Loans for Students Without a Cosigner

People who are desirous of pursuing higher education, have the option of availing private student loans or federal student loans. Private student loans are typically referred to as alternate loans since they are looked upon as an alternative to federal loans. Most students prefer federal student loans since these carry a low rate of interest and have favorable repayment terms. Loans for students without a cosigner are synonymous with federal student loans on account of the following reasons:

• Private student loans are not federally subsidized, hence the lender assumes a great deal of risk by making these loans available to students.
• As a compensation for risk, the lender expects to receive interest that accrues at a relatively high rate of interest.
• Credit checks, that are not a feature of federal student loans, are a compulsory accompaniment as far as private student loans are concerned.
• Poor credit scores, adverse credit history and no credit are deterrents to availing private student loans.
• Private loans for students typically requires the student to have a cosigner if the student has adverse credit history. Even if the student's credit score is commendable, one cannot rule out the need for a cosignatory to the loan.

Hence, (student) loans for students without a cosigner is synonymous with Federal Student loans.

College Loans for Students without a Cosigner

Federal loans are disbursed under the Direct or the Federal Family Education Loan (FFEL) program. The share of federal student loans administered by the direct loan program has increased by 47 percent since 2008. The amount disbursed under the FFEL program has fallen by 17 percent during the same period. Students desirous of availing college loans, without a cosignatory, have the option of procuring Federal Perkins loans or Federal Stafford loans. Credit score, credit history and the absence of a co-signer are irrelevant for procuring the same. Examples of loans for students without a cosigner are as follows:

Federal Perkins Loans: Federal Perkins loans are need based and are provided to deserving students regardless of their credit score or credit history. These loans are disbursed on the basis of the student's financial need by schools participating in the Federal Perkins Loans program. The student's expected family contribution (EFC) is determined by the U.S. Department of Education by using a standard formula that has been proposed by the Congress. Students, who are interested in availing these loans, are required to fill out the Free Application for Federal Student Aid (FAFSA). The information in the FAFSA acts as the basis for determining the student's expected family contribution. Around 1800 participating post-secondary institutions have been entrusted with the task of disbursing Perkins loans.

Federal Stafford Loans: Federal Stafford loans are provided to students irrespective of their financial position, credit score or credit history. Stafford loans may be subsidized or unsubsidized. In case of unsubsidized loans, the Federal Government allows students to defer interest payments during the deferment and the grace period. In other words, the government pays interest on these loans when the student is in school. Thus, there is no question of interest compounding as a result of deferment. A student who avails unsubsidized loans is expected to make interest payments on the borrowed sum. Although deferments may be allowed, a student who defers interest payments will be expected to bear the interest that accrues on the payment that is due. Hence, it dose not make much sense to defer payments on an unsubsidized Stafford loan.

Federal Graduate PLUS Loans: A Graduate PLUS loan or a GradPLUS loan is a low, fixed-interest rate, non-need based student loan that is provided to students who clear the credit check. However, a cosigner is not required for availing these loans and the interest on the borrowed sum qualifies for tax deduction.

In addition to the aforementioned college loans, a number of other federal loans for students without a cosigner are available to deserving students. These loans can be need based or merit based and encourage people to get a good education regardless of their financial standing.