It is widely believed that getting a student loan has to be a family affair where both students and their parents are involved. They get together to make important decisions about the finding the required funding to cover the student’s educational expenses.
But in reality, there is no law that can stop a student from getting a student loan without getting their parents involved. This is especially true for federal student loans. Although getting a student loan without parents’ financial and other details is hard, it is not impossible. If you are a student with a decent credit score, you may find it easier to avail federal and selected private student loans. Your choices, however, may be limited if you have a short credit history and are still financially dependent on your parents.
It is understandable that more often than not, parents would want to be free from being obligated to repay their kids’ loans.
TABLE OF CONTENTS
- Getting federal student loans without parents
- Getting private student loans without parents
- How to take out a student loan without getting your parents involved?
- The bottom line..
Getting federal student loans without parents
As with student loans in general, federal student loans are easier to get access to without your parents’ information. The federal government does not look at the borrower’s personal credit or income status to issue a student loan. The loan fees and the interest rates remain the same for everyone.
Federal student loans, in addition to being flexible with the absence of a cosigner, also come with a number of benefits:
Certain federal student loans can be subsidized: The government will offer to pay the interest on your student loans for as long as you are in school or if your loan is in deferment.
Federal student loans come with a variety of repayment plans: Easier repayment plans like income-driven repayment can be availed which takes a certain percentage of your discretionary income as a monthly repayment.
Federal student loans are eligible for student loan forgiveness programs: Most federal student loans are eligible for forgiveness plans such as Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness, and forgiveness that is a part of income-based repayment plans.
Federal student loans are eligible for deferments and forbearance: Forbearance options are offered by a few private student loan lenders. But it is neither nearly as easy to get as it is for federal student loans, nor as generous.
The truth is, you may be able to take out more on a federal student loan without your parents than with. The borrowing limits are different for dependent and independent students with federal student loans for undergraduates. The borrowing limits are considerably higher for independent undergraduates than for dependent students.
Graduate students are automatically considered to be independent borrowers and can even use federal PLUS loans in case of any additional financial need. They may borrow up to $20,500 in an academic year as federal student loan.
The following table will give you an idea about how borrowing limits work for different students:
|Year in School||Dependent Student Limits||
Independent Student Limits
|First-year undergraduate||$5,500 ($3,500 if subsidized)||
$9,500 ($3,500 if subsidized)
|Second-year undergraduate||$6,500 ($4,500 if subsidized)||
$10,500 ($4,500 if subsidized)
|Third-year or beyond undergraduate||$7,500 ($5,500 if subsidized)||
$12,500 ($5,500 if subsidized)
|Graduate or Professional||N/A||
$20,500 (all unsubsidized)
|Aggregate loan limit -- undergraduate students||$31,000 ($23,000 if subsidized)||
$57,500 ($23,000 if subsidized)
|Aggregate loan limit -- graduate or professional students||N/A||
$138,500 ($65,500 subsidized) this includes undergraduate loans
An independent student fulfils the following criteria:
They must be at least 24 years old by Dec. 31 of the financial aid award year
They must either be a ward of the court or both of their parents are deceased
They are a veteran
They are a graduate or professional student, regardless of their age
They are married or have legal dependents of their own
They receive a waiver from a financial aid administrator if they have unusual circumstances that qualify them as independent
To make it clear, the inability of your parents to support you financially does not qualify you as an independent student. This is also true if your parents choose not to nominate you as a dependent on their tax returns. You must satisfy the first five criteria on the above mentioned list to be considered to be independent. But if your parents are not eligible to avail parent PLUS loans due to their poor credit history or some other reason, you may avail the independent student borrowing limits.
Getting private student loans without parents
It is well known that federal student loans are often not sufficient to take care of the entire cost of going to school. Private student loans help bridge the gap if additional funding is needed. Most private student loan lenders will often loan out as much as your school’s published cost of attendance sans any financial aid you may get.
Private student loans are not guaranteed by the government. The responsibility of ensuring that the students qualify falls on the lenders. If you do not wish to get your parents involved in getting a private student loan for yourself, it can be done in two ways. You could either set up a decent credit for yourself and use it or you could take the help of a creditworthy cosigner.
Most private student loans are lent out to students with a cosigner who displays assurance for them and takes responsibility for their repayments. Even though a cosigner is often a parent or a relative, this doesn’t always have to be the case. A cosigner can be anyone whose credit score and qualifications meet the criteria.
