Federal Student Loans Without a Cosigner

Many students facing the enormous burden of paying for their own college education will turn to student loans for help. Many students think they will not be able to qualify for student loans on their own without needing a cosigner. The good news is that many federal student loans, like the Stafford and Perkins loan, don’t require a cosigner to get a student loan.

Students can also get a private student loan if they are lucky enough to have an established credit history. Personal loans are also an option, and these loans don’t have the same restrictions as federal or private student loans. In any case, whether a student has good credit or bad credit, students can take out student loans without a cosigner.

Federal Student Loans

The Stafford and Perkins loans are the two types of federal loans that you can take without needing a cosigner. Listed below are the pros and cons of getting a federal student loan.

Pros

  • Low fixed interest rates for unsubsidized loans (currently 3.76% for the 2016-2017 school year)
  • Flexible repayment plans
  • Guaranteed loan approval
  • Bad credit is OK
  • No cosigner needed

Cons

  • Unsubsidized loan interest rates (Graduate or Professional Students) remain high at 5.31%
  • Subsidized interest rates are predicted to increase to 5.8% for the next school year.
  • 1.069% “default fee” is taken prior to loan disbursement
  • Low loan limits ($9,500 maximum for first year undergraduates)

Advantages (Pros)

The advantages of getting federal student loans without a cosigner are the low interest rates and flexible repayment plans. Interest rates are at an all time low at 3.76%, and the uncertain economy has allowed borrowers to take advantage of a number of repayment plans. Federal student loan approval is also guaranteed regardless of credit status and without having a cosigner.

Disadvantages (Cons)

There are some disadvantages of getting a federal student loan without a cosigner.

For one thing, the interest rates can vary from year to year. Although the current interest rate is at 3.76%, it’s expected to go up to 4.8% in the upcoming 2017-2018 school year. Congress is currently set to vote on keeping interest rates low, but anything can happen in an election year. Federal student loans also require a 1.069% “default fee” to be taken out before the funds are disbursed. The biggest disadvantage to getting a federal student loan is the low borrowing limits, especially for first and second year undergraduates who are dependents. Consider the following table:

Stafford Loan Limits for Undergraduate
Dependent Students
Year 1$5,500
Year 2$6,500
Year 3 and beyond$7,500

The amount of money offered could be enough to attend smaller community colleges, but many first and second year undergraduate students at major universities will have to consider other funding sources to supplement their college expenses.