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A cosigner is a person who agrees to pay back your loan if you don’t pay it back as agreed.
Student loan refinancing with a private lender might require a cosigner if you have a short credit history (or no credit history at all). This situation is common amongst undergraduate students who’ve never had a credit card, car loan, or other type of credit in their name.
If you don’t have someone willing to cosign a loan or you want to go it alone, here’s what you need to know.
- How does adding a cosigner help?
- Eligibility requirements for student loans without a cosigner
- How to take out a student loan without a cosigner
- Alternatives to student loans
How does adding a cosigner help?
A cosigner gives lenders some extra insurance when they can’t look at your credit history to determine the likelihood of you paying your student loan on time. While having a cosigner could improve your approval chances — and maybe even get you a lower interest rate than you’d get on your own — it’s not always an option.
Eligibility requirements for student loans without a cosigner
Eligibility requirements vary by lender. But borrowers need to meet some general requirements to get approved.
Federal student loan eligibility requirements
To be eligible for federal student loans, you typically must meet the following requirements:
- U.S. citizen or an eligible noncitizen
- Enrolled at least half-time in a qualifying degree or certification program
- A valid social security number
- Complete the Free Application for Federal Student Aid (FAFSA)
- Maintain satisfactory academic progress in college
General requirements for private student loans
Private lenders set their own eligibility guidelines, but here are some common requirements:
- U.S. citizen or an eligible noncitizen
- In good financial standing
- A steady income
- A valid social security number
- A good credit score
- Enrolled in a qualifying degree or certification program
How to take out a student loan without a cosigner
If you think you might qualify for a private student loan without a cosigner, here are the steps to get started:
1. Maximize federal student loan options
Before you even think about applying for a private student loan, make sure you exhaust your federal student loan options first.
Federal loans often offer lower interest rates than private student loans, and they don’t require a cosigner. Plus, they come with several benefits that typically aren’t available through private lenders, such as income-driven repayment plans and forgiveness programs.
2. Improve your odds of approval
Private lenders typically run a credit check to help determine eligibility, so if you have some time before you need to apply, see if you can bring your credit score up.
Most lenders prefer borrowers to have credit scores in the high 600s, according to the National Foundation for Credit Counseling.
If you’re not there yet:
- Become an authorized user on someone else’s account. If you’ve never used credit before, see if a parent or family member will add you as an authorized user on their card. The account will be added to your credit report, and their responsible use of credit will improve your credit score — even if you never actually use the card.
- Stay up to date on your bills. If you have a credit card, set up payments on autopay so you never miss a payment. Payment history accounts for 35% of your FICO credit score, so consistently paying on time can help your score. Be sure to make other payments on time, including rent, utilities, medical bills, and other services. While paying these bills on time won’t necessarily help your credit score, they can be sent to collections if you don’t pay, which will negatively impact your score.
- Keep your credit utilization low. Credit utilization is the percentage of your credit limit that’s currently in use, and experts recommend keeping your credit card balances below 30% of your limit. In other words, if your credit card limit is $1,000, you should keep your balance under $300 at all times. If your credit utilization is greater than 30% on any one card, work on paying down that balance and using the card less.
- Review your credit report. Errors on your credit report can drag your score down. So get a free copy of your credit report from each of the three credit reporting agencies once a year at AnnualCreditReport.com. Review each report to verify that your accounts and balances, payment history, personally identifiable information, and other details are correct. If you find any errors on your report, such as accounts that aren’t yours or are incorrectly reported as late or delinquent, contact the credit reporting agency to file a dispute.
3. Compare options
Another crucial step before applying for a student loan is comparing your options. Interest rates and fees on private loans can vary greatly from lender to lender, and even small differences can cost you hundreds — even thousands — of dollars over the life of the loan.
By comparing options, you can see which company offers you the lowest rate, what repayment options you have, and whether fees are applicable.
4. Plan for repayment
Once you’ve settled on a lender and have been approved for a loan, put together a budget that accounts for your student loan payments.
Start by figuring out how much money you have coming in, whether from a job, a side hustle, or help from family.
Next, calculate your monthly expenses, including necessities like housing, groceries, and transportation, and non-essentials like entertaining, dining out, and shopping. If you’re not sure where you spend your money, try tracking your spending for a month or two.
Finally, determine how much you can allocate to paying off your student loans. Of course, you’ll need to come up with at least the minimum monthly payment. But if possible, see if you can trim expenses elsewhere and send a little extra toward the loan principal each month. This will reduce the interest you pay and the total cost of your loan over time.
The student loan consolidation companies in the table below are Credible’s approved partner lenders. Because they compete for your business through Credible, you can request rates from all of them by filling out a single form. Then, you can compare your available options side-by-side. Requesting rates is free, doesn’t affect your credit score, and your personal information is not shared with our partner lenders unless you see an option you like.
|Lender||Variable rates from (APR)||Fixed rates from (APR)|
|7.12%+ - 10.79%+8||7.59%+ - 14.49%+8|
|Compare personalized rates from multiple lenders without affecting your credit score. 100% free!
All APRs reflect autopay and loyalty discounts where available | 1Citizens Disclosures | 2College Ave Disclosures | 5EDvestinU Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 7ISL Education Lending Disclosures | 8Nelnet Bank Disclosures
Alternatives to student loans
Many students, especially undergraduates, can’t qualify for a student loan without a cosigner. But options to pay for school without student loan debt are available.
- Scholarships: You might receive some scholarships as part of your total financial aid package after completing the FAFSA. But don’t stop there. Ask your school’s financial aid office, use the U.S. Department of Labor’s Scholarship Finder, and search online for other scholarship opportunities. Exhaust every opportunity for gift aid you can think of because even a small scholarship can pay for a good chunk of your education.
- Work-study: The federal work-study program can also be an excellent resource for covering some college expenses because the jobs are usually on campus and offer flexible schedules to fit your class schedule. You can be considered for work-study by completing the FAFSA, but many schools offer these programs on a first-come-first-served basis. So fill out and submit your FAFSA early to have the best chance of getting a work-study place.
- Income-share agreements: An income share agreement (ISA) provides upfront money for your education in exchange for a percentage of your future income for a set number of years. Some colleges, universities, and vocational education programs offer them. While these can be a good alternative to traditional loans, some downsides should be considered. Since repayment is based on a percentage of your salary, the higher your income, the more you have to pay. If you go this route, look for an ISA that caps the amount you’ll have to pay — 1.5 times the amount you received is pretty standard.