Taking out Student Loans Without Your Parents: What You Need to Know

Even though some parents are in a position to help their children pay for college, others are either unable to do so or choose not to disclose their income when applying for federal aid. Although applying for a student loan without your parents’ details or credit history can be challenging, it is not impossible.

Federal student loans are available to both fully independent and partially dependent students. Private student loans are another option that may or may not require borrowers to have a credit history. 

If you need financial assistance for school, the first step is to fill out the FAFSA (Free Application for Federal Student Aid) and apply for federal student loans. In comparison to private loans, they have lower interest rates, more flexible repayment plans, and sometimes even the chance to have the loan canceled entirely.

Can You Really Get Student Loans on Your Own?

The possibility of borrowing without a parent for a student loan is conditional on both the applicant’s financial standing and the specifics of the loan being sought.

• Federal student loans – Students who are considered financially independent or who have exceptional circumstances may not need to disclose their parents’ income or assets on the Free Application for Federal Student Aid (FAFSA). Regardless of how much parental assistance you receive in completing the FAFSA, they will bear no responsibility for any federal loans you may take out in their name. That leaves you on the hook for the full amount, plus interest, on your own.

• Private student loans – Several private student loans require a cosigner since undergraduates often do not have adequate credit or income to be eligible for a private loan on their own. Private student loans can be obtained even if you don’t have cosigners, but you’ll have to come up with the money to pay them back on your own.
  
  Thinking about various forms of aid that don’t require repayment, including scholarships and grants, is a good idea before obtaining student loans. If you can, use the award money to reduce your reliance on student loans.

How to Get Student Loans Without Your Parents

If you have made the decision to finance your education without the assistance of your parents, you have a few alternative options to choose from.

Applying for Federal Student Loans without a Parent

Federal student loans are the best option for students seeking financing for higher education since they offer more security to borrowers and have more lenient credit requirements than their private counterparts.

The Free Application for Federal Student Aid (FAFSA) is the initial step in getting a federal student loan. Whether or not you need a parent’s signature on a student loan and how much money you can borrow are both dependent on how you answer questions on the Free Application for Federal Student Aid (FAFSA) form.

1. Applying for Federal Student Loans as a dependent student. Even if your parents are unwilling to pay for your college expenses, the U.S. Department of Education will nonetheless consider them when determining how much financial aid you are eligible to get if you are a dependent student.
   
   Students who are financially dependent on their parents must submit all of the following, in addition to proof of their parent’s income. However, even without this information, you still have choices. To qualify for federal financial aid, you must fill out the FAFSA form, but there are situations in which you may not need your parents’ information to apply. You have two choices, and here they are:

• Ask a dependency override. If you are in a very difficult situation, such as an abusive home, you can petition the Department of Education to be treated as a non-dependent student. Approval of such requests is discretionary and subject to documentation requirements by the department.

• Prepare your FAFSA application independently of your parents. If your parents can’t or won’t fill out the FAFSA with you and you don’t qualify for a dependency override, you can select this option. I can’t provide you with any details about my parents at this time.

2. Applying for Federal Student Loans as an independent student. Independent status is automatically granted to students pursuing graduate or professional degrees, whereas undergraduates must meet federal guidelines for participation. If you meet one or more of the following criteria, you may be deemed an independent student and not be required to disclose your parents’ income.

• On January 1 of the aid year you’re seeking for, you were at least 24 years old.
• You are in the midst of a master’s or doctoral degree program.
• Either your parents passed away before you turned 13, you spent time in foster care, or you were in a court-ordered ward before you turned 18.
• You served in the United States Armed Forces, either as a veteran or currently for a non-training reason.
• A spouse has been chosen for you, or you’re divorced.
• You are providing over than half of your child’s or dependent’s support throughout the award year.
• If you are not living with either of your biological parents and someone other than your stepparent has legal custody over you, then you are considered an emancipated minor by the law.
• Your housing situation is unstable, and you may soon find yourself on the streets.

You must submit FAFSA data for just yourself if you want to borrow money for college without assistance. This is the most effective approach to obtaining a student loan if you do not have a cosigner from a parent. If you are a self-sufficient student, you will need the following materials to complete the form.

• Proof of social security eligibility.
• Forms of government-issued identification, such as driver’s licenses.
• Recent W-2 forms.
• Recent tax return for the United States federal government.
• Recently available bank statements.

Applying for Private Loans without a Parent

Private student loans can be a useful way to fill up the financial gaps left by federal student loans, scholarships, and grants. Borrowers seeking private education loans must often either have a substantial past credit history or secure a co-signer. This makes being approved more challenging, but there are still options.

1. Inquire about a co-signer from another family member. If your parents are unwilling to co-sign a private student loan with you, you may be able to find another relative or reliable friend who is willing to do so. The income and credit history of the co-signer are two of the most common prerequisites for approval, however, they might vary based on the lender as well as the type of loan being requested. Remember that by agreeing to co-sign the loan, your co-signer will be financially responsible for making the payments in the event that you default.

2. Try to locate a loan provider that doesn’t need a cosigner. For borrowers with limited credit histories, some private lenders may look at other considerations, such as academic merit or future prospective income, instead of requiring a co-signer. Some companies, including Ascent and Funding U, offer private student loans to students who do not have a co-signer based on criteria like GPA, school, program, graduation date, and major.

3. Improve your credit rating. If a student has good credit and a stable income, certain major lending institutions may approve them for a loan without a cosigner. Here are some things you can do to increase your credit score if you are new to credit or if it needs some work:

• Obtain a credit card – If you have a stable source of income or an adult willing to co-sign your credit card agreement, you may be eligible for a student credit card.
• Get yourself registered as an authorized user – Ask a family member or close friend who has good credit to add you as an authorized user on their credit card account until you can establish your own good credit history.
• Fill out your credit report with additional information – Your on-time payments of rent or utilities can be reported to credit bureaus, thus raising your credit rating.

Applying for Student Loans without a Parent: Pros and Cons

Consider these pros and cons before applying for a student loan on your own:

Pros

• Possible eligibility for extra funding. Financial help and federal loans are more common for financially self-reliant students.

• Independence. Some students may find it difficult to ask their parents for information. Even though you may have to put in more time and effort to qualify without a cosigner, taking out a student loan without parental involvement allows you to be financially independent.

Cons

• More difficult to qualify. Federal and private student loans may be difficult to obtain on your own if you are not an independent learner and do not have enough credit history or income.

• Maybe you’ll have to pay a higher interest rate. Getting a private student loan by yourself will certainly result in a higher rate of interest if your credit is less than stellar.

Bottom Line

Even without your parents’ signature on a loan, you may be able to secure enough money to cover your educational expenses. There are still options for securing private student loans, and the process of obtaining federal loans is similar to what it would be like if your parents paid for your education.