Guide to Student Loans Without Cosigner: Why Student Bank Loans with Bad Credit Aren’t the Answer

Attending university can be an expensive business so it is normally necessary to supplement savings, or even a scholarship, with a loan for college. Sadly, student bank loans will not be available without a cosigner if the borrower has either no credit history or poor credit due to missed and late payments. Fortunately, the federal government offers student loans without cosigner or even credit scoring in order to prevent social and educational exclusion.

Student Loans Without Cosigner

As an alternative to student bank loans, it may be possible to successfully apply for a loan for college from the federal government. The two main sources of funding are the Stafford loan and Perkins federal student loan. They are available at a lower rate of interest than their private sector equivalent and may even be subsidised. Not everyone will qualify for a Perkins student loan due to means testing, but a Stafford loan is still be available on excellent terms.

Qualifying for a Perkins Federal Student Loan Without Cosigner

The U.S. Department of Education apply a specific congressional formula to determine whether the applicant qualifies or not. The Expected Family Contribution (EFC) is based on the income of the student (if financially independent) or parental income relative to the size of the family unit. After a Free Application for Federal Student Aid (FAFSA) has been filed, a Student Aid Report (SAR) will be sent to the academic institution.

Federal Perkins Student Loans

Subject to means testing, it may be possible to get a Perkins student loan without cosigner. The interest rate is just 5% (subject to change) and it can be frozen for up to three years in the event of unemployment or financial hardship. Although only the most hard up students will qualify for a Perkins loan, it offers the most favorable terms and should always be accepted by those who are eligible.

Stafford Student Loans Without Cosigner

Means tested Stafford loans are available from just 5.8%. Those who don’t qualify under the means test will be able to get a loan for college at just 6.8% (subject to change). This is by far the most common way of funding university, although there is an upper funding limit. The majority of people who have a satisfactory credit history choose to top-up any shortfall with a student bank loan.

Student Bank Loans

A loan from a bank will be available, subject to credit scoring. The criteria are completely different to the federal student loan as only someone with an exemplary credit history will qualify for a student loan without cosigner. They are not guaranteed and the rate of interest will be higher than on either a Perkins or Stafford student loan. However, they do tend to be less involved from an administrative perspective.

Student Loans Without Cosigner – Federal Loans Vs Student Bank Loans

Federal student loans have a more involved application process and can be more difficult to manage, but the interest rate is lower and they offer far better terms in the event of financial hardship. Some individuals in public sector occupations, such as teaching, qualify for a loan forgiveness program. A student bank loan can be used as a source of funding when the upper limit has been reached for that applicant.