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How to Get the Best Student Loans Without a Cosigner in 2022

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If you want to borrow student loans without a cosigner, the federal government offers the easiest options for students. Most federal student loans don’t require a cosigner, and on top of that, interest rates and loan terms offered by the government are generally more favorable than those offered by private lenders.

While the current interest rate for subsidized and unsubsidized undergraduate loans is fixed at 3.73%, and 5.28%1 for graduate and professional degree-seeking students, private loan interest rates can range wildly depending on your credit score. Currently, fixed interest rates for private student loans range from about 3.20% to 14.98%,2 and variable rates range from about 0.94%to 11.98%.2 Taking into account programs like income-based repayment and student loan forgiveness, it’s easy to see why federal loans are, generally, the first stop for all students who need help financing their education.

But what if federal loans don’t cover the cost of your entire education? Can you get private loans without a cosigner? Are there alternatives? Today we cover these questions and more from borrowers.

The best student loans that don’t require a cosigner

The best student loan options that don’t require a cosigner are usually offered by the federal government. There are three popular direct loan options for US citizens and permanent resident borrowers without a cosigner: Direct Subsidized Loans, Direct Unsubsidized Loans, PLUS Loans, and Direct Consolidation Loans, which allow borrowers to roll all of their existing loans into one new loan. International students will not be able to apply for federal student loans.

Direct Subsidized Loans

Sometimes called a Subsidized Stafford Loan, Direct Subsidized Loans are offered to undergraduate students who demonstrate financial need. While you are in school the interest on these loans is paid by the Department of Education, which is an excellent feature. Students will also have access to income-driven repayment plans offered by the government after graduation.

Your school will determine the amount you can borrow and will use your FAFSA as a part of this equation. Students also need to be enrolled at least part-time to full-time to qualify for a Direct Subsidized Loan.

There is a loan limit on the amount that you can take on as a college student. Independent students do have a higher borrowing limit than those who include their parents’ information in the FAFSA. Consult with a financial advisor or college financial aid office before deciding not to include parents on the FAFSA.

Direct Unsubsidized Loans

Unlike Direct Subsidized Loans, Direct Unsubsidized Loans are available to both graduate and undergraduate students. You do not need to demonstrate financial need to apply for a Direct Unsubsidized Loan. Your school will determine how much you can borrow based on the cost of attendance, factoring in any other financial aid you receive.

Students are responsible for paying the interest on their Direct Unsubsidized Loans while still in school. Deferment or forbearance is an option for students who cannot afford to make interest payments while in school and the interest will be added to the principal amount of the loan. Like a Direct Subsidized Loan, students will need to be enrolled at least part-time and there is a limit to how much you can borrow.

Direct PLUS Loans

There are two categories of people that can apply to Direct PLUS Loans: graduate or professional students (in an eligible program) attending school at least part-time, or parents of a dependent undergraduate student, enrolled at least part-time. The second group is often referred to as Parent PLUS Loans.

Much like the first two loan types, a PLUS Loan is based on the information provided in your FAFSA and each school will decide on the amount of the loan based on other financial aid provided.

Graduate and professional students taking out the loan themselves do not need to make payments while enrolled in school at least part-time, and have a six month grace period after finishing or leaving school. Parents borrowing for an undergraduate student are expected to make payments once the loan is fully paid out. Deferment is an option, but the interest due will be added to the loan principal.

Direct PLUS Loans run a credit check as a part of the application, and those with poor credit history might need a cosigner to receive their loan. The Department of Education also makes exceptions for some students without a cosigner.

Direct Consolidation Loans

Direct Consolidation Loans aren’t new loans for first-time borrowers. Rather, these loans are one of your repayment options when you’re working to pay off your debt after school. If you have multiple federal loans from multiple student loan servicers, you can roll them into a Direct Consolidation Loan with a fixed interest rate based on a weighted average of all your existing loan interest rates.

It’s important to note that Direct Consolidation Loans are generally not an option for loan borrowers to access low interest rates. Unlike refinancing through a private lender which may offer fixed and variable APR options at lower rates than your federal student loans, Direct Consolidation Loan interest rates are based solely on your existing rates—not on market rates.

