In order to apply for student loans without cosigner signatures, most lending institutions have a few standard requirements. First, the applicant must be creditworthy. Second, they will need to be of the appropriate minimum age as determined by the state of residence. Third, they must be enrolled in an approved school for a pre-determined amount of units.
To Cosign or Not?
Cosigners are not required to apply for loans with banks and other traditional lending institutions, especially if the individual is creditworthy. This term means the person has demonstrated a steady payment history with one or more credit cards or other eligible accounts. However, if the applicant can also demonstrate a steady source of income or collateral, this would be to their benefit in being approved.
Age
The minimum age to apply for private student loans varies by state, but is between 18 and 21. Federal student loan applications have no minimum age requirement, even if a person is under 18, and as with private lenders, no cosigner is required. For private institutions, cosigners can increase the chances of being approved.
Applying
For federal aid, the first step is to fill out a FAFSA. This form can be completed online, or on paper and mailed in. Most students will simply pick up the application at their school’s financial aid office. The office then handles the paperwork and follows up with the student.
Filling out the FAFSA allows the student aid program to determine the best loan and assistance options based on the information entered. Among the options available are Pell grants, a state grant, and individual college awards. The FAFSA will also present options such as work-study programs and scholarships.
Private or Federal?
Requirements vary between private and federal lenders, but which one offers better terms? To be eligible for a private lender, the borrower must meet the minimum ‘age of the majority,’ which is between 18 and 21. They will also need to meet credit criteria set up by the institution and be attending a four year college.
Federal lenders do not require a credit check (but will not lend to students who defaulted previously.) There is no age restriction, but the applicant must be a United States citizen and at least be scheduled to start school in the upcoming semester. One significant difference between filling out a FAFSA and a private loan application is proof of income. If the individual applies for private money with a cosigner, no income verification is required.
Private and federal lenders calculate interest in different ways also. Interest rates on federal aid are not credit based, and are capped at a relatively low percentage. Private banks and other institutions use the prime rate and adjust for the creditworthiness of the borrower.
Regardless of which route the student takes to apply for student loans without cosigner assistance, they should realize the money will need to be paid back. Do as much research as necessary to get the best rates and the best loan repayment terms; a little extra work could mean a savings of thousands.
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