Paying your bills to enroll in college can be a true challenge these days. Fortunately, the federal government offers some help in this area, but it is often not enough to foot the entire tab for tuition, room and board. That is why many students have to put together a package of student loans with and without cosigner.
Loans Without Cosigner
The student loans that do not require a cosigner come in two basic categories: federal and private. The federal Direct Loans might be subsidized or unsubsidized. This impacts the interest rates charged as the student is repaying the loans after graduation. Most schools put together a package of financial aid that includes subsidized loans and unsubsidized loans, if necessary.
Federal Student Loans
The subsidized loans have strict limits for each year that the student is in school, with the student able to borrow more as s/he advances in university classes. The unsubsidized have limits as well. Many times, if these two amounts do not meet the need for a student, universities encourage parents to borrow a PLUS loan that is on the parent’s record alone.
Students seeking federal loans must fill out a Free Application for Federal Student Aid (FAFSA) form in the first part of each calendar year to find out if they will qualify for subsidized loans and how much. The advantage of these loans is that the government does not consider your credit record, which in most cases has not been established for better or for worse when you have graduated from high school.
Private Student Loans
Of course, students can go to private banks and credit unions for loans that do not require a co-signer. Unless the student knows a banker personally, these will almost always offer higher interest rates than federal loans, sometimes much higher. This is the least affordable route to get the money together to attend college.
Even after loans with no cosigner, students might need additional funds to pursue higher education. Students that have a difficult time finding money for school without a cosigner can ask a parent or other relative, or a good family friend to cosign with them and obtain the loans that they need. Again, with the high costs of college continuing to rise each year, many students enroll thanks to funds from student loans with and without a cosigner.
Student Loans With Cosigner
The loans granted with a cosigner will have terms that depend on the cosigner’s credit score. If s/he has a very strong credit rating, a student can get a loan at a very attractive interest rate, especially today. If the cosigner has had credit issues, then the terms will not be as favorable.
But even with a strong cosigner, it is hard to beat the federally subsidized loans for price. The catch is that those subsidized loans only amount to several thousand each year, not the tens of thousands often needed.
That’s precisely why more and more students opt for private student loans (with or without cosigner) to pursue their dream of a college or graduate school degree.