How to borrow federal student loans without a cosigner

Borrowing federal student loans without a cosigner is possible, but it will take some planning. Here’s what you’ll need to do:

Complete your FAFSA Forms

The first step in any federal student loan application, for both graduate and undergraduate students, is to complete the Free Application for Federal Student Aid, better known as FAFSA. Students need to file a new FAFSA each school year, to reflect any financial changes. Returning students will instead complete the Renewal FAFSA, which will save you some time during the application process. Deadlines for both will depend on the state and college that you plan to attend.

Filling out a FAFSA form doesn’t mean you’ll be required to borrow federal student loans or even accept any financial aid offered to you, but it is the main way to receive financial assistance to pay for college aside from school-based merit scholarships. Even if you don’t think you will qualify for financial aid, you should still file a FAFSA anyway to be sure.

Review your Student Aid Report

Once complete, the Department of Education will send your Student Aid Report (SAR). This is a summary of everything you’ve indicated on your FAFSA report and will include an estimate of your Expected Family Contribution (EFC)—a dollar estimate of what a college will expect you to pay to attend based on factors like family income, investment assets, family size, etc. This number impacts your eligibility for gift aid like need-based scholarships from your university that you won’t have to pay back.

If you notice any incorrect information on your SAR, report it as soon as you can so you can make sure your EFC is as accurate as possible. Your SAR will also include a summary of the loans you can expect will be available to you from the federal government.

Determine the gaps between your aid and your ability to pay

Some universities are able to cover most or even all of the full cost of attendance for qualifying students whose families cannot afford to pay for college expenses out of pocket. Before you apply for loans, consider all your options: are you able to make up the difference between gift aid and the cost of attendance with income from an on-campus job, or discounted room and board through resident assistant programs?

You can also try simply asking your university to offer you more aid. It may seem too good to be true, but it happens—writing a letter to your financial aid office to explain your circumstances and ask for more help may yield you an extra few thousand dollars in grant money or discounted course credit fees.

Accept loans from the federal government

Once you’re sure you need to borrow loans, you can move forward with accepting what’s been offered to you in your financial aid package. You don’t need to make a separate application—filling out the FAFSA form is all you need to do.

Once your university sends you information about your individual financial aid package, you can choose to either accept or decline the loans offered to you. If you accept, you’ll have to partake in an entrance counseling program and sign the paperwork.

How to borrow private student loans without a cosigner

Though federal loans may be your best option, they don’t always provide the funding students need to cover all the costs of education. When that happens, private loans can help take you the rest of the way. If you want to borrow a private student loan without a cosigner, you may have to put in significant work to build the minimum credit score for a non-cosigned loan. Here are some steps you should take when applying to a private loan without a cosigner.

Check your credit report

You may want to review your full credit report and the factors influencing your credit score before you start applying for loans. This way, you can understand what steps you can take to raise your score. It takes time to build credit history, but knowing which areas you need to improve can help you work in a more targeted way.

You’re entitled to a full, free credit report once a year from each of the three major reporting agencies: Equifax, Experian, and Transunion. There are many companies that charge for services to view your report and score, but you do not have to pay for it—visit freeannualcreditreport.com for your reports, and use free services through your bank, if available, to receive regular information about your score.

Work to improve your credit score

Most students won’t have a credit score strong enough to take out a private student loan without a cosigner. But that doesn’t mean it’s impossible to build one. Here are some strategies that can help improve your credit score to boost your odds of getting a student loan without a cosigner.

Get a job

Proving that you have reliable income and a good work history can help improve your credit score and make you look more attractive to lenders. It will also enable you to make payments on your loans while you’re still in school—which could help build your credit history before graduation and save you significant money over the course of your loan versus allowing interest to accrue unchecked during your education.

Get a new credit card

Making on-time credit card payments may help build your credit history. Look for a card with no annual payment and cash back benefits, and use the card like you would a debit card—never spend more than you can afford to pay off in full at the end of each month and always make sure you pay on time or early. Learn more about how to get your first credit card.

Set up direct debit payments

Credit cards aren’t the only things that impact your credit score—paying other bills on time, like car payments, utility bills, and your cell phone and internet, can also have a positive impact on your score. Make sure you never miss a payment so you don’t end up having a bill sent to collections, which can damage your score quickly.

