University students: what to do before getting loans without a co-signer

0

Breakups are never easy, especially if it’s with your student loan co-signer.

When your co-signer helped you take out your first private college student loan, you probably thought it was there for the long term. You now know that your co-signer is unable or unwilling to help you borrow again.

It might seem like a major setback, but you can overcome it. In fact, there are many ways to pay for education, including student loans, without the support of co-signers. Here is how you can get started.

1. Fill out the FAFSA
2. Search for scholarships
3. Reduce your tuition fees
4. Reconsider Your Federal Loan Options
5. Find a new co-signer for private loans
6. Consider student loans without co-signer support
● More: How did you end up without a co-signer?

1. Fill out the FAFSA

You may have leaned over private student loans to cover tuition fees. The most important thing to do now is to complete the Free Application for Federal Student Aid (FAFSA).

Without the FAFSA, you close the door to federal loans, government grants and work-study opportunities. These options could come in handy as you get over the loss of your co-signer.

Apply for a private student loan and lock in your rate before rates go up.

GET MY RATES

2. Search for scholarships

You might think that the scholarships are only for high school graduates, but this is just one of the Common myths about stock exchanges.

There are many scholarships for students. Prioritize applications intended for students of your level of experience and field of study.

There are many ways to earn scholarships while attending college, including:

  • Your school’s financial aid office
  • Your employer
  • Competition
  • Local and national foundations

Think about how your major field of study, minor accomplishments in school, or even your part-time job might help you get scholarships.

3. Reduce your tuition fees

Before considering borrowing more money without a co-signer on board, try to reduce your university fees. This could offset your need for student loans for students without the support of co-signers.

Drastic measures include transferring to a more affordable school, even a community college, or taking time off to save on your tuition. But there are also small ways to save, like:

Despite adopting these measures, you may still need to take out student loans without the support of the co-signer. But you can at least reduce your potential debt.

4. Reconsider Your Federal Loan Options

If you previously relied on private student loans for college, you probably had a good reason. Maybe you got a much lower interest rate from a private loan company, thanks to your former co-signer.

But now that you are considering student loans with no co-signer requirements, there is no better place to look than the federal government. Subsidized direct loans and unsubsidized direct loans for undergraduate students do not require a co-signer. You borrow the loans on your behalf, and it is your sole responsibility to repay them.

Federal student loans come with features that a private lender probably cannot match. For example, you can replace your federal loan repayment plan with an income-based repayment plan (IDR), which limits your monthly payments to a percentage of your income, after you leave school.

5. Find a new co-signer for private loans

Perhaps you have worked with a private loan company in the past because you maximized your federal student loan allowance and necessary to fill in the gaps.

Either way, be aware that you might find a new co-signer to replace your old one. If your mom or dad co-signed your previous loan, you might find a co-signer from a different branch of your family tree. A grandparent or other relative may be able to stand during this time.

But your co-signer doesn’t have to be a family member, it can be a friend. Many private student loan companies only require that your co-signer be creditworthy and have a positive debt-to-income ratio (DTI). Ask your lender what their specific criteria are before you submit your next co-signer to the application process.

6. Consider student loans without the help of a co-signer

If a private lender is best suited to your situation, be aware that it is possible to take out student loans without the support of a co-signer.

About 91% of private undergraduate student loans had a co-signer in the 2020-2021 academic year, according to a report from MeasureOne. This high percentage is likely due to the fact that most students do not have the credit history and regular income to qualify for private student loans on their own.

You could be in the 9% minority, however. Not all lenders require undergraduate borrowers to have a co-signer. And if you have a credit score near or above 700 and earn a regular salary, you could probably get private loan approval from most lenders on your own.

Make sure you understand the pros and cons of student loans without the help of a co-signer. Without the built-in assistance of a co-signer, you will be solely responsible for the reimbursement. So, don’t borrow more than you can repay once you leave school.

Major lenders offering private student loans without co-signatories

The table below shows some private student lenders offering loans without a co-signer, as of March 5, 2021.

Eligibility criteria stated Note that …
Ascension Two years of credit history, minimum income of $ 24,000 If you do not meet these conditions, you may still be eligible for an Ascent Income Sharing Agreement type loan.
Citizen’s Bank Good credit, no past student loan defaults Non-citizens and non-permanent residents must find a co-signer
College Avenue Credit score of 660 or more If you are not sure if you can qualify on your own, try the lender screening tool
Serious Credit score of at least 650, annual income of $ 35,000 or more and three years of credit history Non-citizen students without permanent resident status (who have a social security number) are eligible with a co-signer
Student loan financing Credit score of at least 680, annual income of $ 35,000 or more and three years of credit history ELFI has a minimum loan amount of $ 10,000
Funding University GPA and graduate rates vary depending on your year in the program of study Your academic success, work experience, and projected postgraduate income determine the fate of your loan application
MPower financing Attend a study program in the United States or Canada and be within two years of graduation Your future earning potential, not your credit score, is used to determine your eligibility
PNC “Satisfactory” credit, meets unspecified debt-to-income ratio (DTI) criteria Students must be citizens or permanent residents living in the United States for at least two years, enrolled at least part-time; co-signer required for 17 years
Finance Prodigy Attend an eligible graduate school in an eligible state International students and US students studying abroad can borrow
SoFi Good credit Half-time enrollment is required for all SoFi loans

How did you end up without a co-signer?

Co-signers of student loans come with a lot of risk.

Your co-signer agrees to be responsible for repaying your loan if you fail to honor it. They also put their credit history on the line, limiting their own ability to borrow money.

This is why it may not be wise to have your parents co-sign a loan. It could damage your relationship with them or put family finances at risk.

With this in mind, a co-signer may refuse to co-sign your student loan because:

  • They have a limit on the amount of debt they are willing to co-sign.
  • They want you to pay off one loan before agreeing to co-sign another.
  • They have money problems.

If you find yourself currently without a co-signer, don’t waste time getting angry. Thank your co-signer for the previous show of support.

Your co-signer will remain a part of your previous loan agreement (or agreements). You will want to keep your relationship intact.

Share.

Comments are closed.