A student loan is an essential financial tool for many students that will otherwise be incapable of affording college tuition. If you’re about to get started with your undergraduate or graduate education, you’re probably wondering about the options available. If you have bad credit, you’re certainly feeling very concerned about student loan options.
Is it possible to get a student loan with bad credit and without having a cosigner? The following article will shed some light on the possibilities.
General Rules for Getting a Student Loan without a Cosigner
Getting a student loan without a cosigner is mainly an option for students that have managed to demonstrate responsible financial behavior in the past.
Responsible financial behavior consists of several components – paying bills on time, staying out of debt and making loan repayments in a timely manner, as well. Such individuals have a relatively high chance of obtaining a student loan without a cosigner.
The problem that many students have is that their credit history usually goes back a couple of years. In order to give individuals a high credit score, the responsible agencies have to take a look at long-term behavior. In this instance, your age and the number of years in your financial history could be standing against you.
Having a cosigner will make it easier for you to obtain a traditional loan. Students, however, can opt for other possibilities that don’t require a cosigner. The most common and popular possibilities include:
- FAFSA Financial Assistance: FAFSA stands for Free Application for Federal Student Aid. Both the income of the students and the parents will be taken in consideration. Other factors of importance include family size and assets. This information is used for the creation of an individual student aid report (SAR). The SAR is sent to colleges and used to determine your eligibility to grants and alternative financial assistance options.
- Perkins loans: these are available to a chosen few but the option is worth fighting for. This is a federal loan that is provided to students in serious financial distress. In general, Perkins loans are provided to students belonging to families that have an annual income of 25,000 dollars or less. Undergraduate students can expect to get a loan of up to 5,500 dollars with a lifetime limit of 27,000 dollars. For graduate students, the individual loan can reach up to 8,000 dollars with a lifetime limit of 60,000 dollars.
- Stafford loans: there are subsidized Stafford loans for students in great financial need. The need is determined by the income and the credit score of the candidate. The unsubsidized Stafford loan is not determined by particular financial needs. Keep in mind that loans provided by banks and credit institutions will typically require a cosigner, regardless of your credit history. Since students are considered a high risk group of lenders, such loans are typically provided with a relatively high interest rate.
How to Look for a Student Loan
If you want to obtain a student loan, you have bad credit history and no cosigner, you should first explore federal options. Loans from federal sources are also characterized by much lower interest rates than other possibilities.
Finding a private student loan that doesn’t require a cosigner will be a much more difficult task but it’s not a mission impossible. Statistics show that 90 percent of the private student loans provided in 2012 required a cosigner due to the candidate’s limited or poor credit history.
Such options are typically available to students that already earn an income. Depending on its size, the income could potentially offset bad credit history and make it possible to obtain college funding without having a cosigner.
When looking for such options, it’s very important to take a close look at the terms and conditions. Read everything, including the fine print. What may seem like an excellent opportunity in ads could potentially force you to pay incredibly high interest rates and agree to other unfavorable conditions.
Plan B: Build Your Credit
If you’re that eager to get a student loan without a cosigner, you may have to wait some time and build your credit. This is not an easy solution but it will increase your chances of getting access to quality financial tools on your own.
Building your score will generally require two years. You can use this time to work and earn a steady income. The period will also be great for evaluating your education needs and figuring out which programs addresses those in the most adequate way.
The expenses associated with higher education are serious and you shouldn’t take college financing lightly. Explore your options and apply for a range of possibilities. The more informed you are, the easier it’s going to be to get the needed financial aid.