By Ashley Russell on August 24, 2011
.jpg.aspx?width=75&height=75) Students loans can be a lifesaver but also a student's worst enemy. The student loan process is complex, overly complicated, and often a long ordeal. There is, however, hope for those individuals who take the time to understand the process before jumping into it, especially when they are looking for a loan without a cosigner.
First, it is important to identify the different types of student loans: federal and private. This is important because they two main types of loans address cosigners very differently. Federal loans for student education are given on a financial need-based weight system, not credit. Instead of needing a good credit history and score, a job, income of some kind, or many other factors that go into getting a normal loan, an individual must simply demonstrate a financial need to the federal government to receive one of these loans. This is currently done with a federal form that looks at family earnings, individual earnings, and many other factors that demonstrate a specific financial need for the loan. These are typically the best loans to apply for first because they have low to non-existent interest rates and are easier to get without a cosigner than private loans because ability to repay the loan is not taken into consideration. The downside to federal loans is that they have limits on how high of a loan is awarded to each individual, depending on their "demonstrated" need.
Private loans on the other hand are much harder to get without a cosigner. These loans are based on credit scores, have strict repayment plans, and have higher, often adjustable interest rates. The benefit of these loans, however, is that the limit awarded to each individual depends on the private company awarding the loan. Consequently, without a cosigner it is often hard to get a reasonable interest rate for the student loan. Going to several different creditors can help find the best rate possible for the remaining loan amount needed. Although these loans can be of a much greater amount, they are much harder to get than a federal need-based loan.
Each type of loan has its benefits, but the benefits of a federal loan generally outweigh those of a private loan. Be sure to max out federal loans then try to find a private place to give you the rest on the lowest interest rate possible. Although student loans without a cosigner may be a complicated task, it is best to search around for the options that is beneficial for the current situation and will be better in the long run.
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