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College Students and Recent Grads

How to Get Student Loans Without a Cosigner

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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The cost of tuition is higher than ever, which explains why 70% of students leave college with student loan debt.

But that doesn’t mean that student loans are always easy to get, especially when it comes to private loans. According to MeasureOne, nearly 93% of undergraduates who borrow private student loans do so with a cosigner. Typically a parent or a close friend, having a cosigner can boost your chances of qualifying for a student loan.

But not every student has someone willing to share debt with them. If you’re looking to go it alone, here’s what you need to know about taking out or refinancing student loans without a cosigner.

How to get a student loan without a cosigner: Start with federal loans

If you’re worried about how to get a student loan without a cosigner, here’s the good news: You certainly don’t need a cosigner for federal student loans.

Provided by Federal Student Aid, federal loans for undergraduates don’t have credit or income requirements. To be eligible, you just need to attend a Title IV school and be a U.S. citizen or eligible noncitizen.

On the other hand, PLUS loans for graduate students take your credit into account, but the standards to qualify are very agreeable. The only requirement is that you don’t have an adverse credit history — otherwise, their criteria is similar to that for undergraduate federal loans.

Federal student loans should always be your first stop for borrowing, and not just because they don’t require a cosigner. They also come with relatively low interest rates and protections like income-driven repayment plans and forbearance.

To take out federal student loans, you simply need to submit the Free Application for Federal Student Aid (FAFSA). After reviewing your information on the FAFSA, your college’s financial aid office will offer you a certain amount of federal student loans, as well as any grants or scholarships you qualify for.

At that point, you can choose what parts of your financial aid offer you want to accept, and which parts you’d rather leave on the table.

Types of federal student loans

So what types of federal student loans are available to borrowers? Here are the main ones:

  • Direct subsidized loans are available to undergraduate students with financial need. The government covers interest during periods of deferment. As of July 2018, these carry a 5.05% interest rate and an origination fee of 1.062%.
  • Direct unsubsidized loans are available to both undergraduate and graduate students. These loans accrue interest from the date of disbursement. For the current academic year, they have an interest rate of 5.05% for undergraduates and 6.60% for graduate students, as well as an origination fee of 1.062%.
  • Direct PLUS loans are designed for graduate students. These currently come with a 7.6% interest rate and a 4.248% origination fee.

Direct subsidized and unsubsidized loans come with borrowing limits, so you might need additional funding for school, whether through private student loans or another source.

With PLUS Loans, you can borrow up to the full cost of attendance of your school, but you might need extra loans to cover living costs. Plus, PLUS Loans come with relatively high interest rates, so you might consider refinancing for lower rates.

And if you decide to refinance, or if you need to take out additional loans, here’s what you need to know about applying with a private lender without a cosigner.

Borrowing or refinancing private student loans without a cosigner

Private student loans come with stricter borrowing requirements than federal ones. A private lender wants to ensure you have the means to pay back your loan, so they check your credit and income before approving your application.

Since most undergraduate students don’t have much of an income or credit history, the majority end up applying with a creditworthy cosigner. By adding a cosigner who has strong credit and a steady income to your application, you can boost your chances of qualifying and probably get better interest rates than you would alone.

But a cosigner is just as responsible for the debt as you are, and their credit score could suffer damage if you fall behind on payments. Asking someone to share your debt is a big request, and in some cases, you might feel uncomfortable putting that burden on someone.

Or you might not have anyone you can ask who meets a lender’s requirements for credit and income. If this is the case, you’ll need to find ways to qualify on your own.

Boost your chances of qualifying for student loans without a cosigner

So how can you qualify for student loans without a cosigner? Well, private lenders look for a strong credit score, usually in the mid-600s or higher, and a steady income. Some also look to see that you have a certain amount in your bank account.

To boost your chances, these steps could help:

  1. Establish credit if you haven’t already. A number of factors go into a credit score, including your length of credit, mix of credit types, amounts owed and payment history. If you’ve never borrowed a loan or opened a credit card, you might not have any credit to speak of. So begin by getting a credit card (maybe a secured one at first).
  2. Make on-time payments on any loans or credit cards. Your debt repayment history is a big part of your credit score, so stay up-to-date with any debt in your name.
  3. Make moves to increase your income. Since private lenders often look at your income to determine if you have the means to pay back a loan, increasing your income is sure to help boost your chances of approval.
  4. Lower your debt-to-income ratio. Reducing the amount of debt in your name can boost your credit score, and lowering your debt-to-income ratio is also important to lenders. So if you’re looking to borrow or refinance a student loan, chipping away at your debt and boosting your income will help you get approved without a cosigner.
  5. Seek out reputable lenders with less strict requirements. When it comes to doling out loans, each private lender sets its own requirements. Look for one that’s not so strict about credit scores and income but still offers competitive interest rates. Earnest, for example, looks at a variety of factors when considering candidates for student loan refinancing, not just your credit score and income.

