Borrowing money is hard, and it’s even harder for young borrowers to get student loans without a cosigner. Lenders need a reason to believe they’ll get their money back, and students haven’t had a chance to build up their income or credit history in order to demonstrate that ability. Many private lenders need a cosigner, but what do you do if there’s no one to cosign?
A cosigner is someone who guarantees they’ll pack back the debt if the borrower can’t pay. They can also help you to qualify for a loan and get lower interest rates. But how can you get student loans without a cosigner?
How to Get Student Loans Without a Cosigner
Thankfully, federal loans don’t require a cosigner so you can get them on your own. Private loans require you to either have a very strong credit history or a cosigner. It’s difficult for most high schoolers to have a strong credit history, though, because many don’t start establishing credit until they’re 18. And even 18-year-olds need a parent to co-sign for their first credit card.
How to Get Federal Student Loans Without a Cosigner
There are several programs offered through the U.S. Department of Education that don’t require an established credit history, meaning you wouldn’t need a cosigner.
A few reasons to check out Federal student loans first:
- Federal loans are available without a credit check or income requirements.
- Interest rates are usually low and may be fixed for the entire term of your loan.
- Your interest costs can be subsidized or paid for by someone else while you’re still enrolled in school.
- You can apply for income-driven repayment after you graduate.
In order to find out how much federal aid you qualify for, fill out the Free Application for Federal Student Aid, or FAFSA, to find out your eligibility for aid or scholarships. The grants, scholarships, and loans you apply for through FAFSA don’t require a cosigner and they typically have lower interest rates, forgiveness programs, and income-driven repayment plans.
You can borrow as much federal money as you need, but only up to a certain limit. A dependent student who’s a first-year undergraduate can borrow up to $5,500. Independent students can borrow up to $9,500. That means you may to turn to private student loans to cover the deficit.
How to Get Private Student Loans Without a Cosigner
Organizations like banks and online lenders that offer private student loans don’t have federal backing, so they need to rely on your credit history and income. Getting a private student loan without a cosigner is hard, but you could get approved if you have a consistent source of income and established credit history.
Without established credit history and a good source of income, you aren’t likely going to get approved and it might be expensive when you do.
Give Yourself the Best Chance of Being Approved for a Student Loan Without a Cosigner
Don’t know what your credit score is or what’s in your credit report? It’s time to fix that before you apply for a private student loan.
You can get a copy of your credit report annually for free if you aren’t sure what your credit score it. This is what the lender looks at, so you should review what’s in the report carefully and see what’s affecting your credit score. This will give you an indication of what you need to focus on in order to improve your credit score.
Here are a few ways to get approved for a loan without a cosigner:
Build Your Credit
This path takes a long time, but it may help you to qualify for loans without a cosigner. It can take at least two years to build your credit and you may not have excellent credit by the time you’re ready to apply. If you have the time to dedicate to this option, then it’s a good way to go. There are also ways in which you can improve your credit score in just 30 days.
How can you build up your credit? Borrowing responsibly. Use your credit cards wisely by paying off your balance in full each month. Make sure you don’t use more than 30% of your limit each month, and make sure you understand exactly how credit cards work. You can also take out a small loan and make your monthly payments on time. Borrowers under 21 may be eligible for a credit-builder loan, which is a small loan you can get at a credit union.
Secured credit cards are another way to build credit. You put down a deposit of as little as $300 and then receive a card. You cannot spend more than that amount and you need to make sure you’re not late on any of your payments.
If you have a car, you can use it as collateral for a loan. Although it probably won’t be able to get you enough to fund your college education, it might get you to attend a few classes while you work on building your credit.
These loans can be expensive and risky so make sure you go to mainstream banks and organizations instead of independent loan shops.
Some Alternatives to Borrowing
If your path to getting a student loan without a cosigner is looking bleak, consider a few alternatives to borrowing:
- Attend a Cheaper School So You Can Borrow Less
Consider attending a school that is local like a community college or an in-state school that allows you to live at home while you attend. Not only will you have lower tuition costs, but your room and board expenses will be null. This will benefit you later on when you don’t have tens or even hundreds of thousands of dollars of debt to repay.
- Apply for Every Grant and Scholarship You Can
These sources of financing are free and never need to be repaid. You will need to do your research and apply so it pays to be organized and thorough when you take this route. We have an extensive knowledge base with many scholarship and grant opportunities available, including our own scholarship!
- Work While You’re in School
This can take away time from other things, but if it’s the difference between attending school or not, then it’s well worth it. Some schools have work-study jobs and there are usually businesses near campus that need part-time employees. There are plenty of good jobs for college students.
- Consider Tuition From an Employer
Some companies will pay for you to attend school. It’s possible this might not be with a company you love or even in a role that you like, but if it gets you through school, then it’s worth considering.
What to Do If You Can’t Get a Student Loan Without a Cosigner
What can you do if you got denied? Don’t despair. It’s not the end of the road for your dreams of obtaining a college education. Here are a couple ideas for what you should do now if you can’t get a student loan without a cosigner.
- Call the School’s Financial Aid Office
If your family had a change in their financial circumstances and you think you might be eligible for more funding from the school, then reach out to your college’s financial aid office to see what they can do. Sometimes they will take another look at your file and adjust the financial aid package accordingly due to your special circumstances. This means you might get money from scholarships or work-study grants that you didn’t have access to before.
- Reduce the Amount You Need to Borrow
Get creative with the ways you can reduce your total education bill by living with many roommates off-campus or buying used books instead of new ones from the bookstore. Make use of your library and look for other resources on campus for students who might be in financial need.
In addition to these suggestions, you could also take some time off of school to build your credit while you work. Taking a year or two off to establish credit will also give you the opportunity to build up some work experience. If you happen to land a job in an industry you think you’d like to study more about, then this is a great way to test the waters and see if you like it. You won’t waste valuable time and money figuring that out while in school.
Getting a Student Loan Without a Cosigner is Difficult, But Not Impossible
There’s no magic wand to get you a student loan without a cosigner. Thankfully, federal student loans are on your side and are the best way for you to get started. Understanding your credit and knowing what lenders are looking for will also go a long way in making sure you’re prepared when you apply. Do your research to arm yourself with the knowledge you need in order to have the best chance to get a student loan without a cosigner.