Funding University Reviews: Undergraduate Private Student Loans Without a Cosigner

Funding University, or Funding U for short, aims to serve lower- and middle-income students who “are shut out by the bank requirements” to get a student loan. Those typical requirements, credit history and cash (or those of parents), are replaced by factors like the student’s grade point average when Funding University reviews loan applications. Unfortunately, these loans also carry high interest rates and only help fill small gaps in funding.

Funding University review: Undergraduate student loans

Historically, about 9 in 10 private student loans for undergraduates are cosigned, often by parents with thicker credit files. Funding University reviews other factors, including graduation rates and projected future earnings, when underwriting its loans, which are strictly for students.

Funding U student loans are a good fit for high-achieving undergraduates (including prospective first-year students) who prefer eschewing a cosigner, or who don’t have the option of one. This loan product could be particularly helpful for undocumented students who are recipients of the Deferred Acton for Childhood Arrivals (DACA) program and don’t have many lending options.

Funding University reviews for undergraduate student loans: The basics

If you’re an undergraduate without a cosigner, here’s what to expect from Funding U loans.

APRs	● Fixed: 7.99% – 13.49%
Basics	● Prequalify and check rates without affecting your credit ● Loans available in 33 states (full list below) ● Borrow as little as $3,001 and as much $15,000 per year ($7,500 per semester) ● Receive a $100 Amazon gift card upon graduation
Eligibility	● U.S. citizen, permanent resident or DACA recipient ● Age 18 or above ● Full-time enrollment at one of about 1,450 eligible four-year, not-for-profit schools awarding bachelor’s degrees (online-only schools are ineligible) ● Meet minimum grade point average
Applying	● No application, origination or “hidden” fees
Repayment	● Standard six-month grace period (when full repayment commences) ● No prepayment penalties ● Two in-school repayment options, $20 or interest-only monthly payments ● Reduce your interest rate by 0.50 percentage points if you make interest-only payments while enrolled ● Repayment term option: 10 years
Support	● Funding U assigns a “loan officer” to each borrower for one-on-one service ● Forbearance for in-school payments is offered in 90-day increments for up to 51 months overall ● Forbearance for out-of-school repayment is available in 90-day spans for as many as 24 months ● Forgiveness is offered only in the case of the primary borrower’s death

What to like about Funding U student loans

Funding University serves an underserved audience: undergraduates who don’t have a loan cosigner. But there’s even more to like about this company.

Prequalify, with no credit score or income necessary

Like other reputable lenders, Funding U allows you to prequalify — that is, confirm your eligibility and check rates without a formal application that could ding your credit score. Plus, unlike other lenders, Funding U doesn’t impose requirements around your credit or income to become eligible for its loans.

Instead, Funding University reviews a handful of nontraditional criteria, including:

• Academic record and internship experience
• College course load (with 15 credits per semester being optimal)
• Your school’s graduation rates
• Projected future earnings for your degree program
• Projected student debt from Funding U and other sources

With that said, Funding University reviews your credit history, as well. Negative events such as missed payments or debt in collections would harm your chances of approval.

DACA recipients over 18 are eligible to apply

Funding U stands out for its inclusion of undocumented students who are recipients of the Deferred Acton for Childhood Arrivals (DACA) program. This is a major distinction because even some financial institutions that lend to non-green-card-holders require a citizen or permanent resident cosigner.

So, if you’re seeking DACA financial aid, it might be worth considering Funding U’s loan program after you’ve exhausted all sources for gift aid (like grants and scholarships) that don’t need to be repaid.

Clear-cut forbearance programs to pause repayment

Deferment and forbearance programs allow you to postpone monthly dues on your loan balance if you struggle to keep up. They’re a helpful safeguard against becoming delinquent on your debt, which can have serious consequences, such as wage garnishment.

For its part, Funding U has clear-cut forbearance programs, whether you’re in school or already graduated.

