Funding U Student Loans: 2022 Review – Bankrate.com

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Hanneh Bareham specializes in everything related to student loans and helping you finance your next educational endeavor. She aims to help others reach their collegiate and financial goals through making student loans easier to understand.
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Funding U is an online lender that offers private student loans to undergraduate students without a co-signer. In fact, it doesn’t allow co-signers at all. Unlike other lenders, Funding U doesn’t base eligibility on credit history; instead, it looks at students’ GPA and other merit-based factors. While it does have higher interest rates than traditional lenders, it could be a good option for students who have strong grades but who don’t have a creditworthy friend or family member to help co-sign a private loan. However, it does cap annual loan amounts at $20,000, so it’s best for students who have covered most of their expenses with federal loans and need a small amount to fill in any gaps.
This lender is best for undergraduate students with little to no borrowing history who do not have a co-signer.
Funding U has limited lending options, offering only one private student loan for undergraduate students. However, its unique eligibility criteria makes up for the limited offerings.
Rather than relying on credit score and income to make lending decisions, Funding U uses its own proprietary scoring system based on academic progress and success. The lender tailors its product to undergraduates even further with its blog, which covers everything you need to know about building credit, paying for college, job hunting and more.
Funding U’s unique lending process comes with benefits, but it also has its drawbacks. Here’s what you need to know about the lender before applying.
Discount for interest-only payments in school: Borrowers can choose to make either $20 flat payments or interest-only payments while in school. If you choose to make interest payments, you’ll get a rate reduction of 0.5 percent.
No fees: Some lenders tack on an origination fee each time you take out a loan. Funding U does away with all fees, including origination fees and application fees.
Available to all undergraduates: Most lenders that have unconventional eligibility criteria will not lend to underclassmen. However, even freshmen can apply for a Funding U loan. In this case, lending decisions will be made based on high school academics.
Limited repayment options: Unlike with most lenders, you are required to make payments while you’re in school, though you can choose between a flat $20 payment and interest-only payments. Once you graduate, you are also limited to one repayment term of 10 years.
Availability: Funding U loans are available in only 37 U.S. states. While the list of eligible states is growing, residents outside of these states currently cannot borrow with the company.
Low maximum loan amount: The maximum amount of $20,000 per year is low when compared with other lenders, some of which offer up to the full cost of attendance.
High interest rates: Young borrowers without a co-signer will almost always be subject to high interest rates, and Funding U is no exception. Its interest rates are high, especially compared to interest rates offered by the federal government or more traditional private lenders.
In order to quality for a Funding U student loan, you must:
When making lending decisions, Funding U says that it considers students’ academic success in college, likelihood of graduating on schedule and projected total student debt. And while there is no minimum credit score requirement, Funding U will review applicants’ credit histories to ensure that there’s no pattern of late payments, collections or other indications of an adverse credit history.
Funding U is a great option for undergraduate students with little to no borrowing history who do not have a co-signer. Academic high achievers are most likely to be approved for a loan with Funding U. Funding U could also be a good choice for borrowers who don’t need to borrow much in student loans, since it caps its loans at $20,000 annually.
Funding U offers undergraduate student loans with fixed interest rates — there’s no option to select a lower variable rate. Keep in mind that the specific terms and conditions of your student loan will vary based on your graduation year and state.
There are no application fees, origination fees or cancellation fees associated with a Funding U student loan.
Borrowers have a few payment options while they’re still in school:
The in-school period can last up to 51 months, at which point loans enter a six-month grace period. Loans will also enter the grace period if you drop below full-time enrollment.
After the six-month grace period, students will begin repayment. There is only one repayment term offered; students must repay their loans over a period of 10 years.
Funding U’s customer service department is run through Scratch Services. If you have a question about your loan or the application process, you can contact a customer service representative through a phone call, the chat feature on the Scratch website or a letter.
You can call Scratch at 844-727-2684 from 9 a.m. to 8 p.m. ET Monday through Thursday or 9 a.m. to 5 p.m. ET on Friday. You can also log into your account at scratch.fi and use the live chat feature.
If you’re sending correspondence, you can send it to P.O. Box 411285, San Francisco, California, 94141. If you’re mailing a check, you can do so through USPS by sending it to Scratch Services, LLC, PO Box 398654, San Francisco, California, 94139.
You can apply for a student loan directly on Funding U’s website, starting with a preapproval process that’s based on factors like academic achievement, courseload, projected graduation date and future earnings.
In order to speed up the application process, you will need to have these documents on hand:
Here’s what the process will look like after getting preapproved:
Applications for the upcoming school year typically open in June.
Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
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