Funding U Student Loans Review: Pros, Cons, And Alternatives

Funding U is a student loan lender that focuses on non-cosigned student loans.

When students apply to take out private student loans, they'll typically be required to pass a credit check. Since most college students have a limited credit history, that usually means they can't qualify for a student loan on their own.

Some student loan companies market no-cosigner student loans to graduate students in certain professions. But Funding University is one of the few lenders who lends to undergraduate students who don’t have a co-signer.

Private loans have fewer benefits and protections than the more common federal student loans. Most students who qualify for federal student loans should only turn to private loans after they've hit their annual or aggregate loan limits.

But if you're not eligible for federal student loans or you need to bridge a funding gap, Funding U could help you take out a student loan to pay for school without a cosigner. Learn who would benefit from their student loans and who should look at other funding options.

Who Is Funding U?

Funding University, or Funding U, specializes in private student loans for undergraduate students. Currently, Funding U is able to lend in 40 states. Their loans never require a cosigner. 

Instead, the company lends based on your likelihood of graduation from college. The borrowing requirements are based on your GPA, and year in school. Upperclassmen can expect better rates and are more likely to qualify for a private loan from Funding U.

What Are The Academic Requirements?

Funding U uses a proprietary scoring system, called SMaRT™, to determine a student's loan eligibility. SMaRT™ relies on a variety of non-credit variables to evaluate student borrowers during the loan approval process.

One of those variables is a student's GPA. The actual GPA requirements vary by academic year. Underclassmen need higher cumulative GPAs to take out a loan compared with upperclassmen. 

In addition to GPA requirements, Funding U has school graduation-rate requirements. A certain percentage of students that enroll in your school must graduate within 6 years in order for it to be an eligible academic institution. 

What Are The Employment Requirements?

You don’t need a job or any source of income to take out a loan from Funding U.

However, you will need to immediately begin making payments of at least $20 per month on the loan while you're still in school. Ideally, you’ll want to have part time work or another source of income to cover these payments.

What Are Funding U's Student Loan Terms?

Students can borrow $3,001-$20,000 per year with Funding U. Regardless of how much you borrow, you will not pay any origination fees. They also have no prepayment penalties.
Rates on Funding U loans range from 7.99% – 13.49% when you are set up on autopay. All loans have either 5 or 10-year terms which, unfortunately, doesn't provide any payment flexibility. Many other private loans come with 15- or 20-year options which can be useful for borrowers who want lower monthly payments.

Normal repayment begins 6 months after you graduate (or otherwise leave your school). During school, you must make minimum payments of $20 per month or interest-only payments.

Since interest will accrue during school, making interest-only payments could help to keep your loan balance down and avoid interest capitalization after you graduate. 

Are There Any Extra Perks Or Discounts?

Yes, Funding U offers a $100 Amazon gift card graduation reward to all of its borrowers. To receive your gift card, you'll simply need to provide proof of your graduation date such as by submitting your final semester grades or a copy of your degree.

You can also earn a $200 Amazon gift card by referring a friend to Funding U. And borrowers who sign up for autopay receive a 0.50% discount on their interest rate.

How Do Funding U Student Loans Compare?

Funding U is one of very few companies that lends student loans to underclassmen without a co-signer. However, there are other options. First, students should look into Federal Student Aid. You can apply for Federal Student Aid by filling out the FAFSA on StudentAid.gov.
If you can't get enough funding through Federal Student Aid, you’ll want to compare loan offers from private lenders. Since most lenders require a cosigner or a source of income, finding a loan alternative to Funding U may be difficult. However, a private loan marketplace like Credible could help you find a loan.

Check out the table below to see how they compare to some of the more popular private loan lenders:

What Borrower Protections Are Available?

All private loans are less flexible than federal students loans. For example, you won't have the option to sign up for income-driven repayment if you're feeling pinched by your standard monthly student loan payments.

However, Funding U offers more borrower protections than you'll find with some other private student loan lenders. It's forbearance policy, for example, is very generous offering up to 24 months of hardship forbearance (applied in 90-day increments). You can also receive up to 24 months of forbearance during a medical residency, military deployment, or if you enroll in a graduate degree program. 

Funding U does provide death discharge, but unlike other lenders, will not discharge loans due to permanent disability. Instead, it can provide up to 60 months of forbearance for totally disabled borrowers.

Are There Any Fees?

No, Funding U is a completely fee-free student loan lender! There are no application fees, origination fees, or prepayment penalties. And it doesn't charge any late payment fees either which is a rarity in the private student loan industry.

How Do I Contact Funding U?

Funding U doesn't provide any contact information on its website. However, it does list several ways to reach its loan servicer, Scratch Loan Servicing.

To get in touch with Scratch Loan Servicing, you can call 1-844-727-2684 or live chat at scratch.fi. Its customer service hours are 9 AM – 8 PM (ET), Monday through Thursday and 9 AM – 5 PM (ET) on Friday.

Why Should You Trust Us

I am America’s Student Loan Debt Expert™ and have been actively writing about and covering student loans since 2009. Myself and the team here at The College Investor have been actively tracking student loan providers since 2015 and have reviewed, tested, and followed almost every provider and lender in the space.

Furthermore, our compliance team reviews the rates and terms on these listing every weekday to ensure they are accurate. That way you can be sure you're looking at an accurate and up-to-date rate when you're comparison shopping. 

Who Is ThiS For And Is It Worth It?

Undergraduate students should be careful about taking out private loans. These loans don’t have the same protections as federal loans, and they often carry high interest rates. In some cases, private loans can be avoided by working during the school year or summer or by living very frugally.
Of course, you may face extenuating circumstances where taking on private student loans is the best way to get your degree. For example, not everyone qualifies for federal loans (such as DACA students or permanent residents. And if you do need a private loan as an undergrad, Funding U is a strong option for those who would can't or don't want to add a co-signer.

Funding U Student Loans FAQs

Let's answer a few common questions about Funding U student loans:

Does Funding U lend to graduate students?

No, only undergraduate students are eligible to apply for Funding U student loans.

Is Funding U a good student loan?

Funding U stands out from the private student loan crowd by never requiring cosigners. However, it may try to compensate for the extra risk it takes on by charging higher interest rates. Students should compare Funding U's rates with their cosigned student loan options.

Can parents apply for a Funding U student loan?

No, Funding U only lends to students directly.

Does Funding U offer student loan refinancing?

No, if you're interested in refinancing your Funding U student loans, you'll need to apply with a different private lender.

Will applying with Funding U hurt my credit score?

Funding U offers a pre-qualified rate tool that uses a soft credit check. However, if you move forward with submitting a full loan application, a hard credit check will be added to your credit report which is likely to have a short-term impact on your credit score.

Funding U Features