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Can You Get Student Loans Without a Cosigner?

The majority of students today use some sort of financial aid to pay for their higher education. There is a large number of private student loans available for college students and they are suitable option of financial aid in some cases. They can have unlimited loan amount and can cover up to the total cost of your education. But, private student loans are credit-based and since most of the students don’t have established credit history at the moment of application, this type of student loans requires you to have a cosigner on your application. Private student loan without cosigner is almost impossible to get if you don’t have credit history or have a bad one. No private lender will approve you in case you have bad credit or no credit history and this is why you’ll need a cosigner when you apply for private student loan. You can apply for private student loan with no cosigner only in case you are working and have a good credit score. Applying with a creditworthy cosigner will significantly increase your chances of being approved and can speed up the applying process and private loan approval. It will also help you be eligible for the lowest interest rates offered because the most of private loan lenders will calculate your loan rate according to your credit situation (in this case the credit situation of your cosigner).

Note: You should be cautious when you are offered private student loan without cosigner, since there are many no-cosigner lenders who offer no credit check loan but actually offer some type of personal loan or even a payday loan. Given to their terms and interest rates, these types of loans are not appropriate for students and you should stay away from them if possible.

Federal Student Loans

Although some may argue that the application process for private loans is more simply and there is no limit on the loan amount you can get, the first option that should be considered when applying for financial assistance is aid provided by federal government. There is a wide variety of federal financial aid options for students available and they are based on other factors than credit history and can be obtained with no cosigner. You can get federal student loan or some other type of federal student financial aid like scholarships or grants regardless of you have bad credit or even have no credit history at all. Some other eligibility requirements must be satisfied, though, if you plan to apply for student loans funded by U.S. federal government’s Department of Education.

Financial Need – How to Demonstrate It?

Most federal student loans are based on the borrowers’ financial need. To find out can you claim financial need, you should subtract the amount of Expected Family Contribution (EFC) from Cost of Attendance (COA).

Expected Family Contribution or EFC is based on family income: the lower your family’s income is, the lower will be your EFC and the higher your financial need will be. EFC is used as an indicator of your family’s ability to finance your education-related expenses. Other factors that have effect on EFC are the following: number of family members; size of your household; whether you are still dependent child or not; the number of family members attending post-secondary institutions. Your EFC will be calculated after you fill out the FAFSA and will be reported to you via your SAR (Student Aid Report). Once you have become eligible for federal financial aid, you will be able to acquire student loans without cosigner.

Stafford and Perkins Student Loans

There are two federal student loan options offered to students who can demonstrate the appropriate level of financial need. These two include Perkins Loan and Subsidized Stafford Loan. The other type of Stafford Loan, Unsubsidized Stafford Loan is not based on financial need and you can obtain it regardless of your financial need.

Stafford Loans are available at most schools in the U.S.A. that participate in the federal financial aid program, while Perkins Loan is only available at selected schools in the country. Perkins Loan is strongly based on financial need and only you can apply for this type of federal loan if you can demonstrate the highest level of financial need.

The Subsidized and unsubsidized Stafford Loans are offered directly by the Department of Education, and no longer from private lenders as a part of the FFEL Program (as from introduction of Student Aid and Fiscal Responsibility Act of 2010). The subsidized type of Stafford Loan will not accrue interest while you are in school, while the unsubsidized version will. Both versions of Stafford Loan have fixed interest rate.

If you apply for private student loans, your credit score is going to be used by the loan lenders to determine do you qualify for private student loan. Nearly all of private loan lenders offer loans based on borrower income and credit score and if those conditions are not met, it is very difficult to find a private loan lender that will approve the loan application. However, if you meet the requirements for federal financial aid offered by the U.S. government, you can obtain student loans regardless of your credit history and with no cosigner needed. These are the loans that you should take advantage of before you look into applying for private student loans. By submitting the FAFSA by the deadline (Jun 30th for upcoming school year) you can make yourself eligible for federal loans with no difficulty.

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