However, since undergraduate borrowers are less likely to have established credit or an income, lenders will usually require students to apply with a co-signer.Some lenders who have loans for borrowers without a co-signer will consider career and income potential.Lenders will often require you to attend a Title IV school, which means your school processes federal student aid. You’ll have a hard time finding a private student loan from a bank, credit union or online lender if you have bad credit.Federal student loans don’t require borrowers to demonstrate creditworthiness, so they’ll be your best option.
Federal student loans also have flat interest rates set by Congress, while the interest rate on a private student loan depends on your or your co-signer’s credit.Depending on the lender, you may be able to choose a fixed or a variable interest rate.A fixed rate stays the same throughout the life of a loan.A variable rate may start out lower than a fixed rate, but could increase or decrease over time depending on economic conditions.Consider any borrower protections your private lender offers, including deferment and forbearance, as well as repayment options.USA Today’s Money section has a good article discussing why you should exhaust your Federal student loan opportunities before looking at private loans. The amount of federal money that students can borrow is limited, and those limits haven’t kept up with increases in college costs.As a result, some students who attend high-cost schools rely on private loans to pay for expenses not covered by their federal loans. Public Interest Research Group, a consumer advocacy group, has charged that some of these ads are misleading and entice borrowers to take out unnecessarily high-risk, high-cost loans.If you’ve already hit your limit on federal loans, you may be able to get a private student loan if you apply with a co-signer who has solid credit, typically scores in the high 600s or better.Learn more: Student loans for borrowers with bad or no credit If you have no income and either no credit or bad credit, you’ll need a co-signer to get a private student loan.The government pays the interest on subsidized Stafford loans while the borrower is in school.In addition, borrowers who work in certain public-service jobs for at least 10 years will be eligible to have the balance of their student loans forgiven.