Back when I got my private student loans, I was not able to get approved for the loans on my own. If I could go back in time, then I would tell myself that it was a sign not to get those evil private student loans. Of course, these terrible loans are a necessity for some students.
The nice thing about a private student loan is that you can use the money to cover any extra costs; like textbooks, equipment, the costly out-of-state student tuition surcharge, housing and general cost of living expenses.
Why Private Student Loans Often Require Co-Signers
Unlike the regular Stafford loans, a private student loan is not guaranteed by the Federal government.
Instead, private lenders (aka banks and other financial institutions) assume all of the risk when giving out private student loans. That means that a private student loan is an unsecured debt. So, that makes a loan from them just like any other line of credit. This means that a certain credit profile is required in order to get approved for the loan.
And since most students have not yet built up a solid credit profile (mostly due to a short credit history), a co-signed with good credit is needed for the loan to be approved.
Sometimes, students can get approved for a private student loan without a co-signer, but having one anyway can be beneficial. Why? Because you might get a better interest rate if the co-signer’s credit is excellent.
Requirements For Private Student Loan Without Co-Signer
As with any other type of unsecured debt, the primary requirement for a private student loan without a co-signer is a good credit profile.
The higher your credit score, not only the more likely that you get approved for the loan, but the lower your interest rate.
It is also beneficial if you have a job so that you can show the lender that you have income to repay the debt.
For the best results getting approved without a co-signer, try applying through your personal bank or credit union if they offer private student loans. Already having that relationship with the lender will help increase your chances of getting approved without a co-signer.
And if you want some additional general information on private student loans, take a look at the video below.