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Last update: March 7, 2024

8 minutes read

How to Qualify for a Private Student Loan? The Key Requirements

Learn the key qualifications for securing private student loans: A comprehensive guide on necessary credit scores, income stability, and accredited school enrollment requirements.

By Brian Flaherty, B.A. Economics

Edited by Rachel Lauren, B.A. in Business and Political Economy


Ready to hit the books, but your wallet isn't? Wondering how you can qualify for a private student loan? In this post, you'll learn about the essentials: from enrollment status and school accreditation to credit scores and income requirements. Plus, we'll dive into the importance of a cosigner for those with less-than-stellar credit. You'll discover clear steps to prepare and qualify for the financial boost you need for school.

Key takeaways

  • Make sure you attend an accredited institution and meet the half-time enrollment requirement
  • A credit score in the mid-600s is typically needed for loan qualification
  • Steady income and low debt-to-income ratio play big roles in eligibility

    How can you qualify for a private student loan?

    To qualify for a private student loan, you typically need to attend an accredited school at least half-time and have a solid credit score or a cosigner with good credit (like a parent, for example). Lenders also check if you or your cosigner have enough of an income while meeting their specific age and citizenship criteria.

    What requirements do you need to meet for a private student loan?

    Before you can unlock the door to a private student loan, there's a checklist of basic requirements you need to meet. These aren't just arbitrary hoops to leap through—they're the lender's way of making sure you're a good investment. So what's on that list? Well, you've got to be:

    • Enrolled in an accredited school (think four-year colleges, community colleges, and trade schools)
    • Signed up for at least half-time classes (though there are loans for part-time students too)

    Checking if your institution makes the cut is easy. You can ask the lender directly or visit your school's financial aid office for more information.

    How does my credit score affect loan eligibility?

    Your credit score is super important when you want to borrow money. It tells lenders how good you are at paying your bills on time and handling money responsibly. When you apply for a loan, private lenders usually check your credit score to see if you've been good with money in the past.

    If your credit score is around 670 for FICO or 660 for VantageScore, that's considered good. It shows lenders that you're responsible with your debts and you've been paying your bills on time.

    The score takes into account things like how much credit you're using, your payment history, and how long you've had credit accounts. If your score is good, it increases your chances of getting approved for a loan, and you might even qualify for lower interest rates.

    Back when I was starting my college journey, my credit score wasn’t the strongest part of my application. Luckily, I had another thing backing me up - income. If you’re working a job like I was, lenders might be willing to overlook a weaker credit score. Let’s see how.

    What kind of income do you need?

    To get a private student loan, you should have a regular income that's enough to pay back what you borrow. Some lenders might ask for a minimum income, but the amount can vary between lenders. It's smart to ask the lender you're thinking about borrowing from to find out exactly what income they're looking for.

    You may be thinking, “But I’m a student—I have no income.” That’s where having a cosigner with income is important, or you may want to consider a part-time job.

    What about age and citizenship?

    To get a private student loan, you need to be at least 18 (19 in some places) and have your high school diploma or equivalent. Also, you need a Social Security number and either US citizenship or permanent residency.

    For people not making the age cut or needing a cosigner, no worries. Lenders usually bend the rules if you bring an older cosigner to the table. International students, you're not out of the race—you can also apply with a cosigner who is a U.S. citizen. If that’s not an option, some specialist companies offer loans to international students without any cosigner requirement at all.

    How do you get a private loan with not-so-great credit?

    Bad credit doesn't mean you're out of options for a private student loan. Here's a smart move—apply with a cosigner with a good credit history. They agree to cover the loan if you can't, sharing the responsibility of repayment. Missed payments are a hit to both of your credit scores, so be careful.

    If a cosigner isn't possible, then consider lenders who don't need high credit scores. Take Earnest, for instance, with a 650 credit score minimum and a $35,000 salary bar. Or Ascent, who looks at more than just numbers—they're interested in your GPA, your major, and your potential.

    How do you choose and apply for the right private student loan?

    Choosing the right private student loan is no less important than choosing a Netflix series for the weekend—you want to make sure it's a good fit. Keep these factors on the top of your mind:

    • Get your hands on those annual percentage rates (APRs) to compare real costs
    • Chat with lenders about whether your school is in their list
    • Look out for any extra perks, from cosigner release options to generous grace periods
    • Double-check that they'll loan you the full amount you need

    Apply like a pro:

    1. Get your credit score before diving in.
    2. Make sure to consider multiple lenders. Use loan comparison tools, like Credible, to make it a breeze. Make sure you get quotes before doing a full application and getting a hard inquiry on your credit.
    3. Filled out the application? Kick back and wait for the wheels to turn. If you get the thumbs up, the funds head straight to your school.

