Your Guide To Student Loans Without A Cosigner

Finding student loans without a cosigner can be difficult, but not impossible. Student loans are the first type of debt that many young consumers become familiar with. This year, the bad economy along with rising tuition rates will mean that many more students than in previous years will be applying for and taking out student loans. Unfortunately for students, government cutbacks to student loan programs means that there will probably be a lot less federal student loan money available. This means that for many students, taking out student loans from private companies is the only other way to pay for college.

Think Before Taking Out Any Student Loans Without A Cosigner

Prior to taking out any kind of student loans, it is necessary for a student to understand what rules control them. Under federal law, money that is taken away from student loans is only permitted to be used to make payments for tuition and other costs that are considered by the Department of Education to be directly related to the costs of attending college. For example, items such as textbooks, laboratory supplies, housing, meal plans, and required clothing such as uniforms may be purchased with money from student loans. On the other hand, indirect expenses, such as transportation or child care are not allowable costs that can be paid for with money from student loans. Therefore, it is recommended by the Department of Education that any student who needs help paying for his or her indirect expenses use his or her grant money or money received as wages to pay these costs. This will free up money from student loans for direct school costs.

Private student loans have a lot more flexibility when it comes to what the money can be used for, making these loans a better choice for some people with a lot of indirect education costs. Qualifying for student loans no cosigner, however, can be a bit of a challenge. This is because most students do not have a long credit history, making them seem like a higher risk for many lenders.

Qualifying for a Loan Without a Cosigner

Of course, any student trying to take out guaranteed student loans without cosigner should first make sure that it makes financial sense to do so. Lenders typically require cosigners when they believe that a loan will not be repaid by the person borrowing the money. In this event, the co signer will be responsible for the charges on the account. A co signer essentially gives the bank another way to collect the money if payments are not being made.

Many financial advisors strongly recommended against becoming a co signer, however, and few students are able to find someone willing to be responsible for their debt. This makes being able to find a student loan that doesn’t require a co signer a necessity for many students to be able to go to college.
Being able to show that you have a viable plan to pay the student loans back will go a long way towards qualifying for student loans for students without co signers. A general rule that many lenders follow is to not let a student borrow more than his or her expected salary the year after he or she graduates. This amount is determined by the lender, usually by using salary surveys collected from former students. By not taking out more than this amount, payments can be kept affordable.

In addition to limiting the amount a student borrows, a student who is hoping to qualify for a student loan without having to use a cosigner should also try to establish some credit for him or herself. At least six months before going to college, apply for a credit card. While the amount of credit extended will be fairly small, this will help to start a credit history. Also, be sure to make timely payments on any recurring bills, such as cell phones or other utilities, to show that the student can make payments on time.

If possible, get a job (even a part-time one) while attending school. Being able to show income will go a long way towards getting a student loan without a co signer.

Finally, apply to several different banks when looking for a student loan without a cosigner, and be willing to accept less favorable terms. As with any loan without a co signer, interest rates will probably be higher than loans taken out with a cosigner.

Review The Loan Terms Before Taking Out Any Student Loan

When reviewing the terms of a loan; be sure to pay attention to the origination fees along with the interest rate that is listed on the loan paperwork. Students and recent graduates are only permitted to refinance their student loans once during their lifetime according to federal law. This rule makes it extremely important to consider how the loans will be paid back. Terms that leave a former student with too high of a payment will make it very difficult for that student to get established in a career.

Taking out student loans is a decision that can affect a student’s budget for the next several decades of his or her life. This makes it very important to carefully consider the terms of any loans that are taken out. Before agreeing to take out student loans without cosigner, a student should be sure he or she understands the terms of the loans he or she is taking out.