Building credit takes time, so you might have to wait to borrow or refinance until you can meet a lender’s requirements. But by taking these steps, you’ll move closer to becoming a strong candidate for a loan.

Can’t qualify for a loan? Seek alternative ways to afford tuition

If you find yourself unable to qualify for private student loans without a cosigner, look for alternative ways to cover the costs of college. Here are a few strategies that could help:

  • Find a job to earn money. Working a part-time job might be enough, or you could find full-time employment as you pursue your degree part-time. But be careful about restricting your enrollment too much, as you could lose eligibility for federal student loans if you drop below half-time as a student.
  • Seek out companies that offer tuition reimbursement. Some companies will cover the costs of classes for their employees, which could be a huge help if you’re struggling to pay for tuition.
  • Contact your school’s financial aid office about your options. Some schools have emergency loans for students in need, while others might help you renegotiate your aid package or direct you to additional grants or scholarships. Plus, your financial aid office might be able to hook you up with work-study opportunities.
  • Apply to scholarships far and wide. Regardless of your student loan status, make it a priority to apply for grants and scholarships. The more “free money” you can earn for college, the less debt you’ll have to take on.

Because private lenders check your credit and income, it can be tough to qualify for student loans without a cosigner. But if you can boost your financial credentials on your own, you could make yourself eligible for private student loans or student loan refinancing.

And if you’re not eligible right now, keep making moves to build your credit and boost your income. Whatever steps you can take will improve your chances of qualifying for a student loan, and fortify your overall financial health.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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College Students and Recent Grads

What Is a Private Student Loan? Here’s the Must-Know Info You Need

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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College is more expensive than ever, and most students cover costs with a mix of savings, scholarships and federal student loans from the Department of Education. But what is a private student loan, and how does it fit into this picture?

Private student loans offer a way to cover a gap in funding if you don’t have enough after maxing out your available federal loans. But these private student loans differ from federal ones in major ways, so it’s crucial to understand what you’re getting into before signing on the dotted line.

Here’s what you and your family need to know.

What is a private student loan?

A private student loan is money you borrow from a private lender (such as a bank or credit union) to put toward your education. Most lenders require you to be enrolled at an eligible school to qualify for a loan.

Each lender sets its own criteria, which you’ll have to meet in order to get the loan. Some will let you borrow up to cost of attendance of your school, while others set annual borrowing limits.

If you qualify, many lenders will send the funds directly to your financial aid office to cover your tuition bill. Any remaining money will get sent back to you to use for living expenses or, if you don’t need it, to return to your lender. Note, however, that some lenders will send the funds directly to you instead, meaning it becomes your responsibility to use them for your tuition bill.

When you borrow, you’ll choose repayment terms, typically between five and 15 years. You’ll also likely get to choose between a fixed interest rate, which stays the same over the life of your loan, and a variable rate, which can start lower but might also increase over time.

Each lender could offer different rates and terms, so it’s important to shop around before a private loan to find the best one.

What’s the difference between a private and federal student loan?

As a college or graduate student, you can borrow private student loans from a banking institution, or you can take out federal student loans from the government. Here are the main ways in which private student loans differ from their federal counterparts:

