Can You Qualify for No Cosigner Student Loans?

As you start looking at how to fund your college career, you’re probably going to hear a lot about student loans and how to get them. Private student loans almost always seem to require a cosigner – someone with good credit who can vouch for you on your loan by tying their credit score to it. However, a lot of students today don’t have anyone in their lives who can do this for them. If you’re trying to fund your college career, and you don’t have anyone to cosign on a loan, you still have options.

Why Do Lenders Require Cosigners?

Before we get into those options, though, let’s talk a little bit about credit scores and why lenders require students to find cosigners for their loans. Basically, when you apply for private student loans, you ask for a certain amount of money, and your lender decides to award you that money at a certain (fixed or variable) interest rate with agreed-upon monthly payments beginning when the loan is disbursed to you.

They determine whether or not to loan you money and how much interest to charge you largely based on the perceived risk they’re taking by lending you money. If you have bad or inadequate credit history, resulting in a poor credit score, they are likely going to deny you the loan or charge you an incredibly high interest rate.

However, banks and other lenders want to make money on student loans, so they will often approve loans for students with poor credit scores if they have someone with good credit to cosign on the loan with them. It makes sense, but it doesn’t leave a lot of room for students looking for no cosigner student loans. So what can you do?

Apply for Federal Student Aid

Unlike private loans, direct federal loans are always no cosigner student loans. These loans are not awarded based on your credit history. In fact, your credit score isn’t even included in your Free Application for Federal Student Aid (FAFSA). When you fill out a FAFSA, you’ll give the government information on your income and taxes from the previous year. If you are a dependent, you’ll also give information about your parents’ or guardians’ income and taxes, as well.

With this information, the federal government will be able to determine how much aid you qualify for, as well as what kind. For example, if you are an independent student attempting to pay your own way through college and you show sufficient financial need, you will most likely qualify for one or more federal grants, such as the Pell grant or the Federal Supplemental Education Opportunities Grant (FSEOG).

For most students, grants will not be enough funding to cover all of their tuition and fees, but that’s where federal student loans come in. The same application will determine how much money in federal student loans you qualify for from the government. You may qualify for one or more of these three types of federal loans:

• Direct student loans (also called Stafford loans) – These loans are awarded directly to undergraduate students and may or may not be subsidized by the government. Subsidized loans will not accrue interest while you’re enrolled in school or during the grace period between graduation and your first loan payment.
• PLUS loans – These are usually reserved for graduate students, but they can also be awarded to dependent undergraduates’ parents to help with their education.
• Perkins loans – These are supplied through your school. They are reserved for students with sufficient financial need, and they have a maximum interest rate of 5%.

Private No Cosigner Student Loans

If your federal student loans don’t cover all of your tuition, you may still need to apply for private loans. Without a cosigner, this can be difficult, but it is certainly not impossible. You can improve your chances of being approved for a loan with a number of credit-improving tactics:

• Credit cards – Just having a line of credit through Visa, MasterCard, or American Express can help put you on the map with credit bureaus. Carrying a small amount of debt from month to month can do even more by establishing revolving credit.
• Buy a car – You may need someone to cosign on this, but it’s much easier to finance a car than a college career. This kind of debt shows that you are reliable and can keep up with payments.
• Maintain a part-time job – Lenders will also be more likely to approve you for a loan if you can show that you have the means to make monthly payments once your loan has been disbursed.

Federal loans are usually your best bet for no cosigner student loans, but they are not your only option. Start working on your credit score early, and you might be surprised at the loans you can get approved for on your own.

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