With the cost of law school on the rise, many students need to bridge the gap between scholarships and financial aid with loans, first federal and then private. Unfortunately, about 90% of new private student loans require a cosigner. In the absence of a willing or qualified cosigner, though, the good news is there are private lenders who will give out non-cosigned students loans.
Many of the lenders we list later in this article will offer loans to students with a caveat or two—namely, that you have a decent credit score, good credit history and that you meet any other credit requirements established by the bank. Others judge your future earning capacity to ensure that you’ll be in a good position to repay them. Thankfully, as a graduate student, you’ll have had a few years to build your credit history and pay off credit cards such that the credit check should deliver good news.
Before you go shopping for the loan, prepare yourself for the private loan application and selection process to save time, hassle and money. We’ve included some helpful tips for you as you look for the best ways to finance your education.
How to shop for a student loan without a co-signer
Start with federal student loans.
Fill out the FAFSA (Free application for federal student aid) to apply for federal loans to initial meet your financial need. These loans, which are provided by the government, usually have low interest rates that are better than many private lenders. Direct unsubsidized loans are the most common and lowest-cost ways to cover graduate school costs.
Plan to take out direct loans before you move on to private loans as they are often more flexible and affordable. Federal loans are also eligible for income driven repayment and several different loan forgiveness programs, which will be important if you decide to take a public sector job.
Private loans can help you make up the cost of attendance difference between what federal loans will cover and what you need to pay for school. Be advised that private lenders don’t offer any loan forgiveness programs and normally don’t offer income-based repayment options. So, private student loan companies should be considered a lender of last resort but I know that many of you will need more money than your Stafford loans and Plus loans offer.
Related: How to Pay for Law School
Get your credit in order.
At the end of the day, lenders want to make sure that you can pay back the money that they lend you. The more creditworthy you are when you apply, the better your chances of approval and the lower your interest rates will be.
- Check your credit score early and often as you prepare to apply for private student loans. Aim for a 690 or better FICO credit score to get the best loan terms.
- Raise your credit score by disputing and correcting any errors on your credit report.
- Pay your bills on time and keep your credit utilization low. Try not to spend more than 30% of your available credit at a given time, and try not to open too many new accounts. Taken together, these factors make up the majority of your credit score.
Compare apples to apples.
Take some time to go over the fine print of each loan offer. Obviously, lower interest rates will be more attractive, but also consider if there are additional student loan options that may suit you.
The option to postpone payments of the entire loan amount (e.g. hardship or deferment) may be something that may be important to you down the road. Also look at any application, origination, or late fees. See if your lender has any prepayment penalties and take them all into account as you figure out what the true cost of your loan will be.
When you receive all of the terms of your potential loan, use a student loan calculator to see exactly how much you can expect to pay each month. Factor in your APR’s, any fees or discounts and all of your repayment options to get a clear picture of what you’ll be facing when you graduate.
Look for a fixed interest rate.
While provide student loans will offer higher interest rates, a fixed interest rate (as opposed to a variable rate) will make sure that your loan repayment doesn’t increase over time. While I’m generally a fan of variable interest rates once you’re in the mode of paying off your loan, I think you can only make that decision once you’ve established your income and have regular recurring checks deposited into your checking account. For now, I’d stick with the fixed interest rate to ensure that you’re comfortable making monthly automatic payments under your repayment plan as soon as you graduate.
Think about refinancing in the future.
After graduation you may be able to refinance your student loan debt and secure a lower interest rate. Going through the effort of refinancing can save you money by reducing your monthly payments and it’s typically easy to check rates using a tool like Credible where you can check a bunch of interest rates at the same time.
Private lenders offering student loans without a cosigner
Now that you know what to look for to secure the best loan terms, here are some lenders to consider. All of these listed lenders provide private student loans to graduate students without a cosigner. You’ll find the most lenient, accessible lenders at the top of the list, though.
Ascent offers non-cosigned private student loans. Their fixed rates start at 4.09% and cap at 13.03%. If you’re an upperclassmen or graduate student without a credit history, you may want to check out an Ascent loan.
The main issue with Ascent is their high interest rates. Those high rates are due to the fact that Ascent only requires a relatively low credit score of 540. Also, you don’t need you to have any income or cosigner when you apply. Rather than relying solely on your current financial situation, Ascent considers your future earning potential when they assess your ability to repay their loans. Their approval process will take into account your future earning potential rather than your current creditworthiness.
Ascent will also allow you to defer your loans while you’re in school. When you’re ready to repay, enrolling in auto-pay will net you a 1% cash back incentive or a .25% interest rate discount.
Sallie Mae is the top private student loan lender in the US. They offer private loans to most graduate students without a cosigner. Good credit is necessary for all applicants, but graduate students are still likely to get approved.
CommonBond provides loans to both undergraduate and graduate students. In many cases, they’ll lend to graduate students—especially those enrolled in med school—with requiring a cosigner.
CommonBond also offers a low origination fee and several different repayment options, including a residency deferral so that you can manage your loans gradually as you enter the workforce.
Citizen’s Bank will also lend to graduate students without a cosigner. They do require that you have good credit, but will not charge you and application or origination fees.
They offer lengthy repayment terms, from 5-15 years depending on how much you borrow. Citizen’s Bank will shave up to .25% off of your interest rate if you enroll in autopay. You can earn an additional .25% interest rate discount if you already have another account with them.
Discover will establish private student loans without a cosigner, but they do insist on good credit. If your credit history isn’t established or your credit score isn’t high enough, Discover will require a cosigner. International students can apply for loans from Discover, but they must be secured by a cosigner who is a US citizen.
MPOWER offers private student loans to international students or students with DACA (deferred action for Childhood arrivals) status. MPOWER offers 7.52% to 13.63% interest rates for individuals from 180 different countries. DACA students don’t need a social security number to qualify and MPOWER doesn’t require an established credit history for approval.
How to shop around for the best deal
Once you’ve reached the maximum federal loans provided through the department of education, private lenders offer some competitive selections to make sure that you have the money that you need for tuition. The private loan options listed in this article offer a great way to finance your education.
Before starting the application process, make sure you have everything in order for your applications. Every lender wants to know what risk they’ll take on by lending money to a client, so making sure that you’re creditworthy is valuable to everyone on this list. Sallie Mae and Ascent offer loans to most graduate students, but you’ll improve your chances of approval and get better rates with a higher credit score and good credit history. MPOWER and Discover will provide private student loans to international students and those with DACA status. MPOWER doesn’t need a cosigner to do this.
The other three lenders—CommonBond, Citizen’s Bank and Discover—will lend to graduates student who have good credit. To make their programs stand out, Citizen’s Bank and Ascent will even provide incentives like cash back or a discount on your interest rate to encourage timely repayment of your loan. CommonBond offers a residency deferral program for med school students.
In short, it’s possible to secure student loans without a cosigner, and as an independent student you do have some choices. Each of these lenders is available to help you bridge the gap towards financing your professional education on your own. Weigh their requirements and benefits so that you’re able to find the best loans for your needs.
Joshua Holt is a practicing private equity M&A lawyer and the creator of Biglaw Investor. Josh couldn’t find a place where lawyers were talking about money, so he created it himself. He is always negotiating better student loan refinancing bonuses for readers of the site or finding honest companies that provide student loan advice for a fair price.