-This kind of aid is available for students that desire to attend a college or university outside the country they live in. In the case of a student from another country attending school in America, most loan offices would require that the student loan have a cosigner that is currently a citizen of the United States.
How to Apply for a Student Loan
You might be asking yourself, “The loans sound great, but what do I have to do to get one?” Many people think it will be a hard task to get financial assistance, especially the kind of loans that do not require a cosigner. Lots of times, this small problem will prevent people from attempting to gain financial aid to help them pay for education beyond high school. Well the reality is it’s actually quite simple.
You can apply for financial assistance online, anytime, at www.fafsa.ed.gov.
When you get to the homepage on the website you will see the different options. One category is about the things you should do before beginning your FAFSA or Free Application for Federal Student Aid. Another column is for filling out your FAFSA, and the last is for after completing your application.
Before you start the FAFSA you should have all of your information in front of you, or know it by heart. This includes dependency status, tax returns, other income, and your personalized pin given to you by the FAFSA website. While filling out the application you will be asked many questions about yourself, your income, and your family. At the end of the application all you need to do is wait on the email informing you about the aid you might be eligible to receive.
Grants and Scholarships
For most students, loans will likely be needed to pay for education costs.
But don’t rely only on loans. There are ways to subsidize part of your education costs through scholarships and grants. In some cases, scholarships and grants may actually pay for your entire education (note that this is usually not the case, only very high level scholarships pay the full cost of education).
Note: To access grants (and many scholarships offered by colleges), you need to fill out the FAFSA application. This is the VERY first thing you need to do.
What is a Grant?
A grant is a need-based award. This means if you are a low-income student (i.e. you can’t afford college on your own), you may qualify for grants. There are basically two kinds of school grants:
- Federal Grants for Students
- Private Grants
What is a Scholarship?
A scholarship is usually given out on the basis of merit (it’s a merit-based award). The most common criteria for scholarships is excellent academic performance, either during high school or while attending college/university. There are also a host of special-interest scholarship that cater to minorities, gender, religious or political affiliation, etc. You generally apply for scholarships either online or by getting a scholarship list from a college financial aid office/website.
About Federal Grants
Federal grants for school are given out automatically based on your assessed need when you fill out the FAFSA application. There are a number of federal grants:
- Pell Grant — Pell Grants are awarded usually only to undergraduate students who have not earned a bachelor’s or a professional degree. The maximum amount (as of 2010) is $5,500 per year
- Teacher Education Assistance for College and Higher Education Grant (TEACH Grant) — provides grants of up to $4,000 per year to students who intend to teach in a public or private elementary or secondary school that serves students from low-income families
- Federal Supplemental Educational Opportunity Grant (FSEOG) — The Federal Supplemental Educational Opportunity Grant (FSEOG) program is for undergraduates with exceptional financial need. The amount will range between $100-$4000 a year depending on financial need.
- The Academic Competitiveness Grant (ACG) — An Academic Competitiveness Grant provides $750 for the first year of study and $1,300 for the second year.
- The National Science & Mathematics Access to Retain Talent Grant (National SMART Grant) — A National SMART Grant will provide up to $4,000 for each of the third and fourth years of undergraduate study.
- Institutional Grants — Not all grants are only given out by the government. Institutions themselves (such as your college or university) may give out their own grants
One avenue that students can pursue additional (and sometimes a lot of) funding are through scholarships. The best place to find information scholarships for students is from a college financial aid office. If you are currently attending a college, visit your own college’s financial aid office or website for an updated list of scholarship and grant programs to apply for. If you do NOT yet attend college, then you may visit your nearest community college financial aid office/website for this information. Keep in mind that some INSTITUTIONAL grants/scholarships will only be offered by specific institutions for students attending that specific institution.
Some employers, especially large corporations, may provide special scholarships for employees returning to school. It’s always good to consult your employer, if you are working full time, about any scholarship opportunities they offer. You may gain extra money for school this way.
Grant Scams Online: Beware
Note there are a number of scams popping up online that target students. These usually involve grants. Any website that requires you to pay MONEY for a guaranteed grant or scholarship is likely a scam, so keep your eyes wide open when searching for grants/scholarship. Only use reputable sites (like scholarships.com) to find these programs and never, ever pay money to apply!
The Final Word
Making a life and a career for yourself is not supposed to be an easy accomplishment. In these times money is a hard thing to come by, and so is employment without a college degree. After attending college for as little as two years, a student can pursue a career in whatever they wish.
So what is the problem? Why are you in college classes right now?
More often than not financial aid will pay for most if not all of the student’s expenses. Completing some kind of post high school education will greatly increase the probability for finding a job. In the year 2008, 9.0 % of the unemployed had less than a high school diploma, while at the same only 1.7 % have some kind of professional degree. So, those of you asking yourself why go to college, start asking why not? All the resources and information you need to get started is right in front of you, so start your education! Besides the FAFSA there are a few other ways to find out about student financial aid.
There is a lot of misinformation when it comes to student loans on the web. I’ve noticed MANY student loan sites simply trying to redirect users to loan sites without providing any relevant student loan information.
It’s certainly difficult paying for college no matter what you do. There is no substitute for your own hard working efforts to pay for your education. At the end of the day, you are responsible to come up with the money for your education. DO NOT simply rely on information given out on websites alone; spend time doing plenty of research and inform yourself on the topic of financial aid so you can find the available help out there and make use of it. Good luck with your student loan hunt!
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There are plenty of legit information about paying for college, financial aid, scholarships, grants, and student loans on the web. If you are looking for good information about the topic, here’s the best sites to visit on the topic:
Web-related ways to find out about student loans
Telephone numbers that can also help
- The Federal Student Aid Information Center: 1-800-4-FED-AID
- Direct Loan servicing: 1-800-557-7392