	Amount available	Reasons to qualify
In-school forbearance	90 days each, 51 months total	● Any medical residency ● Economic hardship ● Military deployment ● Total permanent disability ● Temporary hardship ● National Disaster
Out-of-school forbearance	90 days each, 24 months total	● Unemployment ● Pursuing further studies for a graduate degree at an eligible school ● Any medical residency ● Economic hardship ● Military deployment ● Total permanent disability ● Late school notification ● Temporary hardship ● National Disaster

During a qualifying period of forbearance, your monthly payment would be zero, but interest will continue to accrue. It capitalizes onto your balance at the end of the forbearance period.

What to keep in mind about Funding U student loans

Besides the fact that Funding U is really for a narrow audience (undergrads without cosigners), there are a few other factors to be aware of.

Federal loans should be your first option

Like federal student loans for undergraduates, Funding U loans don’t require a cosigner. But federal loans come with lower APRs and vastly greater repayment protections. Even Funding U encourages its potential borrowers to borrow a federal loan before resorting to a private loan.

Loans not available nationwide or at all school types

Even if you fit Funding U’s borrower profile, you might not be pursuing higher education in a qualifying state.

Funding University reviews loan applications in the following states
1. Arizona 2. Arkansas 3. California 4. Colorado 5. Connecticut 6. Florida 7. Georgia 8. Hawaii 9. Illinois 10. Indiana 11. Iowa	12. Kansas 13. Maryland 14. Massachusetts 15. Michigan 16. Missouri 17. Nebraska 18. New Jersey 19. New Mexico 20. New York 21. North Carolina 22. Ohio	23. Oregon 24. Pennsylvania 25. South Carolina 26. Tennessee 27. Texas 28. Utah 29. Vermont 30. Virginia 31. Washington 32. West Virginia 33. Wisconsin

Funding University reviews loan applications only for certain types of schools, too. If you (plan to) attend a for-profit or online-only program, for example, you’ll be ineligible.

Rates are not competitive with cosigned loan options

If you can find a student loan cosigner, it could be worth your while. That’s because fixed (and variable) interest rates offered by other lenders that at least encourage (and sometimes require) cosigner support offer significantly lower rates than the range Funding U promoted for the 2021-22 school year.

Furthermore, the lowest rate advertised by Funding U — 7.49% in January 2022 — was only available to juniors and seniors “with outstanding academic performance.” If you’re a first- or second-year student without a sterling GPA, for example, you might be in line for a double-digit APR.

Loan amounts are limited

Many of the best private student loans allow students to borrow up to 100% of their remaining cost of attendance after all other financial aid has been accounted for. Funding U loans have a $7,500-per-semester maximum, which could leave you short of the funding you need for your school.

All loans are assigned a 10-year repayment term

Like federal student loans, Funding U loans automatically carry a 10-year repayment term. That means your postgraduate payments will be divided into 120 equal installments: 12 per year, for a decade. (The only way to adjust your term would be through student loan refinancing down the road.)

If you’d like a greater amount of repayment flexibility, you might choose to work with a private lender that may offer three to five or even more different repayment term lengths. This way, you could pay off your loan in, say, five, seven, 12 or 15 years.

In-school payments are required

This is not necessarily a negative, as paying even small amounts of your student loans while enrolled can go a long way toward ensuring your balance doesn’t balloon while you’re busy studying. It can also help you build a positive credit history.

It’s worth noting, however, that Funding U doesn’t offer customers the ability to defer their repayment. Its two in-school repayment options include:

1. Partial: Pay $20 monthly toward your debt
2. Interest-only: Cover the accruing interest each month

Interest-only monthly payments could potentially be more expensive than those fixed $20 payments, but the total cost of your repayment (over 10 years) may be lower. If you borrowed a $15,000 at 9.99%, for example:

	Partial	Interest-only*
Monthly payment	$20	$118.63
Total cost of repayment	$28,806	$26,485
*Assumes for a discounted 9.49% APR

On the bright side, borrowers who elect to make interest-only payments would receive an APR discount of 0.50 percentage points.

Loan servicing is handled by a third party

Funding U’s sleek website and application experience, including a dedicated “loan officer,” might give you a sense of false confidence. The company outsources its loan servicing operations to Scratch Services. That means this third party (not Funding U itself) would help you navigate repayment.

How Funding U student loans compare

Comparing rates and terms with multiple lenders will help you find the best overall loan possible for your situation.

