Conventional wisdom has it that getting a student loan is a family affair involving students and their parents. It is a tag-team effort to find the education financing needed to get a newly-minted college student on campus with enough funding to cover college costs.
The truth is, there’s no law that says a student and parent need to both be involved in borrowing money for college, especially when it comes to federal student loans. That make sense when you think about the sweet spot families should be aiming for with student loans.
- Students need the money to pay for a good college or university and get on with the process of preparing for the real world, primarily through quality academics and internships at good companies.
- Parents want their children to get the financial aid they need to go to college, but ideally want their names off the loan and no obligations to repay that debt.
There are several ways college students can get student loans without a parent borrower or cosigner. These include federal student loans, increasing federal student loan limits by qualifying as an independent student, getting a private student loan with someone other than the parent as a cosigner and tuition installment plans.
Focus on Free Money First
It’s always best to exhaust any and all free financial aid options before you turn to a student loan.
Free money includes grants and scholarships, tuition waivers, and gifts from family members like grandparents, aunts and uncles.
Consider tuition installment plans, which let you pay the college bills in monthly installments over the academic term for a small up-front fee.
Perhaps friends and family might be willing to provide a no-interest loan.
Hit the Sweet Spot with a Parentless Federal Student Loan
How do you meet those unique goals and get junior on the path to a college degree, while keeping mom and dad at an arm’s length on any student loan transactions? One good way is a student loan without any parental help.
A “parentless” student loan is easier to achieve than you might think when you focus on public and not private student loans.
Most U.S. college students are eligible for the Federal Direct Stafford Loan, which does not depend on the applicant’s credit history and does not require a cosigner. The applicant does need to file the Free Application for Federal Student Aid (FAFSA), which usually requires parental information if the student is a dependent student, but this does not obligate the parents to borrow or to cosign the loans.
“Dependent Versus Independent” Student Loan Options
Whether the student is considered to be a dependent or independent student on the FAFSA affects federal student loan limits.
If the student is an independent student, parental information is not required on the FAFSA, and the loan limits on the Federal Direct Stafford Loan are higher.
How high? This table shows the loan limits for dependent and independent students:
Year in College
$5,500 ($3,500 subsidized)
$9,500 ($3,500 subsidized)
$6,500 ($4,500 subsidized)
$10,500 ($4,500 subsidized)
Third and Subsequent Years
$7,500 ($5,500 subsidized)
$12,500 ($5,500 subsidized)
$20,500 (all unsubsidized)
$40,500 (all unsubsidized)
As shown in the table, independent undergraduate students get an additional $4,000 per year in annual loan limits during the first and second years, and $5,000 per year during the third and subsequent years.
Graduate students and students in medical school are automatically considered to be independent students.
In addition, the aggregate loan limits for independent undergraduate students are $57,500, compared with $31,000 for dependent undergraduate students. Graduate students can borrow up to $138,500 ($224,000 for medical school students), including any undergraduate debt.
Graduate students may also be eligible for the Federal Grad PLUS loan, which depends on the borrower’s credit history, but does not require a cosigner. If the graduate student has an adverse credit history, they may be able to still get a Grad PLUS loan with an endorser, which is like a cosigner.
There is no shortage of caveats in classifying a college student as dependent or independent when it comes to qualifying for student loans without parental help.
Basically, if you’re 24 years old (or older) as of December 31 of the financial aid award year, Uncle San considers you an independent college student, thus qualifying you for higher loan amounts than a dependent college student.
Additionally, if a college students parents have both passed on, if the student is a military veteran, or if the student is married or has dependents of his or her own, that student (even if he or she is an undergraduate) is deemed an independent.
Special circumstances may apply, as well. For example, if a student’s parents can’t qualify for a Federal Parent PLUS loan because they have bad credit or other financial hardship issues apply, the student can qualify for the same loan limits as independent students on their Federal Direct Stafford loans.
A Word on Private Student Loans
You can get a private student loan without a parent, as well, but there’s a pretty big catch.
Private student loans generally require a creditworthy cosigner, but the cosigner does not need to be your parents. The cosigner can be someone else with very good or excellent credit who is willing to cosign the loan. Convincing a non-parent to co-sign a private student loan is a tall order, however, and your chances of doing so are low.
But if you have a mentor, grandparent or trusted friend with sterling credit who will cosign your loan, you may be able to qualify for a private student loan without getting your parents involved.
Five Action Steps to Get a Student Loan Without a Parent
Leverage the right strategies to get a parent-free loan:
No matter what, fill out the FAFSA form. The one step in the “no-parent” student loan that actually requires a parent’s involvement is the FAFSA form. The FAFSA is a prerequisite for a student to get a federal student loan. If the student is a dependent student, parental information is required on the form. Signing the FAFSA does not obligate the parent to borrow or to repay their child’s federal student loans.
Explore going independent with your college loan. Uncle Sam, via the U.S. Department of Education, does offer various loopholes to move your “dependent” status to an “independent” status.
Students can’t really declare themselves independent, even if they are living on their own and financially self-sufficient.
There are very few options for becoming independent that are under the student’s control. The main options are getting married, having children or legal dependents other than a spouse, serving on active duty with the U.S. Armed Forces and enrolling in graduate school. Otherwise, the student will have to wait until they turn age 24 and are automatically independent to go to college.
Besides these options, college students can ask the financial aid administrator for a dependency override in unusual circumstances. But, dependency overrides are very rare and involve extreme circumstances, such as an abusive household and abandonment.
The college financial aid administrator will not provide a dependency override merely because the parents are unwilling to complete the FAFSA or verification, or because the parents are unwilling to pay for college.
If, for whatever reason, parents can’t or won’t provide their financial information and have cut off all financial support to the student, the student may qualify for just unsubsidized student loans.
Check out tuition installment plans. The vast majority of U.S. colleges and universities offer tuition installment plans that can help you take a bite-sized approach to paying down tuition costs – and curb the need for any student loan. If you’ve saved up enough money, paying your tuition via monthly installments buys you some time to so you don’t need to make that huge upfront, lump-sum payment.
Even if you steer $2,500 of your savings toward $10,000 worth of college tuition costs for a semester, that’s $2,500 less than you’ll need to borrow in a student loan scenario. Ask your bursar’s office about signing up for a tuition payment plan.
Tuition installment plans are also a good option if the student is trying to work their way through college.
Check your SAR. Once the FAFSA form is complete, the student and his or her family will get a Student Aid Report (SAR) in a few days or, more likely, in a few weeks. On that form is all the data that was recorded on the form by student and parents.
When you get your Student Aid Report, check it thoroughly for accuracy, as the information included will be used to calculate the amount of money available in financial aid for the student. If the amount isn’t enough for your college costs, the student can apply for federal student loans (as long as they remain under the loan maximum cap) without getting his or her parents involved.
The Parental View
For parents, there is no obligation to repay a college loan taken out by their student that they didn’t cosign or apply for themselves.
While mom and dad can still contribute to their child’s college education in myriad ways (i.e. tax free gifts, through college 529 plans, or the American Opportunity Tax Credit, for example), they’re free and clear of any legal obligation to repay student-only federal or private loans.
That might be the ideal scenario for parents who want to help out with a child’s college costs – but only on a limited basis where they call the shots.