All About Signature Student Loans

By Kelly Boyer Sagert · January 23, 2023 · 7 minute read

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All About Signature Student Loans

When you’re looking for funds to pay for your college education, you’re likely to go after federal funds and all of their benefits first — and, if that isn’t enough, then you’ll seek private loan funding. But, what is a signature student loan, exactly? Does it make sense to take out this type of funding? This post will share insights into a student signature loan.

What Are Student Signature Loans?

Known as a “sig student loan” for short, it’s a type of loan that people use to pay expenses for college. They can also be known as “good faith loans” because they’re granted to a borrower on the basis of a signature only with no collateral. The borrower takes on a certain amount of private (non-federal government) debt in the form of a loan at a predetermined interest rate, agreeing to pay it back in a series of installments, and then uses the funds to pay expenses.

What Type of Loan is a Signature Student Loan?

As you explore options, you’ll come across different types of student loans. In general, there are two broad types: federal and private student loans. Federal loans require the filling out of a FAFSA to see if a student qualifies for any type of aid from the federal government; some colleges and universities require a FAFSA even for scholarships and grants. A student signature loan, however, is a form of private funding, one where collateral is not needed, making it an unsecured private loan for college expenses.

Common Uses of a Signature Student Loan

Common uses of a signature student loan include for tuition/attendance, books, and housing. Here’s more about each.


Tuition costs can vary but a typical student could pay $10,000 a year for in-state tuition at a public four year institution and up to $40,000 to $50,000 in tuition at a private university each year. So, a student may decide to use a sig student loan to cover costs of tuition/attendance that aren’t covered by grants, scholarships, and federal student loans.


The average college student spends between $600 and $1,500 each year to pay for their books and supplies. One single hardback textbook can now cost as much as $400 although the average is between $80 and $150. So, just about 30% of students use some form of loan funding to pay for their college books.


Although some students continue to live at home during college, many pay for room and board. At a public, four year institution, this could cost $9,000 to $13,000 a year. At a private, non-profit institution, it could cost a similar amount, depending on whether the student lives on or off campus.

Should You Get a Signature Student Loan?

It depends on your unique situation because signature student loans come with pros and cons that we’ll explore soon in this post. As general guidance, students who don’t receive enough funding through grants, scholarships, and federal student loans often look towards private funding to make up the difference. Private loans, sometimes called signature student loans, are offered by banks, credit unions, and online lenders.

Pros and Cons of Signature Student Loans

Pros of Signature Student Loans

Pros of signature student loans include the following:

•   Extra Source of Funds

•   Variety of Repayment Terms

•   Flexibility of Usage

•   Here’s more about each

Extra Source of Funds

Private student loans, also called a student signature loan, can provide a source of funding for college after grants, scholarships, and federal options have been exhausted. Federal financial aid can include grants and scholarships typically being awarded without repayment requirements. Federal loans are also considered financial aid. Students who demonstrate financial need may qualify for a subsidized loan, meaning that the government covers the interest while the student attends school. Student signature loans can help fill in funding gaps.

Variety of Repayment Terms

With a private student loan, funds are obtained from a private lender. Some offer better rates and terms than others with some of them deferring payments while the student is attending college classes. Compare rates and terms to choose which route is best for you.

Flexibility of Usage

In general, a private loan can offer flexibility with the funds used; for example, this funding can be used as one of the undergraduate student loan options or one of the graduate student loan options: for tuition, books and supplies, and/or housing expenses.

Cons of Signature Student Loans

Unlike a federal student loan, private lenders of student signature loans don’t rely upon information found in a FAFSA. Instead, a student interested in receiving private funding would fill out an application with the lender of interest. In other words, the student must qualify for the loan.

Qualifying for a Sig Student Loan

Loan terms can vary by lending institution. This includes the interest rates offered, borrowing limits allowed, and the length of the loan.Some require payments while the student is in school while others will defer payments until the student is out of school. Choose parameters that fit your needs with the understanding that you’ll need to qualify for the loan program.

Credit Score

The private lender may require you to have a certain credit score to obtain the loan or to get the best rates and terms. The three main credit bureaus that issue scores are Equifax, Experian, and TransUnion. A private lender will likely have a certain credit bureau that they use to get an applicant’s credit scores, and yours will need to fit within their lending guidelines to get loan approval.


The lender will also want to see proof of a steady income, one that’s sufficient to pay back the loan. If you don’t have enough on your own, perhaps a parent would cosign the loan for you, reassuring the private lender that the loan will be appropriately paid back.

Other Ways to Pay for College

Ways to pay for college include:

•   Financial aid

•   Federal loans for students

•   Federal PLUS loans for parents

•   Work study jobs

•   Part time jobs

•   Private student loans

•   Here’s more about each

Financial Aid

In general, student financial aid can be a combination of grants and scholarships, federal student loans, private student loans, and funds from jobs (work study or part time jobs).

Federal Loans for Students

Federal Direct loans, also known as Stafford loans, can be either subsidized or unsubsidized. With the first, the government covers the interest while the student is in school; with the latter, the interest accrues while the student is in school. In either case, finding out what you qualify for in federal funding can be a logical first step.

Federal PLUS Loans for Parents

Parents can take out a Parent PLUS loan for an undergraduate with fixed interest rates and flexible repayment methods. These loans do require a credit check and can also be taken out by graduate/professional students. The maximum amount that can be borrowed is the full cost of tuition minus other financial assistance the student receives.

Work-Study Jobs

There is a federal work-study program that allows students with financial need to earn income to pay their education-related expenses. Ideally, the work will be connected to community service and/or the student’s academic study courses. This program is managed by the colleges themselves, so check with yours to see if they participate and if you qualify.

Part Time Jobs

If you don’t qualify for work study, you can still seek part time employment in the general location of your university, perhaps at a restaurant or coffee shop or by babysitting or dog walking. This allows the student to earn income, hopefully on a schedule that is flexible enough to work around college commitments.

Private Student Loans

This can be a source of funding for college expenses when grants, scholarships, and federal funding options have been exhausted. Private lenders can have different loan programs, so compare carefully before making a decision.

The Takeaway

In short, a signature student loan is a type of unsecure (no collateral) form private funding to help with educational expenses. It’s a private form of lending. There are pros and cons to this type of lending as this post demonstrates.

If you’re exploring private student loan options, SoFi can help. SoFi offers a low-interest rate, no fee form of private lending — a student signature loan — that covers costs that are school certified: tuition, books, supplies, room and board, and transportation.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.


Is a signature student loan a good idea?

It depends on your unique situation, and whether you’ve explored all of the options for grants, scholarships, and federal loans. This article lists pros and cons of signature student loans.

Is it easy to get a signature student loan?

A signature student loan is a form of private funding, so the lender will likely check your credit scores and ability to pay back the loan. You may or may not need a cosigner.

When do you have to start paying a sig student loan back?

It depends on the private lender. Some have you start paying it back right away while others allow you to wait until you’ve finished school. Be clear about what you’re agreeing to, including when the loan must be paid back.

Photo credit: iStock/FatCamera

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Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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