It’s no secret that a bachelor’s degree is expensive. According to the College Board, in 2019-20, average published tuition and fees ranged from $8,730 per year at public-four year colleges to $36,360 per year at private nonprofit four-year colleges.
If you and your family are unable to cover college costs using scholarships, savings, a 529 plan or other strategies, you’ll need to take out student loans. To get a student loan without a co-signer, first consider federal student loans, since the vast majority of them don’t require one. If you need additional financing, there are some private lenders that offer non-cosigned loans, too. Here’s what you need to know.
No Co-signer? Opt for Federal Student Loans First
If you need to borrow money to pay for college, start with federal student loans. They typically have lower interest rates and more favorable repayment terms than private loans, making it easier to manage your debt after graduation.
Subsidized loans are of particular value: They’re available to undergraduates with financial need, and the government covers the interest on them during periods of deferment, such as while you’re in school or when you pause payments for certain reasons.
Additionally, between July 1, 2020, and July 1, 2021, interest rates on federal direct unsubsidized and subsidized loans for undergraduates will be just 2.75%, down from 4.53% the year before. Direct unsubsidized loans for graduate students will have interest rates of 4.3%, compared to 6.08% last year.
Most federal student loans do not require a co-signer. The one potential exception is PLUS loans. Parent PLUS loans and grad PLUS loans do require applicants to undergo a credit check. If you have an adverse credit history, you may not qualify for a loan on your own. However, you can still get a loan if you have an endorser—someone with good credit—to co-borrow the money and take on responsibility for payments if you fall behind.
Federal Loan Benefits
As a federal loan borrower, you can take advantage of the following protections:
- Alternative payment plans: If you can’t afford your current monthly payments, you may be eligible for lower bills through an income-driven repayment (IDR) plan. Under an IDR plan, your payments will be based on your family size and income, and your repayment term will be extended to 20 or 25 years.
- Loan forgiveness: Some borrowers can have a portion of their loans forgiven through programs like Public Service Loan Forgiveness or Teacher Loan Forgiveness. You’ll also get forgiveness on any balance that remains at the end of your IDR plan.
- Deferment or forbearance options: In many cases, you can temporarily postpone making payments on your loans without becoming delinquent or entering into default—for longer periods than what many private lenders offer.
Federal Loan Limits
You can borrow PLUS loans in amounts up to the total cost of attendance at your school. Direct subsidized and unsubsidized loans, on the other hand, have limits on how much you can borrow each year. These loans depend on your year in school and whether you’re considered an independent student who won’t rely on family support.
|Loan Limits for Federal Direct Subsidized and Unsubsidized Loans|
|Dependent students||Independent students
|Annual limit for first-year undergraduate students||$5,500 (no more than $3,500 can be in subsidized loans, which the government pays the interest on in certain circumstances)||$9,500 (no more than $3,500 can be in subsidized loans)
|Annual limit for second-year undergraduate students||$6,500 (no more than $4,500 can be in subsidized loans)||$10,500 (no more than $4,500 can be in subsidized loans)
|Annual limit for third-year undergraduate students and beyond||$7,500 (no more than $5,500 can be in subsidized loans)||$12,500 (no more than $5,500 can be in subsidized loans)
|Annual limit for graduate or professional degree students||All graduate and professional students are considered independent students||$20,500 (all unsubsidized)
|Aggregate loan limit||$31,000 (No more than $23,000 may be subsidized)||$57,500 for undergraduate students (no more than $23,000 can be in subsidized loans)
$138,500 for graduate or professional students (no more than $65,500 can be in subsidized loans)
Explore Private Lenders That Don’t Require a Co-signer
If you reach the federal loan borrowing limits and need more money to cover your school’s total cost of attendance, private student loans can help fill the gap.
But make sure you exhaust all other financial aid options first, as private student loans lack the benefits that federal student loans offer. For example, you can’t sign up for income-driven repayment plans or apply for Public Service Loan Forgiveness as a private loan borrower.
There are some private student loan lenders that will approve borrowers without a co-signer. However, you should be aware that there are some downsides to applying for a loan on your own:
- Limited repayment options: Private student loans without a co-signer tend to have limited repayment options. Instead of having multiple loan terms to choose from, you’ll likely be assigned a loan term, so there’s little flexibility.
- Low loan maximums: While many private student loans allow you to borrow up to the total cost of attendance, non-cosigned private loans have stricter limits. You’ll be able to take out a smaller amount.
