International Student Loans with No Cosigner
Posted by Rohit Mittal
If you have been looking into international student loans at all, you have probably noticed the term “cosigner” popping up everywhere. What exactly is a cosigner? Unfortunately, a cosigner is more than just a second signature on your loan application.
In the United States, the term cosigner refers to a second party who will become responsible for the payments if the borrower is unable to repay the loan. It is added security for the lender that gives them a second person to pursue if they do not receive payment.
Read on to learn more, or check out our video Loans for International Students in USA | F1 Loan Without Cosigner!
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What to Do if You Can’t Get a Cosigner?
Finding a private loan without having a cosigner and credit history could be tough. Although federal loans could look like an ideal option, they might not be easy to obtain. Here are a few ways which can help you out:
Get a loan from a non-traditional source
When things don’t turn right, turn left! Thus, if credit unions and banks are not providing loans to you without a cosigner, it is highly recommended to explore the alternate options. You could approach non-traditional sources to obtain money.
How about approaching a family member or friend or any other acquaintances who might be willing to lend money to you? You will not only be able to secure a loan quickly and swiftly this way, but you will also be able to get a loan at better rates and with lesser documentation.
Build your own credit
Credit history is important, and it will impact your finances, sooner or later. This is why it makes sense to build your own credit. One of the best ways to do so is by getting a secured credit card or small installment loan from a lender who reports to the credit reporting bureaus. Next, start building your credit score by paying the installments well on time, and paying all the dues ahead of the deadline.
This will help you in building your credit, and will ultimately help you in securing a loan without depending on a cosigner.
Look at alternate solutions
If the loan offers are not in line with your budget, and you need to make a decision quickly, one of the best ways is to look for alternate options. For instance, you might want to become a roommate as an alternative to getting a cosigner for an apartment lease. This way, you will be able to skip the credit check since you are not the only person responsible for paying the rent to the landlord.
Similarly, if you are out in the market for an auto loan, you might want to get the loan through franchise dealerships that most automobile manufacturers are associated with. There are dozens of companies that are ready to provide a loan to the people who are likely to buy a car.
Are There Loans for Students with No Cosigner?
Thankfully, yes, there are loans for students with no cosigner. However, these loans are only available to students who have a good credit score along with an established credit history. It is important to mention here that instances, when students qualify for private student loans without a cosigner, are rare. This is because, more often than not, students lack a credit score, let alone be credit history.
But this should not dishearten you. As you can still secure a federal loan even when you don’t have a cosigner. Federal loans are approved based on a range of factors – like your financial need. Here, your lack of credit score and history do not impact your chances of getting a loan. This, essentially, means that students with weak or no credit history can receive these loans.
Direct subsidized loan
These loans provide students with flexible repayment terms along with low interest rates. These loans are provided to students based on their financial need, and the government pays the interest accrued on these loans while the student is in school.
Direct Unsubsidized loan
Contrary to a direct subsidized loan, direct unsubsidized loans do not require you to demonstrate your financial need to get the loan. However, here, you will need to pay the interest accrued while you are in school. This will not be paid by the government as is the case with the direct subsidized loan.
4 Requirements Your Cosigner Must Meet For Your Loan
While the concept is simple, finding a loan cosigner can be very difficult, especially for an international student; not just anyone can cosign a loan.
A qualified cosigner can be difficult to find because private lenders will require that they meet certain criteria. The most common and important requirements are that your cosigner:
1. Have a Good Credit Score and Credit History
The point of having a cosigner is to provide additional security on the loan, so the cosigner must prove that they will make the payments if need be. The proof that lenders look to is credit history and credit score.
2. Be a US Citizen or Permanent Resident
The second thing you need in an international student loan cosigner is US citizenship, which is usually the most challenging criteria for international students.
3. Have a Stable Source of Income
Lastly, your cosigner must be able to show a stable source of good income. Lenders will usually ask for recent pay stubs to prove that the cosigner will be able to make payments.
4. Be Willing to Cosign a Loan on Your Behalf
The last element of an eligible cosigner is much simpler, yet can still add difficulty to your search. Even if you have found a perfect cosigner—who meets the criteria above — he may not be willing to sign on your behalf.
Being a cosigner is risky because their credit will be hurt if the borrower fails to make the necessary payments on the loan. Many people are not willing to take this risk, even if they are a close friend.
Why do International Students Need Cosigners?
After reading the difficulty of finding a cosigner above, you may be wondering whether or not you need one? Can you get a loan without a cosigner? There are many criteria for obtaining a student loan, whether it is a federal loan or a private loan, many of which are more difficult for international students to meet.
Low/no credit score and credit history
As with a cosigner, an international student loan will require you to show excellent credit and long credit history in the US. This is obviously very difficult for international students, as college is their first time in the US at all. Even if you began building credit in college, it would not have time to grow significantly.
