“Can you co-sign a student loan for me?”
As more and more students find themselves using student loans each year, more parents are finding themselves facing this difficult question. Cosigning a student loan on behalf of an incoming or current college student can be a risky decision. Not to mention, not all parents are able to cosign a student loan on behalf of their student.
A co-signer is usually needed when an individual is applying for an extension of credit, or a loan, and doesn't have strong enough credit, has poor credit, and small or no income.
As a result of the rising costs of higher education in the U.S., it has become common practice for students to ask their parents or family to co-sign a student loan for them. Each year, 12 million students use educational loans to help pay for college. Out of these 12 million, 1.4 million students use private college financing to help cover the costs. According to The Washington Post, 90% of all private educational loans are co-signed.
Having a creditworthy guardian can definitely help get you approved. Moreover, having a cosigner may even lower the interest rate on the loan. Every basis point matters when it comes to student debt, especially when it comes to private collegiate lines of credit. While interest accumulates and capitalizes, even 25 basis points in savings, or 0.25% can save students hundreds and even thousands in interest over the course of the loan.
But what options are available for students looking for financing options without a guarantor?
At LendEDU we get this question everyday. We wanted to create a guide for students and parents looking for to finance student debt without the help of a cosigner. In this guide we will look at a variety of options available for students without additional signatures.
Financial Aid & Federal Debt Doesn't Require a Guarantor
Applying for financial aid is easy and every student should look to maximize their federal financial aid benefits before using private debt. Luckily, the Department of Education offers an array of financial aid options to certain students. Financial aid can include grants, scholarships, and federal financing. Federal financing options should always be used before private debt agreements.
There are a number of different federal financial aid options are available. The great thing about federal financial aid is that its don’t require or need an additional signer. Everyone is eligible for some amount of federal financial aid even without having a qualified cosigner. The most popular types of federal financing are Stafford Loans, Perkins Loans, and PLUS Loans. Without getting into too much depth, below are some short descriptions of each of these different types of loans. For more in-depth explanations you should check out the full guides available.
There are two main types of Stafford Loans available to undergraduate and graduate students. The first being Subsidized Stafford Loans. Subsidized Stafford Loans are awarded on the basis of financial need, and carry the benefit of subsidized interest. The federal government pays the accrued interest while a student is in school.
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