  • Private student loans require a credit and income check. While anyone who qualifies for federal aid can borrow federal loans, private loans have stricter requirements. To qualify, you’ll need to meet certain criteria for credit and income — or apply with a cosigner who can.
  • You’ll probably need a cosigner. You can borrow federal student loans in your own name, but if you’re an undergraduate, you’ll probably need a cosigner (such as a parent or guardian) to take out a private student loan. Because their name is on your loan, the cosigner becomes just as responsible for repaying the debt as you are.
  • Private student loans have less flexible repayment plans. Federal student loans come with a variety of repayment plans, including income-driven repayment, graduated repayment, deferment and forbearance. Private lenders, on the other hand, usually offer plans between five and 20 years, which you select at the time of borrowing. Some lenders will let you postpone payments through forbearance if you lose your job or go back to school, but this isn’t guaranteed.
  • You might be considered in default after three missed payments. Federal loans come with a 270-day delinquency period before your loan is considered to be in default, but private lenders might put your loan into default status after just three months of missed bills.
  • Private student loans can have a fixed or variable rate. While federal Direct loans to undergraduates have a fixed rate of 5.05% for the 2018-19 school year, private loans can have either a fixed or variable rate — usually, the choice is yours. Rates typically range from around 4% to 13%, depending on your (or your cosigner’s) credit.
  • You won’t get your interest subsidized. Students with financial need can qualify for subsidized federal loans, which don’t accrue interest until you graduate and your six-month grace period ends. Private lenders don’t offer subsidized loans, so interest will start piling up as soon as you get the money.
  • Private student loans aren’t eligible for federal forgiveness programs. Programs such as Public Service Loan Forgiveness only work for federal loans, not private ones. That said, private loans may be eligible for some loan repayment assistance programs, which could be offered by your state or a private organization.

So if federal student loans have more flexible repayment plans and better interest rates, why borrow private student loans at all? The most common reason is because federal loans come with annual borrowing limits, so you might not have enough funding to pay tuition.

Unless yours is a rare case — for instance, if you’re a graduate student who could get better rates on a private loan and don’t need the federal protections — you’ll want to turn to federal loans first. Unfortunately, however, more than half of students borrow privately before exhausting their federal options.

What are the interest rates on private student loans?

The interest rates on private student loans vary from lender to lender. As of April 2019, some of the most competitive lenders offer fixed rates starting at 3.89% and variable rates starting at 3.00%.

Although this beats the current rate on federal loans, you or your cosigner would be unlikely to score these lowest interest rates unless you have excellent credit. On the other end of the spectrum, fixed rates can go up to 12.68%, and variable rates as high as 12.22% among our recommended lenders.

And don’t forget that these figures do change — in September 2018, rates ran as high as 14.24%. Interest this high could be a real burden for the 15% of graduates who carry private student loans.

As for deciding between fixed and variable rates, remember that the variable rate exposes you to the risk that rates (and possibly your monthly payment) could rise. If you’re confident you can pay your debt off quickly, a variable loan might be worth the risk, while if you’re planning a 10- or 15-year repayment, you might be safer with a fixed loan.

That said, you could always refinance your student loans for new rates and terms if you have the credit to qualify or have a cosigner who can do so.

What about repayment terms?

When you borrow a private student loan, you’ll get to choose your repayment terms. A 10-year plan is standard, but some lenders also let you opt for five, eight or 15 years.

You can use our loan calculator to estimate what your monthly payments would be on each plan. It might be tempting to choose a five-year plan and get out of debt more quickly, but it’s not worth it if you can’t keep up with the higher monthly payments. Meanwhile, on the flip side, a long term with lower monthly payments might appeal to you, but consider how much you’ll have to fork over in interest over the years. The calculator can reveal how much you could expect to pay over time — that said, you can typically prepay your loan without penalty if you suddenly come into some money.

Before you borrow, it’s also crucial to go over your repayment agreement. Some private lenders let you defer repayment while you’re a student and for six months after you graduate, while others require immediate payments or interest-only payments while you’re still in school.

Also make sure you know when your first payment is due so you don’t fall behind or go into default.

Learn what private student loans are before you borrow

Private student loans have both pros and cons for you as a borrower.

On one hand, they can be useful tools for paying for college and earning your degree. But on the other, as a downside, you’ll probably have to enlist a cosigner to qualify, and sharing debt doesn’t always go smoothly.

Plus, you might have relatively high interest rates, meaning you could end up paying back a lot more than you borrowed.

Whatever you decide, make sure you understand what private student loans are before you borrow any. That way, you can make an informed decision about borrowing before it’s too late.

And make sure to compare offers with multiple lenders so you can find one with the best benefits, rates, and terms for your private student loan.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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College Students and Recent Grads

How to Get Rid of Private Student Loans: Forgiveness and Other Options

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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After maxing out their eligibility for federal student loans, many students and families turn to private student loans to pay for college. While private loans can help fill the funding gap, they can also become burdensome if you borrow too much or get saddled with high interest rates. That’s where private student loan forgiveness and other types of assistance come in handy.

