If you’re in high school and planning on going to college, you’re probably both excited and a little scared. It’s a significant change; especially since you’ll be on your own for the first time.
One of the biggest challenges might be figuring out how to pay for school on your own. If your parents are unable to help you with tuition and room and board — and many families can’t afford to do so — it’s easy to feel lost and overwhelmed.
But you’re not alone. In fact, 71% of all students graduating from a four-year college or university had student loan debt. Here’s how to take out student loans without your parents’ assistance.
How to take out student loans without your parents’ help
If you need financial aid, there are two main kinds of student loans available to you: federal and private.
Federal student loans
When it comes to student loans, federal loans should be your first choice. With the U.S. Department of Education as your lender, federal loans have more benefits, such as lower interest rates and better repayment terms, than private loans. Those perks make it easier to manage after you graduate. Best of all, most federal loans don’t have income minimums or require a credit check, so you can apply for and receive a loan entirely on your own.
If you’re going to school for a vocational program, associate’s degree, or bachelor’s degree, there are two types of federal loans you can take out:
- Subsidized loans: As a student paying for school yourself, you might qualify for subsidized loans, one of the cheapest forms of student debt you can have. With a subsidized loan, the government covers interest that builds on your account while you’re in school, helping you save money.
- Unsubsidized loans: With an unsubsidized loan, you’re responsible for all of the interest that accrues on your loan. While you’re in school, your loan will grow thanks to interest charges which you’ll have to pay back. Although they’re not as beneficial as subsidized loans, unsubsidized loans can still be a useful tool to pay for school.
Depending on your grade level and financial need, you might be able to borrow up to $57,500 in subsidized or unsubsidized loans. As of January 2018, both types of loans have a low interest rate of 4.45%.
To qualify for federal student loans, you first need to complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is what the government uses to determine what kind of aid you receive, including grants and student loans. Depending on your income (if any) and financial need, completing the FAFSA can help you get enough money to pay for school.
Once you’ve completed the FAFSA and gotten accepted into a school, the college will send you information about your financial aid options. They’ll tell you which federal student loans you qualify for and what the next steps are to accept those loans.
Private student loans
Unfortunately, you might find that you cannot get enough federal loans to pay for the full cost of school. You might not qualify for the maximum amount the government allows, or your school might be more expensive and eat up more of the loan.
If you need more money to fill the gap so you can complete your education, private loans might be a good idea for you.
Unlike federal loans, which are issued by the government, private loans come from individual banks or organizations. Private student loans usually have higher interest rates and stricter repayment terms, which is why federal loans are the better choice. However, if used wisely, private loans can help you finish school and get your degree.
Although most federal loans don’t take into account your income or the factors that determine your credit score, private loan lenders do look at those factors. As a student just starting out, it can be much harder to find a private lender willing to work with you, but it’s not impossible. As an undergraduate student, there are two ways to take out private loans:
- Apply on your own: Because private lenders have income requirements for loans, applying for a loan on your own is an option only if you’ll be working while in school. For example, if you are working a full-time job and going to school at night or on the weekends, you might qualify for a private loan on your own. Otherwise, you likely won’t qualify for a loan by yourself.
- Ask a friend or relative for help: Since many students plan on going to school full-time and don’t meet the income or credit eligibility requirements, lenders do offer another option for private student loans. Instead of applying on your own, you can ask a friend or relative to act as the loan cosigner. That means they will be responsible for payments if you fall behind. It lessens the lender’s risk, so having a cosigner increases your chances of getting approved for a loan.
If you need a private student loan and are applying on your own or with a cosigner, it’s a good idea to compare offers from multiple lenders to get the best rate and save money. Check out some of the best private student loan companies to help you get started.
Finding financial aid
Although paying for college on your own can be tough, there are options out there to make college possible for you. By figuring out how to take out students loans with your parents’ help, you can get your degree and kickstart your career.
You can make school more affordable by finding free money like scholarships and grants to reduce the amount of federal or private student loans you need to borrow. These nine scholarship search tools can help you find potential opportunities.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.99% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|3.82% – 12.82%3||Undergraduate and Graduate||Visit Ascent|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|3.88% – 12.88%6||Undergraduate and Graduate||Visit SunTrust|
|4.68% – 9.77%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.04% – 12.01%9||Undergraduate, Graduate, and Parents||Visit Citizens|