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How to Get a Student Loan on Your Own
Getting a student loan is a part of getting a college education. If you borrow federal money or money from a private source, do you need a cosigner for a student loan? Several criteria influence whether you can get student loans with a cosigner or get student loans without a cosigner.
Do Federal Student Loans Require a Cosigner?
You rarely need a cosigner to get a federal student loan from the Department of Education. This is good for students because getting a cosigner can be difficult.
When somebody cosigns for you, they say that if you do not repay the loan, they will repay it. They are legally responsible for paying your debt. Federal student loans have other benefits like income-driven repayment options and deferment of payment.
There is an exception. If you are a graduate student or if you are a parent trying to get Direct PLUS loans and you have bad credit, you will need an endorser. An endorser is a type of cosigner who vouches for you.
Do Private Student Loans Need a Cosigner?
Private student loans are given by banks, online lenders, and credit unions. For a private student loan, you will need to complete a loan application. This application evaluates your credit history. It looks at your employment history and income. These criteria are used to determine the interest rate you will get.
If you don’t meet the lender’s requirements, you will need a cosigner for a private loan. Most students will take out private student loans with a parent as the cosigner. During the application process, the cosigner’s information is considered and submitted.
What Are the Downsides of Cosigning a Student Loan?
The debt to income ratio of the cosigner will be impacted. This can make it difficult for the cosigner to get a different loan for themselves later.
As a cosigner, you are responsible for paying off the loan if the primary borrower cannot meet the loan’s obligation. The cosigned loan will impact your credit report and credit score. In addition to credit implications, there are legal implications you should consider.
If the student does not make the payments or if they make the payments late, it can negatively impact you, which may negatively affect your relationship with the person you cosigned for. Thankfully, as Ascent Funding shows on their website, “A student may prequalify for a student loan without a cosigner and build credit in their own name.” The student is solely responsible for the loan, and the risk of strained relationships is diminished.
How to Get a Student Loan Without a Cosigner
There are outcome-based student loans available without a cosigner. To qualify, students must meet a certain GPA, major in particular subjects, enroll in a particular school or program, and have a set graduation date. These outcome-based loans are available for US citizens, permanent residents, and those with DACA status.
The Cosigner Decision
School loans are a part of getting an education. Whether or not you will need a cosigner will depend on several factors, including your income, credit history, the type of loan you are applying for, and your work history. The decision to use a cosigner should be carefully considered.