The name says it all: a no-cosigner student loan is a student loan that does not require a co-signer. A cosigner is an adult who will become legally and financially responsible for your student loans if you default. If you have private loans, the cosigner will also often be responsible for your loans even if you pass away.
Only private student loans require a cosigner. One of the most common misconceptions is that because your parents or legal guardians are supposed to include their financial information on the Free Application for Federal Student Aid (FAFSA), that it means they are cosigning your federal loans.
But that isn’t the case. Federal student loans do not require a cosigner. The only potential exception is if you are taking out a Grad PLUS loan and have a recent negative event on your credit score. In this case, you may need to add an endorser on your PLUS loan, which is similar to a cosigner. However, this is a rare situation and does not happen to most students.
Benefits of No-cosigner Student Loans
A no-cosigner student loan might be simpler to get than a regular private student loan that does need a cosigner. You do not need to add anyone else’s information on the application so the process may be smoother. Also, you don’t have to go through the awkwardness of asking someone to cosign on a loan, especially if you don’t think they want to say yes.
Plus, many private student loans do not let you remove the cosigner until you have made several months or year’s worth of payments. This could hurt the cosigner’s credit score and impact their own ability to qualify for a loan.
Downsides of no-cosigner student loans
If you don’t have a cosigner on a private student loan, then you will likely receive a higher interest rate. Having a cosigner means that someone is vouching for you so the lender can feel comfortable that the money will be repaid. Also, you will have more loan options available to you, so you can pick the lender that offers the lowest monthly payment as well as other perks, like a longer grace period after graduation and more repayment options.
Also, no-cosigner student loans tend to have lower loan amounts than regular private loans or federal loans. If you need to borrow a large sum for school, you might have to look elsewhere.
How to Qualify for No-cosigner Student Loans
If you’re interested in a no-cosigner student loan, keep reading to understand how to get one.
Use a specialty lender
There are two main student loan companies that do not require a cosigner: Ascent and Funding U.
Funding U does not accept co-signers at all, while Ascent will let you add a cosigner if you want.
With Ascent, you can choose between a credit-based loan or an outcomes-based loan. A credit-based loan will look at your credit score and income, while an outcomes-based loan will consider your GPA and year in school.
Funding U will also look at your GPA and year in school, with juniors and seniors being more likely to be approved.
Take out federal loans
To apply for a federal student loan, you have to complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is the main form you must fill out to receive federal student loans, as well as grants, work-study and scholarships directly from the school you’re attending.
You must complete the FAFSA by the school’s financial aid deadline, or you will miss out on federal student loans. Contact the school’s financial aid department or visit their website to see what the deadline is. If you’re an undergraduate student or below the age of 25, you will likely need to provide your parent’s financial information, including their income and assets, to complete the FAFSA.
Avoid income-share agreements
An income-share agreement is sold as an alternative for students who have either maxed out their federal loans or students who do not have a co-signer for private student loans.
Here’s how income-share agreements work. Instead of taking out a certain amount, the lender will pay for your tuition directly. Then when you graduate and start working, you will start repaying the lender a certain percentage of your income.
Most income-share agreements do not require payments while the borrower is unemployed or earning below a certain threshold. This is a benefit that private loans often don’t have.
However, income-share agreements often end up costing much more than a traditional private student loan or federal loan. And because the percentage is based on the borrower’s income, it is hard to know ahead of time exactly how much the student will end up repaying.
And because income-share agreements are technically not loans, they cannot be refinanced later on for a lower interest rate.
Best no-cosigner student loans
| Funding U | Ascent | Federal loans | |
|---|---|---|---|
| How to apply | Must complete an application | Must complete an application | Must fill out the FAFSA |
| Interest rate | Fixed interest rate | Fixed and variable interest rates | Fixed interest rate |
| Credit score and income eligibility criteria | No credit score required | Varies depending on the type of loan. May need to have an income of $24,000 to qualify | No credit score required |
| Other eligibility criteria | Juniors and seniors are more likely to be approved. Only full-time students at a Title IV school are eligible. | 2.9 GPA requirement for outcomes-based loans. | Any grade level accepted. Part-time and full-time students at a Title IV school are eligible. |
| Citizenship status | Does not have to be a U.S. citizen. DACA recipients are eligible. | Does not have to be a U.S. citizen. DACA recipients are eligible. | Must be a U.S. citizen or permanent resident |
| Loan amount maximum | Between $3,001 and $20,000 a year | $31,000 or $57,500 for undergraduates; cost of attendance for graduate or PhD students | |
| Repayment options | Multiple options available | Multiple options available | Can choose from several income-driven repayment plans |
| State of residence | Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin. | All 50 states | All 50 states |
Alternative Financing Options for Students Without Cosigners
Scholarships and grants
If you need to finance your college education and want to minimize your student loans, you should apply for grants and scholarships.
Grants and scholarships do not have to be paid back after graduation, unlike student loans. Plus, there is no limit to how much money you can receive in scholarship funds. You can start applying by looking for scholarships directly at sites like Schoalrships.com or doing a Google search for your specific skill, interest, hobby or background and the keyword “scholarship” or “grant.”
For example, if you play the clarinet, look up “clarinet scholarship” or “band scholarship.”
Work-study programs
Work-study is a type of need-based financial aid where a student is given a job, usually on campus, that pays a decent wage. You usually work around 10 or 15 hours a week, and the schedule is usually flexible depending on your class times.
To qualify for work-study, you must complete the FAFSA. Schools have a limited number of work-study spots so you should submit the FAFSA as soon as possible to give yourself the highest chance of receiving work-study.
Work as an RA
Housing is one of the most expensive parts of going to college, so why not try to live for free? You can do that by becoming a Resident Advisor (RA). RAs live in the dorms and help the other students by organizing events, keeping the dorm safe and more.
RAs usually receive free room and board as well as a free or discounted meal plan. Sometimes they even receive an extra subsidy, but this depends on the school. RA jobs are coveted so try to apply early if you’re interested.