If you’re wondering how to get rid of private student loans — and do it quickly — know that you do have options. And although none of them will wipe away your debt overnight, they could help you regain control of your finances. Here are eight different possibilities to explore:

1. Qualify for private student loan forgiveness programs

Although private student loans aren’t eligible for Public Service Loan Forgiveness, you can find some student loan forgiveness programs for private loans. National, state and private organizations will wipe away a large portion of your debt, or sometimes all of it, depending on your profession or location.

For instance, the National Health Service Corps Loan Repayment Program offers up to $50,000 in student loan assistance to healthcare professionals who work in an underserved area for at least two years. Likewise, the Herbert S. Garten Loan Repayment Assistance Program has a similar reward for eligible lawyers.

Many states, as well as some universities, also offer student loan repayment assistance for qualifying professionals. Some of the common eligible occupations include doctor, nurse, dentist, pharmacist and teacher. Check with your state to find out if it offers student loan forgiveness for private loans.

2. Find an employer with a student loan assistance benefit

Even if you can’t qualify for private student loan forgiveness programs, you might get a student loan assistance benefit from your employer. Some companies will match a percentage of your student loan payments to help you pay off that debt faster — for example, Fidelity and Aetna each offer up to $10,000 in student loan assistance to their employees.

According to Forbes, student loan matching was the hottest benefit of 2018. And with the student debt crisis continuing to weigh on the U.S., more companies might follow suit and introduce this benefit in the future.

If you are looking for a job or open to changing your employer, consider companies with this perk. They might help you make a bigger dent in your student loan balance than you’d be able to on your own.

3. Postpone payments through forbearance

While the government offers a number of flexible repayment plans for federal student loans, including income-driven repayment, private lenders don’t often have equivalent programs. On the other hand, some do allow you to pause payments through deferment or forbearance if you lose your job, return to school or run into financial hardship.

If you’re going through a financial rough patch, reach out to your lender to find out if you can put your loans on pause for a few months. This break from payments might offer the relief you need until you can get back on your feet.

Just remember that interest typically continues to accrue during a period of forbearance, so you might end up facing a bigger balance once repayment resumes.

4. Request a temporary interest-only payment plan

Along with temporary forbearance, some private lenders offer the option of interest-only payments. With this approach, you could postpone full repayment while still making small payments on interest from month to month.

Although you won’t be chipping away at your principal, you will pay down interest before it accumulates. These reduced payments could give you some breathing room until you’re able to enter full repayment.

5. Negotiate lower payments with your lender

Private lenders typically don’t offer income-driven repayment plans, but some might be flexible if you’re really struggling — after all, they don’t want you to default on your loan completely. So if you can’t keep up with payments, call your lender and find out if they can adjust your bills.

6. Refinance your private student loans for better terms

By refinancing your student loans, you can restructure your debt with new terms — typically between five and 20 years — and adjusted monthly payments.

You could opt for a short term, which might increase your monthly payments but will get you out of debt faster and save you money on interest. Or, if your bills are too burdensome, you could choose a longer term to lower your monthly payments.

You might also snag a lower interest rate, resulting in major savings over the life of your loan.

But while student loan refinancing has a number of major benefits, it’s not accessible to everyone. You’ll need to meet certain requirements for credit and income to qualify — or apply with a cosigner who can. And if you decide to refinance, make sure to shop around among multiple lenders to get the best deal available to you.

7. Discharge your private student loans through bankruptcy

Student loans are notoriously difficult to discharge through bankruptcy, but this route isn’t impossible. If you qualify for Chapter 7 or Chapter 13 bankruptcy, you could wipe away your private student loans.

You will have to prove your student loans are causing undue hardship, and the entire process could destroy your credit and cost you thousands in legal fees. But if bankruptcy is your only option, know that it could lead to wiping away your private student loans.

8. Apply for permanent and total disability discharge

Finally, experiencing a permanent and total disability might remove your obligation to pay back your student loans. Some lenders will wipe away your debt in this circumstance. If you’re unable to work due to a disability, reach out to your lender to find out if you could qualify for private student loan forgiveness.

How to get rid of private student loans

While options such as forbearance and interest-only payments can decrease your bills, they won’t help you get rid of your private student loans any faster. If you’re set on shedding your debt ASAP, your best bet (outside of private student loan forgiveness) is throwing extra payments at your student loans.

If you can find ways to increase your income or decrease your spending — or both — you can use the extra money to make additional payments on your debt. This will save you money on interest and move up the timeline on repayment.

But if your budget is too tight right now, lowering payments might be the best temporary solution to help you manage your private student loans without going into default.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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