How To Get A Private Student Loan With No Cosigner

How To Get A Private Student Loan With No Cosigner

Hey guys, Robert from The College Investor
here, and I am excited to have a short video with you today about how to get a private
student loan with no co-signer. So, the fact is that the CFPB has recently
had a study done, and 90% of private loans had a co-signer. Now, why are co-signers hard on people? Well, because the co-signer is equally as
responsible as the borrower when it comes to paying back that student loan debt, and
that can be hard, because if the student doesn't make payments, it could hurt the other persons
credit, and even in crazy scenarios, like if the student dies, the co-signer is a hundred
percent responsible for that loan.

So not only is there trauma with a student
dying, but the parents or whoever co-signed is still on the hook for the debt. So whenever it's possible, I always try to
recommend people get a private student loan with no co-signer. Now I realize it's not realistic for many
people, and we're going to talk about why, but let's dive in, and we're going to show
you how to qualify for a private student loan with no co-signer. To start with, private student loans operate
much like auto loans, or mortgages. So with a private student loan, the collateral
on the student loan is your earnings. So you can get a higher limit because you're
young. The banks or the lenders think that you're
going to make a lot more in the future. Then based on US law, they know that you can't
really get rid of these loans in bankruptcy, and that there's a lot of ways for them to
collect on this debt, so it's a very safe loan for banks to lend to you.

But that doesn't mean they're great for you. So when lenders are looking to lend a private
student loan, they're looking for three criteria. First off, you have to be a US citizen, the
reason going back to that law piece. They want to be protected. You have to be a US citizen. Second, most lenders are going to want to
see a good credit history. Now this is hard for when you're 18, 19, 20,
'cause you don't really have a credit history, but if you want a private student loan with
no co-signer, you need to have a good credit history, a score of 700 or higher.

They want to see payments made on time for
a couple of years. So that's a challenge. One way to get around this is to maybe have
yourself added as a authorized user on your parents credit card, because now their credit
history on that card becomes your credit history on that card, and that can help. But the third one is what kind of derails
most people, is that most banks and lenders for private student loans offering no co-signer
loans, want to see income as well. On average they want to see about $25,000
a year in income. Now summer jobs, and working on the side,
all that income counts. It just needs to be on your tax return, so
no under-the-table money.

But if you're not making about $20,000, $25,000
a year, you're going to have a hard time combining that with your credit history, to get a private
student loan with no co-signer. So if you want a private student loan with
no co-signer, I recommend checking out Credible. They have private student loans there, and
you can see if you would potentially qualify for a private student loan with no co-signer,
but once again, it's a challenge, 'cause you've got to meet those three criteria that typically
hold people back. Now, if you're going to get a private student
loan, and you end up having to get a co-signer, at least do it the right way. We have a full blog post on the blog about
how to get a private student loan with a co-signer the right way.

The big thing is make sure you guys set rules
and boundaries for each other about making payments on time, and we highly recommend
that whoever the co-signer is gets a life insurance policy on the borrower, so that
if anything were to happen to them, the loan can be paid off. So hopefully that helps you understand what
it takes to get a private student loan with no co-signer. I know it's tough. It's hard for someone that's 18, 19, 20, 21,
to meet those criteria, but that's what banks are looking for when it comes to lending money. All right guys. Now we're going to get into a reader question. This weeks reader question is from Nicole,
and Nicole asks, "Should I consolidate my student loans?" The answer is, maybe. So a student loan consolidation is a process
that's offered for free by the Department of Education, that allows you to take multiple
federal student loans, and put them into a single loan. The benefit of this is just convenience. So instead of making seven loan payments individually,
you can make one payment.

Department of Education

Now, for most people though, a lot of their
loans are at one company, so if you graduate and all of your loans are at Navient, or all
of them are at FedLoan, well you're already effectively consolidated, because you're just
making one payment on one statement. If your loans are at multiple servicers, consolidating
can be very helpful because now instead of having two or three different bills every
month, you can have it all consolidated to one loan at one company.

The important thing to remember is that student
loan consolidation doesn't change anything with your loans. It's not going to lower your interest rate
or your payment. Your new consolidation loan is going to be
the average weight of all the underlying student loan interest rates. So effectively the math works out that you're
basically paying the exact same thing. Now with your new consolidation loan you can
change repayment plans and do other things that could potentially lower your payment,
but just getting a consolidation loan, and consolidating your student loans alone, isn't
going to change anything.

So the question is really, what do you prefer? Do you want to have a single payment with
a single loan? Then consolidating could make sense for you. If it doesn't really bother you how your current
setup is, then consolidating doesn't really make sense. There are two things that you should never
do when it comes to student loan consolidation. Number one is never consolidate a parent plus
loan into your student loans. If you do that, you're shooting yourself in
the foot, because there are a lot of repayment plans now that you can not access because
you have a parent plus loan in that consolidation loan.

The number two thing you should do, is you
should never consolidate a loan you've already been making IBR, pay-as-you-earn, or revised
pay-as-you-earn payments on already. Because when you consolidate it will reset
the clock on any forgiveness. So if you've already been paying a loan under
IBR for five years, and you're expecting to get forgiveness in 20 years, if you consolidate
you reset the 20 year clock. So you just basically gave yourself five more
years of student loan payments. So keep that in mind, that consolidating,
it's a new loan that you're taking out basically. It's a new loan. It's going to say consolidation loan, and
that loan will be treated differently than any loan you had previously, so you could
reset the clock on forgiveness.

All right guys, hopefully that answers your
question about student loan consolidation. If you have any questions, as always, please
email them to me. I do get a lot every single week now, so I
might not be able to put yours on a video, but if it's the best question, and it's really
informative and asks a great thing, I will definitely include it on the show. So thank you guys very much. If you like what you're seeing, please like
and subscribe, and I hope to see you guys on the blog. Until next time, thanks guys..

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