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, a study from AARP reported that for some companies, up to 96% of their private student loans are cosigned.
It's best to exhaust all of your federal student loan options before even considering private student loans. Rates for federal loans issued between July 1, 2020 and June 30, 2021 will drop from 4.53% to 2.75% for undergraduate Stafford loans.
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.
Best Student Loans Without a Cosigner
Ascent: Best Overall
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. Ascent offered the most flexibility for students without a cosigner.
Students with at least two years of credit history who make at least $24,000 per year and have a low debt-to-income ratio are eligible for a non-cosigned credit-based loan. Students with no credit score or eligible students that meet a minimum credit score but don't have two years of credit history can apply for Ascent's non-cosigned Future Income-Based 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 Oct. 8, 2020)
- Variable: 2.69% to 12.98%
- Fixed: 3.58% to 14.50%
- Repayment Terms: 10 or 15 years
- Loan Amounts: $2,000 to $200,000
- Benefits: 1% cash back upon graduating from college
- Discounts: 0.25% automatic payment discount
Read the full review: Ascent Student Loans
MPOWER Financing: Best for International Students
International students have an even harder time finding a student loan that doesn't require a cosigner. There are currently only two options: Prodigy Finance and MPOWER Financing. Prodigy offers no-cosigner student loans only to students seeking graduate degrees in STEM, healthcare, and public policy.
MPOWER offers student loans to a broader range of students including undergraduate and graduate students at over 350 partner schools in the U.S. and Canada.
MPOWER makes loan decisions based on your future potential and reviews your credit history to verify your payment history. While there's no variable rate option
Undergraduate Loan Interest Rate with All Possible Discounts (up to date as of July 31, 2020.)
- International Fixed: 14.98% APR
- DACA Fixed: 10.91% APR
- Repayment Terms: 10 years
- Loan Amounts: $2,001 to $25,000 per loan and a $50,000 lifetime limit
- Benefits: Free visa support letter and U.S. credit history building
- Discounts: 0.50% for setting up automatic payments, 0.50% after six on-time payments discount with automatic payments, 0.50% for reporting proof of graduation, and employment.
Read the full review: MPOWER Financing Student Loans
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.
What Are The 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:
- 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.
- 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.
How You Can Strengthen 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.
Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of student loan lenders. We collected over forty-five data points across more than fifteen lenders including interest rates, fees, loan amounts and repayment terms to ensure that our content helps users make the right borrowing decision for their education needs.
Reuters.com. "Your money: Cosigning a student loan? Be prepared to pay." Accessed July 15, 2020.
Ascent. "FAQ: Eligibility Requirements." Accessed July 15, 2020.
Ascent. "Are there any incentives for the Ascent loans?" Accessed July 15, 2020.
MPOWER Financing. "Get a Loan." Accessed July 15, 2020.
CommonBond. "Eligibility." Accessed July 15, 2020.