Student Loans Without Cosigners: Fundamentals
In order to find the best reasonable strategy for financing education through available financial aid (e.g. private or federal student loans) it’s necessary to have an understanding of college funding fundamentals.
There are two main categories of loans: Federal (need-based) and Private (credit-based).
Federal student loans are provided and guaranteed by the government (U.S. Department of Education). Nearly all students are eligible to receive these types of loans (regardless of credit history or other financial issues). Federal loans are based on financial need.
Private student loans are not guaranteed by the government and provided by private lenders (banks, credit unions, finance institutions). Unlike federal loan programs dealing with need-based criteria, private loans are based on creditworthiness and financial situation of a borrower. To qualify for a private loan it’s required to have a creditworthy cosigner with good credit score and high income level.
Getting Student Loans without Cosigners
Taking into consideration the fact that federal student loans are focused on need-based criteria, guaranteed by the Government, are not requiring creditworthy cosigners and have other advantages, the best advice for getting no cosigner student loans is to apply for federal student loans.
Federal student loan is a 100% better option than a private student loan. It’s cheap and affordable. In fact, most of the students looking for guaranteed student loans without a cosigner eventually find federal loans and focus all efforts on this type of aid.
You can apply for this type of aid with an adverse credit history or a low-income level and still qualify for a loan. Federal loan programs are not based on borrower’s income or credit score and can be considered as the best student loans for students without a cosigner.
Applying for federal student aid options is not a complicated process. The secret is to determine funding sources to focus on. Here’s the main rule: “Exhaust federal financial aid options first”.
If you are interested in college loans without cosigners and want guaranteed financial aid – always remember this rule. First of all, start by applying for federal aid (grants, loans, work-study). Private loans should be the last step. Table 2 below provides more information on this topic.
A practical strategy for getting student loans with no cosigner:
- Understand how private and federal student loans work, analyze advantages and disadvantages and compare these types of loans (Table 1).
- Make a decision. Remember the main rule of guaranteed student loans with no cosigner.
- Take action.
3 Steps to Financial Assistance from the Federal Government
Federal loan programs offer perfect opportunities for students receive funding even without a cosigner or credit history and attend schools (colleges, universities) they dream about. Federal loans are provided directly by the U.S. Department of Education and are the best education loans for college students (because they’re cheap and affordable).
There are three main steps toward getting Federal Student Aid and defining how much funding you’re eligible for. Applying for Federal Student Aid is free.
1. Complete the Free Application for Federal Student Aid (FAFSA).
The FAFSA can be completed online at: www.fafsa.gov. Applying online is the easiest way preferred by the most of the students. Built in logic system for asking relevant questions and checking errors, makes the application process simpler and faster.
There are other ways to complete and submit a FAFSA: PDF format or using paper. If you need a paper FAFSA, you can download it from www.fafsa.gov or request a paper form by calling the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).
2. Review your Student Aid Report (SAR).
After the application step is completed, within a few days you will receive a Student Aid Report also called SAR sent by the U.S. Department of Education. It contains the information from your FAFSA. Review the information in your SAR and check if there are any errors. Make changes if needed and submit the report for reprocessing. The school(s) you list on your FAFSA will get your SAR data electronically.
3. Receive an Award letter.
Each school’s financial aid office will send you an award letter containing the information about what type of aid you’re eligible for plus the amount of funding can be received from federal, state, and school sources. This combination of aid is also known as financial aid or award package.
Compare all award letters from schools you received and decide which school to attend. Take into consideration the aid you will receive and make a decision whether it is affordable or not.
Federal funding comes in the form of Stafford or Perkins loans. Once you completed all previous steps and approved, it’s time to accept award. You now have no cosigner student loan.
Important: There are three main types of federal student aid: grants, work-study and loans. Federal student loans (for students without a cosigner) are only a part. Please, make sure to learn more about each type of federal student aid to be able to apply effectively. Table 2 provides information on funding sources and which to apply for first.
Table 1.
Federal student loans vs. private loans
| Federal Student Loans | Private Student Loans |
| No payments while in school. | May require payments while in school. |
| Low interest rates 6-8 percent. | Variable rates greater than 18 percent. |
| Students who demonstrate financial need might qualify for a subsidized loan. | Private student loans are not subsidized. |
| No credit check (except for PLUS Loans). | A borrower has to have good credit score. |
| No cosigner needed. | A borrower with adverse credit history needs a cosigner. |
| Free help is available at 1-800-4-FED-AID. | Free help is available on each lender’s website (research is involved). |
| Some interest is tax deductible. | Interest may not be tax deductible. |
Table 2.
Sources of financial aid
|
Ways To Fund College Education |
|
| DO NOT HAVE TO REPAY | Scholarships and Grants |
| Savings and Word-Study Earnings | |
| HAVE TO REPAY | Cheap option:Federal Loans
|
Expensive option:
|
|
Source: According to www.studentaid.ed.gov
Remember: Federal student loans can be considered as the cheapest option. Private education loans are very expensive ways of funding.
- Federal student aid overview
- Federal low-income student loans
- Bad credit personal student loans with no cosigner
