A Private Student Loan Without a Cosigner?
There used to be something like this not too long ago, but it just ceased to exist with the onslaught of the financial “ice age” triggered by the sub-prime fiasco. You can search anywhere in the United States, from coast to coast, but there just isn’t any private student loan without a co-signer today. Like a dinosaur, it’s now extinct.
A private student loan is the carcass of an old era. It’s a personal loan, plain and simple, that you can obtain if you have a good credit rating, collateral to protect the interest of the bank in case of default, or a rich co-signer. It’s money that the bank is willing to lend you to purchase that dream appliance showcase you’ve always yearned for if your credit is good, but which you could decide instead to use for your tuition.
Unfortunately, if you’ve just finished high school, the harsh reality is that you don’t have that much of a credit rating to show for or an employment history to back you up.
Major Responsibility
Getting someone to agree to be your co-signer on a loan will be for him or her, a big deal and a major responsibility. If you’re unable to pay your loan when it’s due, usually after four years, or after you’ve finished college, then the bank will run after your co-signer.
This is why a co-signer must be someone very close and dear to you, like your parents or other close relatives. They will stick by you no matter what. In the same light, you won’t allow anything bad to happen to them, like the bank running after them because you messed up on your obligation.
Private lenders understand these social nuances quite well and will gladly approve your loan application without much delay if you can provide them with a credit-worthy co-signer along with your own signature.
Your Credit is not Good
As an incoming college student, you probably have bad or no credit and no income. Under this scenario, your chances of getting an approval will rest solely on your ability to produce a qualified co-signer, hopefully your parents.
If they have a poor credit rating as well, then you’re essentially out of the running and applying for a loan to finance your college education will only cause you sorrow and pain.
But remember that if it’s really that bad for you, you can always turn to the government for help. Unlike private lenders, federal loans are more inclined to look into your neediness as a measure of your worthiness to receive financial assistance through a loan, rather than at you or your family’s credit standing.
But, of course, there is more work and waiting time involved. But then again, you’re given all the periods between January and the start of spring to send in your application. Your most important to put yourself into contention for these loans involves filling out a FAFSA, which is available on the internet, sending it with a click of a button, monitoring your email box for feedbacks, sending additional requirements, etc.
If you did your assignment well and followed instructions, then you should have a reply in a couple of months, around springtime, with the school of your choice informing you your financial-aid allotment. Isn’t this something worth looking forward to and smiling about?
It certainly is. After all, a federal loan is a low-interest and a borrower-friendly loan facility which does not require credit check and co-signers. No matter how you look at, it’s perfect for your needs and is easier on the pocket.
Dealing with Private Student Loans Without Cosigner
However, not everyone is given this opportunity. The FAFSA screens all applications and makes sure that only those who are eligible, but more importantly are really in need, are approved into the loan program. Sometimes, your application may not be accepted on time. This is bad in the sense that you won’t qualify for all federal-funded financial aids, particularly the juiciest ones – grants or free education. With the volume of documents being received and processed during the application period, this is understandable.
Young people react differently to a situation where their aspirations for college education are threatened with financial difficulties. While the easiest way is to simply give up and bid college education goodbye, others deal with their inability to get financial assistance for federal loan or a co-signer for a private student loan as just another challenge that they will have to hurdle in some other ways.
And yes, with a little strategy and imagination, you can. And yes, these are the students who get ahead in life.
After all, the problem of private student loans without cosigner is nothing new; many students have faced the same situation at one time or another.
Find employment
If you’re unable to or don’t wish to apply for scholarships and other financial aids from the government, your best option is to give private lenders what they want – see you gainfully employed, even part time; and see your credit history.
These two factors will certainly set a positive tone for you when private lenders start discussing your application for a student loan. If you’re doing well in your place of employment, it’s not even far-fetched for your employer to co-sign your loan application or absorb the cost of your college education as part of employee benefits.
But that’s going too far ahead in the story. Sometimes, all it takes is for you to get regular employment for banks to approve your private student loan application. With $12,000 a year, living with parents, and well-managed credit expenses, you may be able to convince the bank to grant you a student loan without a co-signer.
A no-no in this situation is to convince the bank to give you credit anyway even if you don’t have employment and a co-signer. This just won’t happen. You’re just wasting your time and the banks. The bank is not going to change this policy soon either. Private lending is a business. Necessarily, banks need to recoup their investment and cut a profit from it. Private student loan without the cosigner is a high-risk investment. A change of policy is not going to happen soon, unless the government intervenes as a co-signer. With the economy still reeling from the economic crisis, this is not going to happen soon, perhaps never.
Federal Aid and Private Student Loans
The choice between a federal loan and private student loan is obviously a “no brainer,” with the former always the preferred one. And it’s safe to assume that if you apply for one or both, you or your parents don’t have the luxury of instant cash to pay for your college expenses!
Assuming you’re gainfully employed with a relatively clean credit record, you can obtain a student loan with no co-signer by applying for a minimum private student loan amount and using whatever amount received from non-co-signed federal loan to cover your other school expenses.
This common-sense approach appeals to many private student loan lenders. It speaks well of you as a person. Banks can look beyond collaterals and co-signers if you can package yourself as a responsible person with character and driven to succeed. After all, isn’t there a loan that can be approved and released on the basis of the character of the person? Yes, there is and it’s called character loan.
In your case, your character may not be enough for the bank to grant you your loan request, but with employment and relatively clean credit record, all these can collectively make the bank favorably decide on your student loan application without a co-signer.
As you grow in age and wisdom, you will realize that a good dose of positive character – trustworthiness, honesty, dedication, loyalty, etc. – can far outweigh collaterals and co-signers.
A Will and a Way
“Where there’s a will, there’s a way.”
Just like most perplexities in life, it’s your will that will serve as your guidepost and compass in finding the best alternatives in the most complex situations in life. Finding funding for your college education is just a small measure of the choices you will face in real life and in the real world.
The most important thing to understand is not to contradict certain realities to make them work for you. There are things that can’t change, no matter how much you wish or try to make them do. It’s best to leave them that way than waste your time and effort.
There are no hard-and-fast rules in dealing with situations like private student loans without co-signers. But you always work around it with people closest to your heart, most especially your parents.
Your problem is not getting a co-signer. Your problem is not your desire to obtain college education. As long as the desire is there, then everything will come in place with will, determination, imagination, and hard work.
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