You’ve put the academic work in and now you’re psyched about finally heading to college. There’s just one little issue: tuition. And how to pay for it. In that, you’re not alone. Two years ago, nearly 70% of students had to take out at least one loan to get through school, and those numbers have been steady.
Okay, you’re down with taking out one yourself, but now you have another issue: you don’t have a credit portfolio to speak of, and you haven’t been able to find a co-signer for a private loan. But do you need a co-signer for student loans? Well, let’s see.
What is a Loan Co-Signer?
This is a person who puts their name on the chief borrower’s loan application. Should you become unable to pay, this co-signer is legally responsible for loan repayment.
Who Uses Co-Signers?
Mostly those who cannot qualify for a loan by themselves, either because they don’t have enough earnings or there’s some issue with their credit. A co-signer can improve their chances of nabbing a loan, and likely at a lower rate.
What If I Can’t Get a Co-Signer?
You can easily get a federal student loan without a co-signer. But maybe you don’t qualify for such loans, or what is offered is insufficient. The problem is that if you have no credit or what lenders call a “thin” credit file – meaning you have few accounts – private student loans that aren’t backed by a co-signer are hard to come by.
The good news is that if you manage to get student loans and could use a lower rate later, you can do a student loan refinance to save money. What is refinancing? Basically, it means getting a new and lower interest rate on an existing loan.
Can I Get a Private Student Loan Without a Co-Signer?
If you have limited or no earnings or credit history, and your parents aren’t helpful here, it’s going to be difficult – but it’s possible. It really depends on the lender in which you’re interested. You should know that while some lenders will require you to have a co-signer from the get-go, others will allow you to apply on your own first.
If you still need a co-signer but don’t have a family member with a good job and credit to help, and you have some wiggle room, as far as time, you might want to investigate building your credit so that you’ll be eligible for a private student loan sans a co-signer as quickly as possible. Consider taking out a secured credit card that carries a credit limit that’s equal to how much you put down. Once you’ve paid on time for several consecutive months, you likely will be able to get a regular card.
In any case, Sallie Mae is a lender that does not require a co-signer, although you might ultimately need one.
What Kind of Credit Rating Do I Need?
It depends on the lender but aims for a credit score in the mid-600s to get you started. A credit score of at least 720 will garner you the best rates. Try to use your time to get the best score possible before applying for your loan. You also may want to improve your earnings level.
So, do you need a co-signer for student loans? You know that while your options may be limited, yes, you can pull off financing your education with some extra effort, including upping your credit score and income. If you want to learn more about your options, consider joining Juno for the best student loan rates.