The Link between Cosigners and Student Loans
By definition, student loans are formulated for college-goers and are meant to cover over the student’s college education. Unfortunately, almost all student loans need a sturdy cosigner, who can guarantee that the borrower would reimburse the study loan within the predestined time duration. Otherwise, if the student fails to repay the loan, the cosigner should promise to step up and repay the loan. From the lender’s perspective, this avoids much confusion and unforeseen problems. On the contrary, the hunt for reliable and potent cosigners is easier said than done. This is because the cosigner must have a good financial background with high credit scores and the heart to sign on behalf of a new to-be-grad.
Can you get Student Loans without a cosigner?
Luckily, there are special student loans that don’t require a cosigner. For instance, the Federal student loan is designed not with the borrower’s credit in mind. Instead, it is based on the student’s desire to acquire financial support and study! Apart from traditional federal loans, there are plenty of private lenders available, who are prepared to support students with good scores and credit histories.
What are your chances of Loan Approval?
Generally, when you apply for student loans without a cosigner, your chances of approval will be remarkably low. In some cases, the chances of receiving a loan will be equivalent to zero. Thus, you must think twice before making a move. Sometimes, it would be wiser to steer away from private lenders and instead opt for federal loans. Successful borrowers state that Federal loans have an endless list of benefits. The loan delights students with flexible reimbursement plans, low interest rates and quick fund transfers. Nevertheless, it is important to remember that Federal loans have a very low borrowing limit. You cannot cover all your expenses using this loan. This is why you must obtain scholarships and grants, in addition to the Federal loans. Conversely, this can be attributed to the need for private lenders.
Gathering All important documents for Your Loan
Applying for student loans without a cosigner will be an adventurous and interesting move. You should have all of your educational documents, financial statements and tax receipts in hand. Also, you must fill in a free application to send to the Federal Student Aid. Above all, you must prepare a good credit score report. There are many organizations to create credit reports for borrowers. These reports will grade your financial level and help lenders decide if they should offer or withhold your application. According to the Fair Credit Reporting Act, all credit reports must be processed evenly. Thus, if your loan application gets rejected, the lender will have a definite reason for it!
Two Important Documents For Federal Loans
As mentioned previously, the very first step in receiving a student loan without a cosigner is to fill and submit a Free Application for Federal Student Aid. The standard application will take care of your financial needs. The loan requires two additional documents, namely the Expected Family Contribution and Student Aid Report. The Expected Family Contribution is calculated using the student’s parental income, student’s income and assets. On the other hand, the Student Aid Report gives a brief summary of the borrower’s financial needs.
All About Stafford Loans
Stafford Loans are extremely famous amongst students. Stafford loans can be unsubsidized or subsidized, which is based on the person who reimburses the interest. Subsidised Stafford loans are meant for candidates who portray a strong need for the loan. For instance, borrowers with very low turnovers and rock-bottom credit scores can apply for this loan. On the other hand, unsubsidized Stafford Loans are designed for students’ with a better credit image. The eligibility criterion of unsubsidized Stafford Loans is not defined beforehand. It depends on the lender’s policies, the borrower’s requirements and the study program. Accordingly, students with strong credit scores naturally have a better chance of receiving the Stafford Loan.
All About Perkins Loan
Another interesting student loan that doesn’t require a cosigner would be the Perkins Loan. This is also a federally funded loan that has to be administered by the high educational institution. The Perkins Loan is perfect for students who portray financial need for additional college expenses. To be more precise, the Perkins Loan is ideal for candidates with an annual income that is well below 25,000 USD. Perkins Loan offers undergrads a student loan of 5,500 USD and a lifetime limit of 27,000 USD. Similarly, grads will receive 8,000 USD every year and a lifetime limit of 60,000 USD. The reimbursement period of the Perkins Loan begins 9 months after the completion of the program.
Can You Receive Student Loans From Private Entities Without a Cosigner?
As mentioned previously, you can receive student loans without a cosigner through private entities. These are private sources like credit unions and banks. Usually, private lenders would ask for a cosigner. Nevertheless, if your family’s financial background is strong and if you have a reliable credit score with signs of longevity & diversity, you will have a better chance of qualifying for the private college loans. Another important factor that is taken into consideration by private college loans would be the student’s state of employment. If you have a steady source of income, the lenders will have no trouble offering you a private loan. Unfortunately, it is important to bear in mind that private student loans without a cosigner will have very high interest rates. You must be mentally and financially prepared to repay high interest rates. This is when government loans turn out to be a better option.
The Ultimate Bottom Line – Research, Research and More Research!
Before you opt for private loans, you must research all of your college loan options exhaustively. The Federal aid options must be analyzed carefully before you even think of private funds. In any case, Federal student aid will not ask for a cosigner or perform intense credit checks. Only private lenders perform credit score checks and have strong cosigner requirements!