CollegeFinance Score: ★★★★☆
Funding U aims to disrupt the student loan industry with its atypical approach to private lending. Loans are awarded based on students’ academic achievements rather than their creditworthiness, and no co-signer is required. Unfortunately, Funding U only offers loans in 30 states. Also, keep in mind that your repayment begins while you’re still in school.
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Cons:
In 2016, Atlanta-based Funding U established its no co-signer loan in Georgia. Two years later, this lender expanded across the country, and today, it offers loans to residents in 30 states. To date, the company has originated $4 million in student loans.
In addition to not requiring a co-signer, Funding U stands apart from traditional private student lenders in other ways. The company was formed with the intention of stepping up to fund what federal financial aid packages don’t cover. It’s also designed to reward hardworking students by awarding loans based on their grades, course load, job experience, and graduation track.
Although Funding U currently only offers undergraduate loans, it plans to expand in the future. In the works are personal loans for recent college graduates, refinancing options, and the ability to release your co-signer from your original student loans.
With its modern approach to lending, Funding U prides itself on supporting strong students, no matter their family’s credit history or income.
Funding U prides itself on providing a positive borrowing experience and a financially sound lending option to students. The Better Business Bureau (BBB) backs up this claim by awarding the lender an A+ rating for its performance.
For more than 100 years, the BBB, a private nonprofit organization, has provided consumers with the information they need to make smarter buying decisions. The organization compiles and assesses customer complaints about businesses across the United States. It also maintains an A+ through F rating system based on how businesses are likely to interact with customers.
The BBB considers numerous factors when calculating these letter grade ratings. Among the factors taken into consideration by the organization are a business’s customer complaint history, the industry it’s in, the length of time in business, transparency regarding business practices, licensing and government actions against the business, and advertising issues.
Funding U’s A+ rating, the BBB’s highest rating, reflects its commitment to helping students achieve their academic goals. Notably, according to the BBB, there are no customer complaints against the lender.
If you’re a high-achieving student with no co-signer, and you’re looking to borrow a low amount to cover gaps in college funding, Funding U could be a great choice for you.
Of course, not every lender will be a perfect fit for every student’s educational and financial needs. And there are some areas of improvement that would allow Funding U to deliver an even better customer experience. For instance, this lender could improve by allowing students to defer repayment until after they graduate and lower their APR.
Minimum loan amount: $3,001
Loan term options: 10 years
Multi-year approval available: Not disclosed
Fixed and variable rates available: Fixed only
Fixed low APR: 7.99%
Fixed high APR: 13.49%
Variable low APR: Not applicable
Variable high APR: Not applicable
In-school payment options: Borrowers must begin making payments while in school. They are required to pay a $20 minimum or interest-only payments each month and can choose to make extra payments.
Grace period: Loan repayments begin six months after graduation.
Co-signer release available: Not applicable, as Funding U doesn’t require co-signers
Loan servicer: Scratch
Interest rate discounts: 0.5% discount available to borrowers who sign up for autopay
Other rewards or services: Not disclosed
Academic requirements: Funding U has minimum GPA and graduation rates in place for students and educational institutions based on the borrower’s class year.
Income requirements: None
Credit score requirements: None
Eligibility for international borrowers: Funding not available to students attending schools outside the United States
Application or origination fees: None
Soft pull rate check availability: Funding U offers a soft pull credit check for students seeking loan pre-approval.
While Funding U offers many advantages to borrowers, do your research, and weigh your options before making this important financial decision. After all, your student loans will follow you for years to come.
Most importantly, exhaust all free financial aid and federal student loans before committing to private student loans.
Each year, the United States government provides more than $120 billion in financial aid assistance to students attending college or technical school through the Department of Education.
Federal student loans are generally the more favorable option when compared to private lenders. They often offer lower fixed interest rates and income-based repayment and deferment options. Also, loan forgiveness is available to graduates who participate in various public service programs.
When it comes to most federal student loans, your credit score won’t affect whether you receive funding. And since your eligibility is based on demonstrated financial need, a co-signer is often not required.
Private student loans are offered by various financial institutions, including banks and credit unions. Their terms vary by lender, and they tend to have higher, fluctuating interest rates. Private lenders are also known for being less forgiving when it comes to postponing or decreasing payments.
Of course, private lenders are useful in supplementing federal student aid if you’re not eligible for the full amount needed to cover your educational expenses. A lender like Funding U is ideal in this situation, as it is designed to loan smaller amounts of money to cover these gaps.
Although it’s still a relatively young company, Funding U stands out compared to other private student lenders. As a lender, it knows that you’re more than just a credit score, and they incorporate this into their business model. Your eligibility weighs heavily on your academic achievements rather than your credit history and family income. Also, co-signers aren’t required to obtain a loan.
However, there are some drawbacks to keep in mind, including loan repayment starting while in college, a high fixed APR, and a maximum funding limit of $10,000 each school year.
It’s a good complement to federal student loans, though, which should always be your first option. Borrowers seeking a low amount of funds to cover any gaps in their federal financial aid package will likely be drawn to Funding U.
Even if Funding U sounds like a good fit for your financial circumstances, do some additional research before committing to a private student lender. Look at all possible lenders and compare every facet of what they have to offer: repayment terms, APR, eligibility, amount offered, etc.
As you make this important decision, CollegeFinance.com is an excellent resource to help you assess potential lenders. Our website showcases information about loan options and lender reviews.
The choices you make today will impact your financial future beyond college, and we want to start you off on the right foot. Covering a vast range of topics, CollegeFinance.com can be by your side as you make decisions about funding your education — whether you want to learn more about scholarships and grants, choosing the best lender, and repaying or refinancing your student loans.