Flickr user Jonathan Cohen

When you are looking for a student loan, the first and best place to start is with the FAFSA. Filling the FAFSA opens the doors to a variety of financial aid, including federal student loans, at very attractive terms. However, sometimes this is not enough. If you require additional loans beyond your federal student loans, you will have to borrow from private lenders.

Private lenders typically approve of loan applications depending on the loan applicant’s credit history. In most cases, you will only manage to get your loan application approved if you have good credit. As a high school student, chances are you would not have had the opportunity to build your credit history, in which case, the lender will require you to have a co-signer.

Who Is A Co-Signer And How Do They Help?

A co-signer is essentially someone who has good credit history and who is willing to pay your loan if, for some reason, you can’t. This assures the lender that the co-signer will pay up the loan should you default on your payment. If you can manage to get a co-signer, that resolves your problem and enables you to get a private student loan to supplement your student aid package.

Unfortunately, not all students have someone who is willing or able to co-sign their loan. This can create a whole lot of issues.

What Happens If You Cannot Find A Co-Signer

Many private lenders will reject your loan application outright if you do not have credit history or a co-signer. Without credit history, they have no way of knowing whether you will be a good or bad borrower and without a co-signer they have no way of getting their money back from you. They prefer to steer clear of any potential problems.

A few private creditors may agree to give you a loan without a co-signer but this usually comes with a catch. Private loans that are given without a co-signer are much more expensive. They come with much higher rates of interest as well as higher administration fees and other charges. Lenders add these on to protect their interests. Think of it as the price you have to pay for not meeting the loan requirements.

Tips For Managing Your Loan Without A Co-Signer

Although private student loans without a co-signer can be expensive, you may have no other choice but to take it to pay for college. If you do decide to go this route, you must look for ways to pay it back as quickly as possible in order to reduce the accrued interest.

One good way to manage this type of loan is to consider consolidating your loans after you graduate. If you have built good credit history while you were in college and attained a job that pays decently after graduating, you may be able to get a lower interest rate on your consolidated loan. This can make the monthly loan payments and the overall loan repayment more manageable.

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