Student Loans without a Cosigner
Most people find getting student loans without a cosigner to be an impossible feat. While the task can be challenging there are a few resources for students to tap into. For most, the top option is applying for government student loans. However, some people might qualify for private funding.
Qualifying for private student loans without a cosigner requires an established credit history and good FICO score. This option is generally reserved for borrowers who have consistent income either from a job, structured settlement annuity payments, or trust fund.
It's not easy to borrow college funds from a bank, so it's better to look into government student loans first. A few of the most common are Stafford loans, Perkins loans, and PLUS loans.
In order to apply for government loans borrowers have to fill out a Free Application for Federal Student Aid, better known as FASFA. Information provided on the application is used for determining if borrowers are eligible for federal grants, financial aid, or loan awards. Therefore, it is crucial to supply accurate information.
Perkins Loans are the preferred choice since they carry a low fixed rate of interest. This college loan is offered to U.S. citizens who attend school part- or full-time and provide evidence of their need for financial help.
Stafford Loans are also quite popular because of reduced qualification needs. This loan also has a fixed interest rate, but it's slightly higher than Perkins. Furthermore, Stafford Loans qualify for loan forgiveness if borrowers demonstrate dire financial consequences such as personal bankruptcy.
PLUS Loans are usually the choice for students attending medical or law school. Since students attend for longer periods they require larger loans. PLUS Loans can be used when other loans do not cover the full amount of tuition.
Schools establish deadlines for submission of financial aid applications. Furthermore, state and federal deadlines exist. Students can submit FAFSA applications, get information about deadlines, and perform school code searches at the U.S. Department of Education Federal Student Aid website.
Applying for private student loans necessitates taking time to investigate options. In most instances, banks require borrowers to have a co-signer to assume responsibility if loan default occurs.
Most often co-signers are parents, but this can be anyone who is willing to take on the risk and qualifies for financing. There are instances when banks will let borrowers use collateral to secure private loans. This is usually in the form of real estate, automobiles, or other types of titled property.
It's important to note that using collateral can be risky business. If borrowers default on their loan the bank can repossess the property and auction it off to pay off the debt. It's best to avoid this tactic unless all other financing options have been exhausted.
Once students complete their education they have to pay back their loans. It's not unusual for borrowers to apply for student loan consolidation to reduce payments or obtain a fixed interest rate. This tactic is most beneficial for individuals who consolidate government sponsored federal student loans.
While all of this might sound confusing, students can get help from college admittance advisers and federal loan providers. Always explore every available option and understand the pros and cons of each. Getting an education is a very expensive undertaking that can take decades to repay.
Learn more about how to get student loans without a cosigner and build credit while attending college in our personal finance blog. We cover a vast array of topics to help students better manage their money while furthering their education.
Published on January 08, 2013 at 03:00 AM