Can You Get a Private Student Loan with No Cosigner?

Young people without an established credit history will have difficulty getting private student loans with no cosigner. A cosigner, such as a parent or family member, is often used so there is a person with more established credit on the application. If the loan goes into default, that person will be called on to make payments or rectify the situation. Without a cosigner, a borrower may not be able to fully assure a lender against the possibility of default. If the borrower can do this in another way, a cosigner will not be necessary.

Qualifications for Private Student Loans

Private student loans come through a bank or lending institution instead of through a school or government program. These loans are often extended to students who do not financially qualify for student aid assistance but still need help paying for college. A good credit rating is the first qualification for any private loan; many students lack this because they have not had many loans in the past. Even if you have never missed a payment, if you have not had credit for very long or do not have much of it, you may not be able to get a loan. The lender will think you are too risky, and you will need to find a way to assure them you will not default.

Assuring Against Default

Instead of using a cosigner, you may consider other means to assure against default. One of the most popular methods to do this is to use collateral. Using collateral means you will be opting for a secured loan. Secured loans are easier to get when you have little credit or poor credit. They also, typically, have lower interest rates. Your car, savings, stocks or home can be used to secure a loan. Any asset you own is potential collateral for a secured loan.

Utilizing Government Programs

Some students will not have collateral, have poor credit, but will have too high an income (or family income) to qualify for federal aid. These students can still benefit from federal programs that offer loan guarantees. If you do not meet the low income requirements for federal student loans, the government may still guarantee the loan you receive from a private lender up to a certain amount. This means they will promise to repay the loan on your behalf if you default. The federal government will do this based on proof that you need the funding for school and other minimal financial requirements. 

Utilizing School Programs

Your school may have programs that assist you in gaining a private student loan. For example, work-study programs allow you to maintain an income while you attend school. Your college can tell your lender exactly what your income will be each month. Or, this income can be allocated directly to your loan payments, allowing you to start paying off the loan immediately. Other schools may offer scholarships to reduce the total cost of financing. Speaking with the financial aid department at your college about getting a private loan will present you with many options.


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