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If you need to borrow money for school, federal student loans should always be used before private student loans. Make sure you fill out the FAFSA, or Free Application for Federal Student Aid, to qualify.
If federal loans don’t quite cover your costs and you need additional money to help you pay for college, though, private student loans can be a helpful option.
How do you qualify for a private student loan? We explain the most common student loan requirements you should know before you apply.
Most common private student loan requirements
Just like with any other kind of loan, there are some requirements that you’ll need to meet in order to qualify for a private student loan. Most private lenders have very similar eligibility requirements, but you’ll want to check with individual lenders before applying.
In addition to the shared eligibility criteria, most lenders also allow you to borrow up to the school-certified cost of attendance. Some lenders may have specific maximum loan amounts aside from the school-certified cost of attendance, but they are often over $100,000.
These are some of the most common requirements you’ll see from private lenders:
1) Attend an eligible school
Private lenders usually won’t lend you money unless you are attending a school they have determined to be eligible. Most lenders require that your college be a Title IV-accredited, four-year-degree-granting program. These types of colleges can be private or public.
If that isn’t the type of program you plan to attend, there are other loan options to consider. If you’re heading to a community college or trade school/career training, there are specific loans that are available for those education paths.
2) Meet citizenship requirements
Private lenders generally require that you are a U.S. citizen or permanent resident. Most lenders require a Social Security number to apply. If you need a cosigner, they will also need to be a U.S. citizen or permanent resident.
Because of this requirement, if you’re an international student, getting a private student loan can be a little bit tricky. It might be a good idea to look at student loans specifically for international students.
3) Be enrolled at least half-time (usually)
If you’re not in school full time, you can usually still qualify for a private student loan. Most lenders require that you be enrolled at least half-time to be eligible to borrow money. Often, that’s defined as six hours per semester, but you’ll want to check with your school to see what they determine as half-time and full-time status.
Are you in school part-time? There are lenders that specifically offer loans to part-time students, so it might be a good idea to start your loan search there.
4) Have a good credit score or a creditworthy cosigner
Most students likely won’t qualify on their own because they haven’t built up a credit score by the time they attend college. Lenders like to feel confident that the loan they grant will be repaid, so they need to have someone with a good credit score on the loan.
To help you qualify for a loan, you will likely need a cosigner who has a good credit score. A cosigner is someone who applies for the loan with you. While the loan is your responsibility to repay, a cosigner is legally responsible to repay the loan should you not make your loan payments.
Not sure if you need a cosigner? Or do you have a cosigner but are not sure they have a strong enough credit score to help you qualify? Many lenders allow you to see if you’re eligible for a loan with a soft credit check before going through the full application process.
If you don’t have someone who can cosign the loan with you and you don’t have a solid credit history, there are student loans without a cosigner that you can apply for.
5) Meet income and debt-to-income ratio requirements (you or your cosigner)
This is another tricky requirement that can be difficult to meet without the help of a cosigner. Lenders want to know that you have income coming in and a small number of monthly debt payments.
If you don’t have an income, that’s okay. This is where a cosigner can again help. You’ll just want to make sure you find a cosigner that has a stable income and few monthly debt obligations.
Documentation you’ll need when applying
If you can meet the five main requirements for a private student loan, it’s time to start applying for student loans. Before you apply, gather a few things to make the student loan application process as smooth as possible:
- School information (including your school name, your year, and the term for which you need the loan)
- Social Security number (for you and your cosigner, if applicable)
- Permanent U.S. address
- Employment and income information (for you and your cosigner, if applicable)
- Cost of attendance and the estimated amount of other financial assistance you will receive (loans, scholarships, and grants).
Where to find private student loans
If you’ve decided that you want to help finance the cost of your college with private student loans, it’s important to shop around to find the lowest interest rate possible.
Many lenders will allow you to get rate quotes with a short application and a soft credit pull that won’t affect your credit score. Once you find a lender that you like, you can go through the full application process.
Here are some guides that can help you compare options:
Author: Erica Gellerman