- High interest rates: If you have good credit—or a co-signer with strong credit—you may qualify for a private loan at an interest rate that is competitive with federal loans’ rates. But on non-cosigned loans, interest rates tend to be much higher.
- Added fees: Private loans that don’t require co-signers may charge relatively high origination fees, which add to your loan’s cost.
If you don’t qualify for a loan based on your current credit history and credit score, college juniors and seniors may be eligible for a loan from Ascent based on their future income potential.
|Loan amounts||$1,000 to $20,000 per academic year|
|Loan terms||10 years|
|Fixed interest rates||3.98% to 14.92% (includes 2% discount for making payments by autopay)|
|Variable interest rates||3.17% to 13.92% (includes 2% discount for making payments by autopay)|
To qualify, you must be enrolled full-time as a junior or senior in a degree program at an eligible school, be a U.S. citizen or permanent resident, and have a GPA of at least 2.9.
Funding U provides loans to undergraduate students in select states without requiring a co-signer. Funding U evaluates your eligibility for a loan based on academic performance, projected earnings and other school factors.
|Loan amounts||$3,001 to $10,000 per year|
|Loan terms||10 years|
|Fixed interest rates||For 2020-21 school year: 7.99% to 13.49% (includes 0.5% discount for making payments by autopay)
|Variable interest rates||Not available|
Funding U loans are not available to all borrowers. To qualify, you must be enrolled full-time at an eligible four-year university, and you must be a resident of one of the following states: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia and Wisconsin.
MPower Financing offers undergraduate and graduate student loans to international students, Deferred Action for Childhood Arrivals recipients, refugees, asylum seekers and U.S. citizens without requiring co-signers or credit checks.
|$2,001 to $25,000 ($50,000 lifetime limit)
Fixed interest rates
These rates do not include available discounts, including 0.5% for making payments by autopay and an additional 0.5% after making six-on time payments with autopay.
Variable interest rates
To qualify, you must be within two years of graduating from—or about to start a one- or two-year program at—an approved school in the United States or Canada.
Consider Co-signer Release
Adding a co-signer to your loan can improve your chances of qualifying for a loan and securing a lower interest rate. But it’s a major commitment, since a co-signer’s credit will be affected if you miss payments.
Some private lenders offer co-signer release programs, which may help a parent or relative feel more comfortable applying for a loan with you. After making a certain number of consecutive on-time payments, you can apply to have the co-signer removed from the loan. For example, Sallie Mae borrowers can apply for co-signer release after making 12 full, on-time payments, or by prepaying the equivalent of that amount.
If you meet the lender’s eligibility requirements, which can include income and credit criteria, on your own, the lender may approve your request. The co-signer will no longer be responsible for the loan.
Work on Improving Your Credit
If you need more money to pay for school than you can borrow in federal student loans and non-co-signed student loans aren’t an option, focus on boosting your credit score so you have a better shot at qualifying for other private student loans on your own.
To get a student loan with the most favorable rates and terms, you’ll typically need a credit score in the good-to-excellent range, plus stable income and a history of on-time payments on credit accounts.
To improve your credit:
- Make all of your payments on time: Your payment history is the most critical factor in determining your credit score. Make all of your payments on time to build and maintain a high credit score.
- Pay down existing debt: If you have debt—including credit card debt—paying down your balances can improve your credit utilization, or the amount of available credit you’re using. That makes up 30% of your credit score, according to the FICO model.
- Become an authorized user: If you have a parent or relative who has good credit and a credit card, they can add you as an authorized user to their account. While you won’t be responsible for payments, you can make purchases using the card, and your credit will benefit from on-time payments made on the account.
- Apply for a secured credit card: If you can’t qualify for a credit card on your own, and becoming an authorized user isn’t possible, apply for a secured card instead. A secured credit card requires a security deposit, which acts as your credit line. As you make payments, the credit card company will report your positive payment activity to the credit bureaus. Over time, using your secured card responsibly can improve your credit.
- Get credit for your rent and utility payments: Programs like Experian Boost, PayYourRent and ClearNow give you credit for making on-time rent, phone and utility payments.
It takes time to improve your credit, so seeing progress will require patience. But over time, your chances at getting approved for a private student loan on your own may rise. If you need help building your credit, read up on tips for establishing your credit history from scratch.