If you need help paying for college, private student loans can help fill the gap that federal financial aid doesn't cover. Most college students don't earn a lot of money, nor do they have lengthy credit histories, so many private loan lenders encourage applicants to have a cosigner on their application. In fact, the Consumer Financial Protection Bureau reported that 90% of private student loans are cosigned.
Unfortunately, not everyone has relatives willing to cosign a loan application with them, making it difficult to qualify for a loan. If that's the case for you, here's what you need to know about getting a private student loan without a cosigner.
Do All Private Student Loans Require a Cosigner?
Luckily, not all private student loan lenders require you to have a cosigner. Of the 12 lenders we looked at, only one—CommonBond—required borrowers to have a cosigner to qualify for a loan. The other 11 lenders encouraged borrowers to add a cosigner to their application; however, if you meet their credit and income requirements, you can get a loan on your own.
However, meeting the requirements while still in school can be difficult. Of the lenders that listed their minimum incomes for non-cosigned loan applicants, Ascent had the lowest minimum at $24,000. The other lenders had income requirements of $30,000 and up. If you're in school full-time, it can be difficult to find a job that allows you to earn that much while juggling your coursework, which is why having a cosigner can be so advantageous.
International students in the U.S. are far less likely to find a student loan that doesn't require a cosigner, although there are some available at select institutions.
How Can You Get a Student Loan Without a Cosigner?
If you need to borrow money but don't have a cosigner, you should first make sure you exhaust all of your federal financial aid options, including student loans.
Unlike private loans, federal student loans don't require a credit check, nor do they have minimum income requirements. As a college student without an established credit history or salary, federal loans can be your best option.
If you still need more financial help after taking out federal loans, focus on building your credit score and earning an income. In some cases, it may make sense to go to school part-time so you can work more hours and earn enough money to qualify for student loans on your own. Or, you can work full-time during the summer and part-time during the school year to reach the minimum income requirement.
Given the limited number of options without a cosigner, be sure to carefully research every private loan you're considering and beware of lenders that may attempt to take advantage of your difficult situation.
Advantages of Having a Cosigner
If it's at all possible to find a friend or relative to cosign the private student loan application with you, it's a good idea to do so. There are two main advantages:
1. You Increase Your Chances of Qualifying for a Loan
The vast majority of private student loans issued to borrowers have cosigners. Having a cosigner decreases the lender's risk, making them more likely to issue you a loan so you can complete your education.
2. You May Qualify for a Lower Interest Rate than You'd Get on Your Own
If you can qualify for a loan on your own, you may get stuck with a higher interest rate because of your credit score or income. By adding a cosigner with good credit and a stable income, you can get a lower interest rate on your loan. Over time, that lower interest rate will help you save thousands in interest charges.
Best Private Student Loan Without a Cosigner: Ascent
We looked at 12 national private student loan lenders to identify the best ones for borrowers without a cosigner. What we found was surprising. Out of the 12 lenders we looked at, 11 lenders don't require borrowers to have a cosigner, but they do encourage adding one to your application.
Only five of the lenders listed their income requirements for non-cosigned loans, and the income minimum is often steep for a college student. The only lender that doesn't have a minimum income requirement is Ascent. For students who have a credit history that is less than two years old, there is no income requirement at all.
If you have at least two years of credit history, Ascent requires you to earn at least $24,000 per year and have a low debt-to-income ratio to be eligible for a loan.
While you don't need a cosigner with Ascent, it does have a high credit score requirement for non-cosigned loans; your credit score needs to be 680 or higher to qualify for a loan on your own.
If you're considering applying for an Ascent student loan, here are some details of its non-cosigned loans to keep in mind:
- Interest Rates with Auto-Pay (up to date as of Jan. 16, 2020)
- Variable: 3.28% to 12.59%
- Fixed: 4.26% to 13.22%
- Repayment Terms: Five or 10 years
- Loan Amounts: $2,000 to $200,000
- Benefits: 1% cash back upon graduating from college
- Discounts: 0.25% automatic payment discount
Strengthening Your Application With a Cosigner
Although it is possible to get a private student loan without a cosigner, it's difficult. As a college student, you're unlikely to meet the lenders' income or credit requirements, and adding a cosigner improves your chances of getting a loan and qualifying for a low interest rate.
If you're worried about burdening your cosigner, keep in mind that several lenders offer cosigner releases. After a few years of making all of your payments on time, you could be eligible to have your cosigner removed from the loan, ending their obligation. A cosigner release allows you to enjoy the benefits of having a cosigner, and you can still remove the cosigner's liability for the loan later on when you are earning a regular salary and have improved your credit.