June 29, 2020
Can a college student get a loan without parents co-signing? Our FAFSA is done for our two college students, but we don't qualify for federal loans or grants. Due to challenging circumstances, we are in financial difficulties even though we both earn good salaries. My daughter will start her junior year of college this fall, and we have co-signed for her up until now. My son will be a college freshman this fall, but so far other than the FAFSA we have done nothing financially yet. What other options do we have?
Many families in your shoes try to find a qualified co-signer — e.g., grandparent, godparent, (very) good friend — who will guarantee a student's loan while leaving the parents out of the process. But you probably don't have a candidate in mind for this dubious distinction, or you wouldn't have asked about options.
Without a guarantor, your children will be able to receive Direct Unsubsidized Loans from the federal government. These do not require financial-aid eligibility, but the limits are low ($5,500 this coming year for your freshman son; $7,500 for your daughter). So your best bet may be to apply for a Parent Plus Loan for one or both of your kids. These loans do not require financial aid eligibility either, and any qualified parent can borrow up to the full cost of attendance each year. If you apply and are turned down (and, from what you've said, "The Dean" assumes you will be), then your son or daughter would be able to receive extra unsubsidized federal loans in their own names and with no co-signer. The biggest drawback here is that your son's loans will be capped at $9,500 in his first year, so this "extra" doesn't make much of a dent in the price tag at many institutions. BUT ... perhaps this is a blessing in disguise, because it will help him to minimize his debt. Your daughter, as a junior, will be able to get a bit more money ... up to $12,500.
You say that your son will be a freshman in the fall, so it sounds like he already has a college picked out. It would certainly be helpful to know which one it is in order to also know how far his unsubsidized federal loan limit will take him. Typically, when "The Dean" hears from a family in similar straits, their child is still formulating a college list, so I can present a sales pitch for keeping that list top-heavy with affordable schools. Right now in particular, many students who would have never considered a community college (or even a public university) are taking a different view. Families are realizing that they might have to pay $70,000 per year for classes that could end up being taught partially or entirely online. This realization is making lower-priced institutions more attractive than ever, including for some Ivy-angsters and other folks who previously prioritized prestige.
So even if you do have a co-signer at the ready or if you are able to successfully appeal a Parent PLUS Loan denial (which happens more than you may think), you still should be wary of leaving your son in significant debt at graduation, especially because it sounds like you may not be in a position to help with repayment. Moreover, the myriad unknowns of the COVID-19 era make it difficult to predict what the job market will look like for him in four years. It's certainly hard to be optimistic about it today, which is another reason why he should try to steer clear of large loans. Even if he's already committed to a costly college, it's not too late for him to apply to a two-year college or even to some in-state public four-year schools.
You can also ask the financial aid officers at your children's college(s) about private lenders that don't demand a co-signer. There are a few out there, but the vast majority will require the recipient to prove good credit, which is almost impossible for young adults who usually have no credit! And even if you can find a private lender willing to give a loan to your daughter or son, I still feel it's a slippery slope. For starters, these interest rates tend to be high and, secondly, it's likely that, if your son depends on private loans to finance his education, he will accrue unwieldy debt. (For your daughter, with just two years to go, a private loan may be more manageable, but — again — not easy to procure.) Here's a list of private lenders that don't automatically require a co-signer but, as noted above, most will demand proof of good credit.
Here are some other websites that may be helpful to you as you proceed:
If all of this feels too stressful and confusing right now (during a time that is already stressful and confusing for most of us!), your son might also want to join the growing ranks of 2020 high school grads who will take a gap year this fall. This would buy you at least a little time to reorganize your finances or to encourage him to apply to colleges that might be most affordable. It might help, too, to have your daughter out of school by the time your son begins.
Whatever you decide, best wishes on the decisions ahead.
Sally Rubenstone is a veteran of the college admissions process and is the co-author of three books covering admissions. She worked as a Smith College admission counselor for 15 years and has also served as an independent college counselor, in addition to working as a senior advisor at College Confidential since 2002. If you'd like to submit a question to The Dean please email us at email@example.com.
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