Private student loans without a cosigner: A guide for Indian students

Many private lenders offer loans to cover tuition, living expenses and other education-related costs, but they often require a cosigner. For Indian students, finding a U.S. or Canadian citizen to cosign an international student education loan can be a major hurdle. This article explores private student loans, what a cosigner is, why it’s often a requirement and the benefits of finding a loan provider that doesn’t need a cosigner.

Private student loans are offered by financial institutions like banks, credit unions or specialised lenders and are used to fund educational expenses such as tuition, housing and books. Unlike government loans, private loans are not guaranteed by the federal government, which is why some lenders implement stricter eligibility requirements like credit checks and the need for a cosigner.

Private student loans are particularly important for Indian students since government loans, such as U.S. federal student aid, are generally not available to non-citizens. However, getting approved for these loans without a strong credit history in the U.S. or Canada can be a challenge for many Indian students, which is where a cosigner often comes in.

1. Total number of Bangladeshi students in the U.S. (2023-2024):In 2023–2024, more than 17,000 Bangladeshi students were enrolled in U.S. institutions, which is an all-time high. This is a 26% increase from the previous academic year.Source: opendoorsdata.org
2. Year-over-year growth – Bangladeshi students in the U.S. and Canada (2022-2023 to 2023-2024):Canada’s popularity as a study destination for Bangladeshi students has grown significantly. In 2023, over 15,800 Bangladeshi students chose Canada, a 150% increase since 2018. Meanwhile, the number of Bangladeshi students studying in the United States reached an all-time high, with more than 17,000 currently enrolled in U.S. institutions.Source: opendoorsdata.org, Government of Canada
3. The proportion of Bangladeshi students among all international students:The total number of international students in the United States for the 2023-2024 academic year was 1,126,690. Bangladeshi students accounted for 1.5% of this total, with 17,099 Bangladeshi students enrolled.Source: IIE Open Doors 2024 Report

A cosigner is a person — usually a U.S. or Canadian citizen or permanent resident — who agrees to take joint responsibility for the loan. If the borrower (in this case, the Indian student) fails to make payments, the cosigner is legally obligated to pay back the loan. Lenders require cosigners because:

• Lack of U.S./Canadian credit history: Indian students often don’t have an established credit history in their host country. Lenders assess risk based on credit scores, and without this data, they’re less likely to approve the loan without a cosigner with a strong credit profile.
• Increased financial risk: Lenders see Indian students as higher-risk borrowers due to factors such as the possibility of returning to India after graduation, currency exchange risks and potential U.S. student visa or work permit issues that could impact employment.

In short, a cosigner provides additional security for the lender, ensuring they have someone reliable to pay back the loan if the primary borrower cannot.

Advantages of private student loans without a cosigner

Given the challenges of securing a cosigner, finding an education loan provider that does not require one can be a game-changer for Indian students. Several lenders now offer no-cosigner loans by assessing alternative factors, making it easier for students to secure funding. The benefits of a no-cosigner loan include:

• Independence: No need to rely on family or friends to back the loan, which can reduce personal and financial pressure.
• Focus on future potential: Some lenders, instead of looking at a cosigner’s credit, evaluate your future earning potential and academic performance. This approach is especially helpful for students pursuing high-demand fields like STEM (science, technology, engineering and mathematics).
• Avoid cosigner obligations: Without a cosigner, you don’t risk harming someone else’s credit or straining a personal relationship if repayment becomes difficult.

Lenders that offer private student loans without cosigners take into account your academic history, the university you’re attending, and your projected career path. These criteria allow them to assess the likelihood of your future success and ability to repay the loan.

For many Indian students, finding a U.S. or Canadian cosigner is a significant challenge. Most Indian students don’t have close family or friends who meet the legal and financial requirements of being a cosigner. Additionally, asking someone to cosign a loan can be uncomfortable, as it requires that person to take on significant financial responsibility and risk.

• Limited personal connections: Many Indian students arrive in the U.S. or Canada without close family members or friends who would qualify as cosigners.
• Cosigner reluctance: Even if someone does qualify, they may be reluctant to cosign due to the risk involved. If the student struggles to repay the loan, it can harm the cosigner’s credit score and financial standing.

When choosing a private student loan, especially an education loan without a cosigner, it’s important to do thorough research to find the best option for your financial needs and career goals. Here are some tips to help guide your search:

1. Compare interest rates

Student loan interest rates are a major factor in determining the total cost of your loan. Look for competitive rates and understand the difference between fixed and variable rates. A fixed rate remains constant over time, while a variable rate can fluctuate with market conditions, potentially leading to higher payments later.

2. Check eligibility requirements

Each lender has its own set of requirements. Be sure to check whether you meet the minimum criteria for private student loans without a cosigner, which may include academic standing, future earning potential, and the field of study.

3. Evaluate repayment terms

Look for flexible repayment terms that suit your financial situation. Some lenders offer deferment options, allowing you to delay repayment until after you graduate or even until after a certain grace period. However, assess delayed payments carefully because they often result in a higher total cost of the loan over time.

4. Understand the total loan cost

Before committing, calculate the total cost of the loan, including interest and fees. An interest rate is a percentage of the loan principal, while an annual percentage rate (APR) encompasses the interest plus any fees for the loan each year. The APR allows you to make an apples-to-apples comparison of different loan products by annualizing the full cost of the loan based on the interest and fees charged.

5. Look for additional benefits

Some lenders provide added perks, such as career services or visa support, which can be especially helpful for Indian students transitioning to the workforce in the U.S. or Canada. These services can improve your chances of finding employment after graduation, making it easier to repay your loan.

MPOWER Financing is dedicated to making higher education accessible to Indian students, especially those who face challenges securing traditional loans. By offering private student loans that require no cosigner, MPOWER simplifies the financing process and provides students with the flexibility they need to focus on their studies.

Here’s why MPOWER’s no-cosigner loans are an excellent choice for Indian students:

• No cosigner required: Unlike many lenders, MPOWER offers student loans without the need for a cosigner, removing the barriers that often prevent Indian students from accessing funding.
• Designed for Indian students: MPOWER’s loans are specifically created for students studying in the U.S. and Canada, offering tailored solutions that fit their unique financial needs. These loans cover a wide range of expenses including tuition, housing, health insurance and other essential costs.
• Fixed interest rates & flexible terms: MPOWER provides loans with fixed interest rates, giving students a predictable payment plan. Additionally, there is the ability to qualify for a 0.25% interest rate discount by setting up automatic payments. Loan amounts range from US$2,001 (₹1,66,700 INR) to US$100,000 (₹83,33,000 INR).
• Fast, digital application process: The fully online process makes it easy to apply for a loan, with quick eligibility checks and efficient approval times. Students can access the funds they need without dealing with complex paperwork or unnecessary delays.
• Support beyond funding: MPOWER goes beyond just providing international student loans. Students gain access to career resources, visa support, and financial services through the Path2Success program, ensuring they have the tools to succeed during and after their studies.