Sign up for free score monitoring from credit agencies

You may be able to get a fairly instant credit score boost by connecting a credit agency like Experian to accounts you hold that wouldn’t normally be connected to your credit score. For example, connecting your Spotify or Netflix account and showing that you make automatic, timely payments may give you a few extra points.

Research lenders

Compare private loan lenders and evaluate what they require from applicants. Look for a lender that openly states they’ll allow students to borrow loans independently without a cosigner. Earnest allows some full-time freshmen, sophomores, and juniors and half-time seniors borrow without a cosigner. Read up on the eligibility FAQs and learn more here.

Make sure you fully understand the loan terms and repayment options for each lender you consider. While the federal government has many protections that help borrowers avoid default (the inability to pay loans, which can wreak havoc on your credit score for years), private lenders don’t offer the same flexibility.

Without a cosigner, the responsibility to pay will be squarely on your shoulders. Ask questions about your repayment options in the event you can’t find a job or get laid off from one — what can you do in the event you’re unable to make your regular monthly payments?

And finally, make sure you fully understand the impact of your loan terms. If your interest rate is higher without a cosigner, you may find that you need to extend your repayment term beyond a standard 10 years into 15 or 203  years in order to have affordable monthly payments. Lower payments, however, will likely mean spending significantly more over the life of the loan as interest will accrue more quickly. You can use Earnest’s student loan repayment calculator to understand how your loan term, interest rate, and monthly payment will impact your total loan cost.

Consider all your options for a cosigner

Private loans can be difficult to get without a cosigner. The Consumer Financial Protection Bureau reports that about 90% of new private loans require a cosigner. Before you invest too much time in a lender, be sure to find out if a cosigner is an eligibility requirement. Even if you can get approved without a cosigner, it may significantly increase the cost of your loan due to potentially higher interest. You may want to check your rate with and without the aid of a cosigner to compare the difference a cosigner could make.

Consider playing the long game

You can also consider playing the long game: Plan to sign with a cosigner now and refinance to remove your cosigner once you’re a grad. If you work to build a good credit score through school, refinancing later with your existing loan company or another student loan lender may be a viable option and may also help you access lower interest rates4.

Drawbacks of borrowing private student loans without a cosigner

While taking out a private student loan with no cosigner is an option for borrowers, it can come with many challenges. Cosigners help share the responsibility of the student loan debt taken on and add a layer of safety for the lender. So, borrowers typically are subject to higher interest rates if they try to go it alone. Here are some of the disadvantages of trying to get a loan without a cosigner.

  • You may have a harder time finding a lender. Some lenders may not allow undergraduate students to borrow loans without a cosigner, regardless of their credit score. Make sure you find a lender who clearly states they allow undergraduates to take out loans independently so you don’t waste your time applying for something you won’t be eligible for.
  • You may have higher interest rates. Students borrowing on their own might have to accept a higher interest rate from private lenders than they would with a cosigner, meaning higher monthly payments in the future. Specifically, undergraduates tend not to have a long credit history for lenders to review their creditworthiness for a lower interest rate.
  • You may benefit from the support of a cosigner. Cosigning a loan is a big responsibility and can put tension on relationships. But sometimes that pressure can be a good thing. Your cosigner has a vested financial interest in your own financial success, as they’re on the hook for your loans if you can’t pay. So, they may be willing to emotionally or professionally support you in your job hunt after school to make sure you’re able to get a good job to pay your loans.

Be sure to pursue all grant and scholarship options before applying for loans, and then utilize federal options before seeking private student loans. Shop around and fully understand your repayment terms and any fees before committing to a loan (even federal loans have an origination fee). Your college’s financial aid office is a great resource for advice, or seek out another financial planner.

Alternatives to a student loan without a cosigner

Student loans are not the only way to finance your education. They’re just one piece of the puzzle. There are a number of different options students should consider to round out their financing. Alternatives include:

  • Applying for scholarships
  • Contacting your school about work-study programs or grants
  • Working full- or part-time during summers and the school year to save up to take classes
  • Taking general education courses at a community college and transferring later to a four-year university
  • Dropping your course load so your expenses are lower (keep in mind, this may prolong your enrollment and result in a higher overall cost, even if it allows you to afford classes in the short-term)
  • Living off-campus or with family to reduce your living costs

After you graduate, there may be assistance from the federal government to help you pay back your loans or reduce the amount you owe. For example, if you pursue a career in public service, you may be eligible for Public Service Loan Forgiveness programs, which cancel the remainder of your balance after you’ve make a certain number of qualifying payments. Additionally, you may want to find a job with a company that offers tuition reimbursement.