A cosigner is willing to put their credit and financial standing at risk for your repayments by co-signing with you. They are legally considered to be responsible for your repayments. Since it is hard to convince a stranger to take such a massive burden on your behalf, cosigners are often parents
Another option to get a private student loan without a parent or a cosigner would be to establish a credit history or score for yourself and try to qualify. This will also be a good way for you to build a decent credit for loans that you will take in the future. If you wish to build your credit fast, you could take a credit card and use it wisely.
Credit score requirements are lender-specific. Any score in the upper 600s should be good enough to get a private student loan on your loan. Private lenders also take into consideration your income. Having a job could be a perk for you, especially one that you have had for awhile.
The bottom line is that getting private student loans is not as easy as is, and is harder without parents.
How to take out a student loan without getting your parents involved?
The following steps can guide you to get a student loan without the help of your parents:
Fill out the FAFSA: Always start by filling out the Free Application for Federal Student Aid(FAFSA). This is the first step to qualifying for grants and federal student aid. Grants are awarded based both on financial need and the student’s merit. Learn about which grants you are eligible for based on your qualifications.
Apply for scholarships: You may qualify for an academic scholarship. The amount that you will receive as scholarship depends on the course that you have enrolled for and your scores. It could even be sufficient enough to cover the full cost of your tuition for your degree. You can always work toward becoming eligible for an academic scholarship if you already are not when you pass out of high school. Educate yourself on scholarship that do not require your GPA for they are easier to qualify for. Enquire more about companies that offer these scholarships. Applying for a lot of scholarships from different organizations increases your chances of landing at least one.
Get a part-time or full-time job: It is not feasible to work full-time while taking classes from a university, but it is likely to help you afford school and save a chunk of money. It is neither realistic nor feasible to have expectations from yourself to apply yourself to such a strenuous extent. So working part-time might seem more realistic. But one downside is that the income from a part-time job is not likely to be enough to cover all your expenses, but it might make a difference when taken into consideration with scholarships and grants. Work opportunities on campus for college students are also prevalent these days. Having said that, off-campus jobs often tend to pay more.
Look into tax credits for qualifying college expenses: Borrowers have 2 options for tax credits available for qualifying college expenses:
a. American opportunity tax credit: The American opportunity tax credit (AOTC): they offer a tax break of up to $2,500 annually depending on your expenses. A credit of 100% can be received by you from the first $2,000 in qualified expenses that you incur and 25% from the next $2,000. Only 40% of it is refundable, up to an amount of $1,000. So if you qualify for a tax refund, you could receive up to $1,000 back from this credit. Tuition and fees, books, supplies and other equipment are considered to be qualified expenses.
b. Lifetime learning credit: The lifetime learning credit (LLC) is worth up to 20% of the first $10,000 spent on education expenses. It is not advisable to try for it if you are expecting a refund because this credit is nonrefundable. Educational expenses that qualify include tuition, fees and other enrolment related expenses. This means that your books, supplies and equipment do not qualify as vital educational expenses because they’re not required to attend your school. These qualified expenses have to be paid directly to the school. You will have to pick one of the two because exploitation of both is not accepted in the same year. So carefully work out which one will be better for you. If your parents claim you as a dependent on their tax returns, you can not avail either credit.
Reduce your college costs: Try to cut back on your expenses at college. Make a budget and stick to it. Bringing in more money isn’t the best way to deal with your loans.
Research tuition assistance programs: Tuition assistance programs are offered by the Army, Air Force, Navy, Marines and Coast Guard. So if you want to join them, you might want to do it soon. These programs cover up to 100% of your tuition and fees. But it is not advisable to do it solely for the money. The government views these programs as an investment for the military, so you might have to serve for a number of years to qualify. Tuition assistance programs are offered by other employers, too, for their employees, even part-time ones..
Think about taking out federal student loans: Federal student loans don’t require a credit check, so your parent’s credit history will not be necessary to take out a loan. With offerings such as the Public Service Loan Forgiveness Program and income-driven repayment plans, repayment options are highly flexible after you graduate. Private student loans can be taken out if federal ones are not enough to cover your expenses entirely. Compare different student loan servicers before settling on one. You may even look into alternative cosigner candidates if your having your parents play the role of a cosigner is not a possibility
The bottom line..
Remember that despite the fact that it can be difficult to get a student loan if your parents are not ready to cosign or get involved in any way, it certainly is not impossible. It is easier to avail federal student loans regardless of whether your parents are available or not. You might need some help in getting a private student loan by yourself. Look into private student loans that do not require a cosigner. These lenders will look at your potential to earn income in the future and not your credit history. Compare different student loan servicers before settling on one in order to pick the one most suitable for your needs. After you manage to get a student loan without any help from your parents, it is important for you to practice good student loan repayment practices as this will affect your credit.