There are many avenues for obtaining student loans without cosigner support. In fact federally-funded school loans are designed to accommodate students with a low to modest income. Low interest student lending prevents the overall cost of the note from getting out of control. This type of funding is guaranteed to eligible applicants. For private loans, the individual needs to demonstrate a steady income and a credit report with no negative trade lines. If these qualifications are met, the need for a creditworthy co-signer is unlikely.
Federal
Federal financial aid is typically the least expensive student lending option. The notes are guaranteed and re-payment options are flexible. Government lending will allow debtors to defer payments while going to school, or request a ‘forebearance’ if they are struggling with a financial hardship. There are three common categories available to undergraduate, graduate and post-graduate students.
Perkins notes are available to a limited percentage of people who can demonstrate income below a certain level. This loan has the lowest fixed interest rate and comes from a government sponsored school fund. When filling out the FAFSA for financial aid, check this option as a first choice.
Stafford is the name given to the most common type of federal lending for school. Anyone can apply and like all the options in this category, interest rates are fixed and low. Applicants who can prove extreme financial need may qualify for a subsidized Stafford, in which the government pays accumulating interest while the person is in school, requests a deferment or during a grace period.
The alternative is an unsubsidized Stafford in which the individual pays all accumulated interest as long as the note is valid. This means interest is capitalized during grace periods, deferments and while the student is going to school. The recipient of the unsubsidized option should consider scheduling regular interest payments before the amount is overwhelming.
Another type of federal assistance is a ‘Graduate Plus’. This aid is intended for graduate and professional studies tuition. It will cover the entire cost of the program minus any other government assistance. Rates are low and fixed, but there are eligibility requirements which should be discussed with a financial aid officer.
Private
For creditworthy borrowers, private banks have student lending programs available as well. Rates are going to be higher, but for expensive tuition this is an excellent option. A private loan can provide assistance even if the individual has outstanding federal obligations. Since this is no different from a car or home loan, borrowers need to demonstrate the ability to pay. Available funds will be dependent on current income and credit history.
While Federal programs do not require co-signers, a person who has exhausted this avenue may need to work with a private source. Ensure creditworthiness by paying down credit cards and making payments to all creditors on time. Secure a steady source of income as well to demonstrate the ability to re-pay the note.
The U.S. government is still the largest source of tuition assistance and offers the best terms. Fill out the FAFSA and take advantage of every type of aid available.
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