Applying for Student Loans Without a Cosigner

Many students have problems in coming up with a student loan, yet most students need some financial assistance in order to complete their college education. The main problem for many students is that they have no credit rating and they are oftentimes unable to come up with a parent or close relative who is either willing or able to cosign for their loan.

Most financial institutions will not approve a loan to a student who has no credit; unless they are able to provide a cosigner who has a good credit rating and who is willing and able to pay back the loan should the student default on payments. This creates a problem for many young students seeking student loans with no cosigner. They are usually too young to have been able to work on their own credit rating and very often their parents either have a low credit score themselves, or they have other mortgages and loans that they are trying to pay back.

It may be possible that a local financial institution may approve student loans without a cosigner however the likelihood of that happening is very slim, and you can expect very high interest rates as well. The best way to go and find find such a loan is to apply for a federal Student Loan. There are two main student loans funded by the federal government, the Stafford loan and the Perkins loan. Both of these loans are geared towards making it as easy as possible for young people to fund their education.

The Perkins loan is administered by different colleges and universities. The amount each educational institution is given is allocated by the federal government, and the college or university decides who these loans should go to. They are usually given to students who have very needy financial situations. There is a 5 percent flat interest rate on these loans, and students are given plenty of time to pay it back.

There are two types of Stafford loans, with the subsidized Stafford loan being given to students who are unable to come up with a cosigner, or who would not be able to finance their education any other way. With the subsidized loan, no interest payments are required while the student is studying for up to six months after they have finished their college education. With an unsubsidized loan, interest payments begin as soon as the loan is issued, although both types of loans do not need to be paid back while the student is attending college. Both the Perkins and the Stafford loans can be applied for online. In order to start the process the "Free Application for Federal Student Aid" form must be filled in and submitted.