    Comparing lenders, their rates, and loan terms is important when you're on the search for a private student loan. It can be the difference between a deal that helps and a deal that holds you back.

    Do’s and don’ts of qualifying for a private student loan

    These tips can make or break your hunt for private student loans. While you hunt for that financial aid, there are clear do’s and don’ts to follow, keeping you on the path to approval without tripping into common mistakes.

    Do

    • Check your credit score and improve it if you can

    • Research and compare different lenders' terms

    • Talk to your school's financial aid office

    • Apply with a cosigner if your credit isn't strong

    • Consider other financial aid options before loans

    Don't

    • Rush the application without knowing your credit status

    • Settle on the first loan offer you find

    • Ignore the school's accreditation status and eligibility

    • Overlook the effect on your cosigner's credit

    • Forget to think ahead about post-graduation repayment

    Advantages and disadvantages of qualifying for a private student loan

    When it comes to the challenges of funding your education, weighing the pros and cons of private student loans is as important as picking your major. They can bridge the gap when scholarships and federal loans don't cover all your costs, but come with their own baggage.

    Advantages of qualifying for a private student loan

    • Access to larger loan amounts for full coverage of education-related expenses.
    • Possibility of competitive interest rates if you have an excellent credit score.
    • Loan terms may be tailored to fit your specific financial situation.
    • Usually quick and responsive application process compared to federal loans.

    Disadvantages of qualifying for a private student loan

    • Higher interest rates compared to federal loans, especially for those with average credit.
    • Lack of forgiveness programs and income-based repayment plans.
    • Stricter requirements potentially necessitate a cosigner.
    • Risk of variable interest rates hiking up your future repayments.
    • The credit score can suffer if repayments get harder post-graduation.

    How TuitionHero can help you

    At TuitionHero, we understand that paying for college can be confusing. That's why we're here to help. We offer different financial services to make it easier for you. Whether you need private student loans or want to refinance existing ones, we've got you covered.

    Think of us as your financial guide, helping you find scholarships, explaining the details of the FAFSA, and presenting credit card offers that work for students. We cover everything in the financial world, helping you make sure you have all the information to make informed decisions. Our goal is to empower students and parents to manage college finances without stress.

    Frequently asked questions (FAQ)

    If you're itching to learn but aren't enrolled at least half-time, don't give up just yet. Some lenders have loans crafted just for students like you—whether you're deep into career training, or just taking a course or two. Look around, and you might find a lender who's got your back. Plus, our FAFSA Help can help you learn more about eligibility for different financial aid options for part-time students.

    Yes! Private student loans can usually cover off-campus housing. It's all part of the cost of attendance, which can include that cozy studio you've got your eye on. Just be sure you're not over-borrowing for a pricey place that'll cost you for years post-grad. Our team at TuitionHero can walk you through estimating your full cost of attendance, helping you make sure you borrow just what you need.

    Look for student credit cards that offer perks tailored to you, like cashback on textbooks or coffee. And always, always keep an eye on things like interest rates and fees. If you're feeling overwhelmed, our Credit Card Offers service sorts the good offers from the not-so-good, helping you pick a card that's a homerun for your wallet.

    Final thoughts

    Getting approved for a private student loan boils down to having a good credit score, a reliable income, and understanding what different lenders are looking for. Take your time to explore options, stay informed, and get help if needed. Keep in mind that each lender has its own requirements, so being well-informed and making smart choices will help you confidently navigate the process and secure the financial support you need for a successful education.

    Source


    Author

    Brian Flaherty avatar

    Brian is a graduate of the University of Virginia where he earned a B.A. in Economics. After graduation, Brian spent four years working working at a wealth management firm advising high-net-worth investors and institutions. During his time there, he passed the rigorous Series 65 exam and rose to a high-level strategy position.

    Editor

    Rachel Lauren avatar

    Rachel Lauren is the co-founder and COO of Debbie, a tech startup that offers an app to help people pay off their credit card debt for good through rewards and behavioral psychology. She was previously a venture capital investor at BDMI, as well as an equity research analyst at Credit Suisse.

    At TuitionHero, we're not just passionate about our work - we take immense pride in it. Our dedicated team of writers diligently follows strict editorial standards, ensuring that every piece of content we publish is accurate, current, and highly valuable. We don't just strive for quality; we aim for excellence.


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