Does Earnest offer private student loans without a cosigner?

Earnest offers private student loans for undergraduate and graduate students. Meeting the minimum credit score and eligibility requirements to take out a new loan without a cosigner, which can be challenging for many young students to achieve since it takes time to establish a good credit history. Even if you have a good job that enables you to meet income requirements and take out a loan without a cosigner, you may find that you have a higher interest rate than you would with a cosigned loan.

However, Earnest lets borrowers choose between fixed and variable rates, and offers an automatic payment discount for loans set up with autopsy5. You can also choose how you’d like to structure your payments — such as paying monthly or biweekly‚ or choosing a longer repayment period — so you can find a monthly payment that works for your finances.

Find out how much you could save with Earnest

If your federal loan amount doesn’t cover your whole cost of attendance, private loans can help you make up the difference. Either way, you’re going to be better off with a cosigner in most cases, but that doesn’t mean it’s impossible to get approved for a student loan if you don’t have one. There are always options and alternatives for financing education.

Earnest offers some of the best interest rates around for new and refinanced student loans, and you can check yours in about two minutes. Checking your rate won’t hurt your credit score and will help give you an accurate picture of what it could cost you to borrow a loan independently without a cosigner.

 

 

 

1 Annual Percentage Rates (APRs) for Federal Direct or PLUS loans are based on the published interest rates for loans first disbursed between <date> and <date>, including published fees of <X.XXX>% and <X.XXX>% for loans first disbursed between <date> and <date>. For loans approved for Fall <year> & Spring <year>, the rates for both disbursements are set by the first disbursement date in the Fall of <year>.

2 Actual rate and available repayment terms will vary based on your income. Fixed rates range from X.XX% APR to X.XX% APR (excludes 0.25% Auto Pay discount). Variable rates range from X.XX% APR to X.XX% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent, plus a margin and will change on the 1st of each month. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada.

3 Earnest’s Loan Cost Examples: These examples provide estimates based on principal and Interest payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 11.69% APR would result in a total estimated payment amount of $21,290.40. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 13.03% APR would result in a total estimated payment amount of $22,827.79. 

These examples provide estimates based on interest only payments while in school. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 11.69% APR would result in a total estimated payment amount of $26,173.03. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 13.03% APR would result in a total estimated payment amount of $28,186.67. Your actual repayment terms may vary. Other repayment options are available.  

These examples provide estimates based on fixed $25 payments while in school. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 11.69% APR would result in a total estimated payment amount of $30,584.74. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 13.03% APR would result in a total estimated payment amount of $33,915.55. Your actual repayment terms may vary. Other repayment options are available.  

These examples provide estimates based on deferred payments. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 11.69% APR would result in a total estimated payment amount of $31,462.16. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 13.03% APR would result in a total estimated payment amount of $34,874.28. Your actual repayment terms may vary. Other repayment options are available.

4 Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for total cost of your refinanced loan.

5 You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service for more information on our private student loan product. Earnest reserves the right to modify or discontinue the terms of this program at any time without notice. 

Before applying for private student loans, it’s best to maximize your other sources of financial aid first. It’s recommended to use a 3-step approach to assembling the funds you need: 1) Look for funds you don’t have to pay back, like scholarships, grant and work-study opportunities. 2) Next, fill out a FAFSA® form to apply for federal student loans. Federal student loans do not require a credit check or cosigner, and offer various protections if you’re struggling with payments. 3) Finally, consider a private student loan to cover any difference between your total cost of attendance and the amount not covered in steps 1 and 2. For more information, visit the Department of Education website at https://studentaid.ed.gov

To view other, important disclosures, visitwww.earnest.com/student-loan-rate-disclosures. 

Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.

Earnest Private Student Loans are made by One American Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. 

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America. 

© 2022 Earnest LLC. All rights reserved.

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Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.