Students have very little income
While attending college, most students do not yet possess the necessary skills or knowledge to have a high paying job. Even if they did, most of their time is spent in class or studying. Because of this, most college students do not meet the necessary income requirements for private lenders.
Very high-interest rates
If you are barely able to meet the requirements above but have no cosigner, the lender will make up for this insecurity by charging you a much higher interest rate. Although this is an option, it could be very detrimental in the long run and limit your repayment options.
How Can an International Student Find a Loan Cosigner?
After reading the beginning of this article, you may have come to the conclusion that it is both necessary and very difficult to find someone to obtain a cosigned loan. Below you will find the most common ways to find an international student loan cosigner in the US.
Have friends or family cosign
If you are planning to attend a university in the United States, it might be because you have close family or friends living there. If this is the case, and they are a US citizen or permanent resident with good credit, they may be willing to sign for your loan. Family and friends are the most commonly used cosigners in the US, for both permanent residents and international students.
Check with university alumni associations
Some universities have programs in place to help international students with the dilemma of getting a loan with a cosigner. Alumni who may have been in your shoes before and are now established in the US offer to cosign private loans for students who show commitment and academic promise. It is worth it to check for this option when choosing your university.
Use an online loan cosigner matchup
In this day and age, whether it’s a home, book, or significant other, you can find almost anything online. This also holds true for loan cosigners. You can certainly do your search on any social media platform, but there are also websites like Cosigner Finder who will help you find a willing and able international student loan cosigner.
The internet can be a great resource—but be careful! Do not give any personal information to an untrusted party. Also, notice that websites like this may charge additional fees.
How Can I Get a Loan Without a Cosigner?
At this point, you may be slightly discouraged at how difficult it can be for an international student to find someone to cosign their private loan. Don’t be discouraged! There are still options available regarding loans without cosigners and other financing options, check them out below.
Get a Private Loan Through an Online Lender
Now for the good news! There are several online lenders designed specifically for international students and others who may have trouble qualifying for a loan or getting a cosigner. Below you will find the top three online lenders for international students.
Stilt is specifically designed for international students and others who may have difficulty obtaining a private or federal loan in the US. Stilt lends to immigrants, including international students and DACA holders, who can’t get a cosigner and have competitive interest rates starting at 7.99%. Stilt is the top pick, as they have the fewest qualification requirements. The loan process is really quick — you can get a decision within 24 hours after a complete application. The funds can be in your account in as quickly as 1 business day after the promissory note is signed. Stilt doesn’t partner with universities, so you are eligible to apply irrespective of the university you attend. Stilt is also the only option if you want to refinance your international student loan without a cosigner. You can also start building credit with a Stilt loan.
Like Stilt, MPOWER also focuses on international students and has a minimum 7.99% interest rate. To make up for the lack of cosigner, however, MPOWER tends to give loans to students they feel have high earnings potential. Mpower partners with universities and provides loans only for a few majors. To be eligible for Mpower, you should be attending a school supported by Mpower and be in the last 2 years of your education. The loans have up to 10 years repayment period. Because of this, it can be difficult for undergraduate students and students at lower-tier universities to qualify. On average, it takes 3 weeks for an end-to-end process with Mpower, and the funds are disbursed directly to the school.
Another international student loan company is Prodigy Finance. They have seen great success and hope to grow tremendously in the future. The downside, though, is that they have tough qualification guidelines. The list of partner universities and majors is limited. Prodigy is focused on loans to international students who attend MBA programs. They only offer loans to students at the highest-ranked universities and even restrict the areas of study that they will cover. The loans are originated from a U.K.-based entity, and the repayments are not reported to credit bureaus in the U.S.
3 Options for Student Financial Aid
For many international students, getting a private student loan (like the ones above) ends up being the only option that they have. In some cases, though, there is other financial aid available. Below are a few additional ways for international students to go about getting financing.
In general, international students do not qualify for federal loans, because you must have a green card to get this kind of financial aid. If you do not fall into this category, it is still often recommended that you fill out the Free Application for Federal Student Aid (FAFSA) anyway. If you are attending a public university, your FAFSA will also be used to determine your eligibility for any financial aid provided by your state or school itself.
Private and Academic Scholarships
A great option for students of all backgrounds is scholarships. There are scholarships for almost every type of person and achievement, and some are simply drawings or other luck! A simple Google search will pull up hundreds of options, and you should apply for them all.
Even if you get a great loan, scholarships offer a huge advantage: you will never have to make a repayment. No matter the size, scholarships can help all students, regardless of the method they use to pay their tuition.
Family and Personal Savings
When it comes to college tuition, paying outright is a great option when it is possible. It may require some sacrifice, but if you’ve read this far, it is clear that your education is important to you. Any payments that you can make on your own throughout your time in college will reduce your loan and interest amounts, saving you lots of money in the long run.
As an international student, loans will be hard to come by in the U.S., especially if you don’t have a cosigner. But that doesn’t mean that you have no options. Armed with the information above, you should be able to secure a loan and make the most of your education in the U.S.!