It’s a fact of life: Most college students simply don’t have the credit history to qualify for private student loans on their own . It’s also true that not everyone who needs a cosigner has someone who’s able to fill that role. For some, the only option is to get a student loan without a cosigner.
What to look for in a private student loan without a cosigner
If you don’t have a cosigner to help you acquire a privagte student loan you’ll want to see what loans are available to you – and of those, which ones are the best fit for you. When you look at lenders, consider each of the following aspects:
Student Loans Without a Cosigner: How to Acquire Student Loans on Your Own
Loan terms – Your loan terms spell out exactly how long you have to pay off your debt, as well as the interest rate you’ll pay back. Shorter loan terms, around five years, will generally feature lower interest rates but require a higher monthly payment. Longer loan terms, usually around 20 or even 30 years, typically feature higher interest rates resource while requiring lower monthly payments.
Repayment terms & options -Most lenders offer a few different types of repayment terms and each has their pros and cons. Some of the most common repayment options include deferment while you’re in school, paying the full payment while you’re in school, and paying only the loan interest (or another small, fixed amount) while you’re in school and then ramping up payments once you graduate. Your monthly payment(s) and total amount of interest paid will vary greatly depending on which option you choose, so make sure you run the numbers carefully and understand all your options.
Refinancing options – Unlike federal loans, private student loans are generally a no-brainer to refinance – under certain conditions. If you can find a loan offer with a lower interest rate, it can save you a lot of money in the long run by refinancing.
Deferment options -There may be times when you can’t make your monthly payment because you’ve lost a job, had a health crisis, etc. Some lenders offer a temporary deferment option where you won’t have to pay your student loans for a short period of time while you get back on your feet. But who qualifies and for how long can vary a lot.
Fixed interest rate vs. variable rates – Private student loans can come with either a fixed interest rate or a variable rates. A fixed rate means you’ll have one interest rate for the life of your loan and therefore your monthly payment won’t change. Variable rates will shift up or down over time based on various economic factors. Variable rate loans can be a good option if you can get a low interest rate at the start of the loan and are likely to pay off (or refinance) the loan within a few years. But the longer you hold the loan, the more likely interest rates will rise which can balloon your monthly payment.
Loan discounts – With some lenders, you can get an autopayment discount or discounts for other actions such having other financial products with that lender. Typically the discount is around 0.25% off your interest rate.
?Fees & penalties – Some (but not all) lenders charge application fees or origination fees (usually a percentage of the loan amount when you apply for and/or accept a loan.) Penalties generally apply when you miss a payment or if you have a bounced check. Some charge a fee if you repay your loan early. Hopefully, you’ll avoid most or all of these charges, but it’s worth checking the fine print to see what each lender charges – it can vary a lot.