	Funding University	Laurel Road	Citizens Bank
SLH rating	3.8/5	4.3/5	4.3/5
Loans for…	● Undergraduate students without cosigners	● Graduate students who are studying health care (including future nurses, physician assistants, doctors and dentists)	● Undergraduate and graduate students ● Parent loans
APRs	Fixed starting at 7.99%	Variable starting at 3.00% and fixed starting at 3.10%	Variable starting at 3.22% and fixed starting at 3.23%
Ability to prequalify without affecting credit	Yes	Yes	No
Borrowing amount	$0	$0	$1,000
In-school repayment options	2	4	2
Repayment terms	10 years	5, 7, 10, 15, 20 years	5, 10, 15 years
Cosigner release available	n/a	Yes — after 36 months of timely payments (and meeting other criteria)	Yes — after 36 months of payments

You’ll very likely be better off if you shop around beyond a few lenders. Make sure you learn all about the best options for your specific needs.

Are Funding U student loans right for you?

The interest rates are high, the repayment options are inflexible and the loan amounts are capped at $7,500 per semester. And yet, Funding University reviews like this one recommend the lender for a niche audience: undergraduate students who don’t have a cosigner, or many other options.

For all of its faults, Funding U is a reputable lender with a dependable product that serves this cohort well. It also stands out for lending to DACA recipients and offering a transparent forbearance program that makes it relatively easy for borrowers to pause payments in hard times.

Before you borrow from Funding U, though, it’s wise to double-check your potential eligibility with other lenders. Our private student loan marketplace is a good place to start.

How to apply with Funding University

If you might be a fit for Funding University student loans, the lender recommends taking the following steps:

1. Confirm your eligibility by creating an account on the Funding U website
2. Share your academic progress to date, such as your most recent grade transcript
3. Request a loan amount
4. Wait for pre-approval
5. If approved, discuss your quote with a dedicated loan officer
6. If you accept the offer, upload documentation like your tuition bill to “re-verify” your application
7. Wait for your school to receive the loan funds from Funding U

How to contact Funding University

Funding U only lists an email address — [email protected] — where it accepts general inquiries.

If you have questions about the servicing of an existing Funding U loan, contact Scratch Services via its website or at (844) 727-2684.

Frequently asked questions about Funding U student loans

If you didn’t find your question answered in our Funding University review, see the following FAQs:

Is Funding University a federal loan?

No, Funding University is a private loan for undergraduate students (not parents or graduate students). The company recommends opting for federal loans (if you must borrow) before resorting to private loans.

What grade point average (GPA) do you need to qualify for Funding U?

Funding University doesn’t publicly share its GPA requirements. The thresholds vary by school and state.

Does Funding U offer student loan refinancing?

No, the only way to change the terms of your Funding University loan would be to refinance it with a private lender that does offer refinancing. In the process of refinancing, your new lender would pay off your original debt and issue you a new loan for the same amount, albeit with ideally better terms.

Methodology for ratings

To come up with our shield rating for student loan refinancing lenders and companies/private student loan lenders and companies, Student Loan Hero asks hard questions — 20 of them, in fact — spanning three categories: accessibility, rates & terms and repayment experience. That’s because we want to judge financial institutions on their products and services from start to finish: when our users are shopping around, filing applications and paying down their debt.

A top-rated lender, for instance, has inclusive eligibility criteria, allows you to prequalify and check rates without harming your credit score and is supportive as you face monthly payments.

The answers that we get to our 20 questions — either from the lenders themselves or by combing through their fine print — determine each lender’s overall rating. We score answers consistently, sometimes awarding partial points, to ensure that you can make equal comparisons between all lenders that we put under the microscope.

Student Loan Hero isn’t paid for conducting these reviews, and lenders don’t have a say in their content. The goal with our reviews and ratings, along with everything else we do, is to give our users the most comprehensive and up-to-date information available to make the best decisions according to their borrowing needs.

Student Loan Hero has independently collected the above information related to Funding University student loans, which is current as of Jan. 19, 2022, unless otherwise noted. None of the financial institutions named has either provided or reviewed the information shared in this article.