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Nestor Rizhniak/Shutterstock May 27, 2022 Chelsea has been with Bankrate since early 2020. She is invested in helping students navigate the high costs of college and breaking down the complexities of student loans. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money. Bankrate logo Editorial integrity
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Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. A private student loan can be a great way to pay for college if , grants and federal student loans don’t cover all of your expenses. But you’ll need to fit the criteria to qualify. Every private lender sets its own requirements, but you’ll typically have to meet minimum credit and income requirements, find a co-signer and enroll at an eligible institution. Plus, there are rules about how you can use private student loan funds. Here’s what to know. What to consider before applying for a private student loan
Before borrowing money to pay for school, it’s important to know the difference between your two main options: and . Even though offer attractive starting interest rates, it’s usually best to start with federal student loans. Here’s why: Federal student loans don’t have a minimum credit score requirement. If you’re borrowing as an undergraduate, you won’t even need to go through a credit check for federal loans. This makes federal loans more accessible and more affordable for new borrowers. Federal student loans have one fixed interest rate. With private loans, the lower your credit score, the higher interest rates you’ll receive — sometimes into the double digits. Interest rates are the same for all borrowers who apply for federal student loans, and the rate you receive on your loan will never change during your loan term. Federal student loans come with borrower protections. Flexible repayment plans based on your income, generous hardship programs and loan forgiveness are a few of the perks exclusive to federal student loans. While private lenders may offer some hardship programs, the options aren’t nearly as robust. After applying for federal student loans, you may still need to cover leftover expenses with private student loans. When shopping for private loans, compare these factors among each lender: How much you can borrow. Whether you can invite a co-signer and if there’s a co-signer release. The loan’s interest rate and fees. The loan term, which influences the monthly payment and total cost of interest. When you must start repayment. Hardship programs, such as forbearance and deferment. Private student loan eligibility requirements
Before applying for a private , check whether you meet the basic requirements. The five private student loan requirements below are the most common among lenders, although all lenders have different standards. School
Private lenders typically start with the basics, so they’ll first require that you’re a student who’s pursuing some kind of education. You’ll also need to attend an accredited school, which typically includes four-year colleges and sometimes includes two-year community colleges and trade schools. Most lenders also require you to be enrolled at least half time at your school, but some lenders have private student loans specifically designed for part-time or career-training students. How to prepare: If you’re not sure whether your school qualifies, ask the lender for a list of acceptable schools or ask about the specific school you’re interested in attending. Your school’s financial aid office can also give you tips on paying for your education. Credit score
Private lenders typically check a borrower’s financial standing to help them analyze the risk they take on by lending money. They’ll run a credit check to see how you’ve handled debt in the past. It can be tough to qualify on your own if you have no credit history or a limited one. Many lenders won’t advertise a specific , but generally, a score in the mid-600s or higher can help you meet private student loan credit score requirements. As your credit score increases, you’ll have more borrowing options and may receive a lower interest rate. How to prepare: If you don’t have the credit history to qualify for a private student loan, you might consider holding off on your application for a few months. Work on so you can qualify for the loan and get a good interest rate. If you don’t have the time, you may need to apply with a who meets the lender’s credit requirements. Income
In addition to credit requirements, lenders also typically have minimum income requirements. In some cases, it can be as little as $24,000, but the higher your income, the better. Lenders will typically ask for documentation that shows your employment status and earnings and also calculate your debt-to-income ratio to see how much of your monthly income goes toward debt. How to prepare: If you don’t have the income to qualify, look for jobs you can take on while enrolled in school. Alternatively, you can apply with a co-signer who’s willing to take on the responsibility of paying your student loans if you can’t. Qualified expenses
Private student loans are designed to cover your cost of attendance, which usually includes: Tuition and fees. Housing expenses. Transportation to and from school. Meals. Textbooks and supplies. Your lender determines your cost of attendance by contacting your school’s financial aid office after you apply. The school will confirm the cost of attendance, certify the amount you’re asking to borrow and disclose other financial aid you’ve received. How to prepare: While a private student loan can be a convenient way to cover expenses while you’re in school, it’s still money that will eventually need to be repaid. Consider paying for some of your costs with savings, income from a part-time job or . These options can minimize your postgraduation costs. Age and citizenship
Most lenders also include a set of requirements surrounding age and citizenship status. An applicant usually needs to have a Social Security number and be a U.S. citizen or permanent resident. Borrowers must also be at least 18 years old with a high school diploma or equivalent, such as a GED. Some states set the minimum age at 19. How to prepare: If you don’t meet age requirements, ask the lender if you can qualify with an older co-signer. And if you’re an , you may still be able to qualify for a private student loan with a co-signer who is a U.S. citizen. How to qualify for a private student loan if you have bad credit
If you’re new to credit or you’re recovering from a setback in your credit history, you might not be in a good enough place to qualify for a private student loan on your own. The first step is to look for other ways to finance your education, such as federal loans, scholarships, grants and other alternatives that don’t require a good credit score. If you’ve exhausted those options, though, most private lenders can help you by allowing (or requiring) you to apply with a creditworthy co-signer. This person agrees to make the monthly loan payments if you can’t, which means that you both share the responsibility for repayment. Many borrowers turn to parents and other relatives for this role. Your co-signer won’t have to worry much if you always make timely payments, but they’ll be on the hook for repaying your debt if you fall behind. That’s why it’s a good idea to figure out how you’ll before borrowing the money. You can also look for private lenders that offer a . After you make a certain number of on-time payments, the lender removes your co-signer from the debt altogether. It might be difficult finding someone who’s willing to co-sign your private student loan, especially if you’re taking out a large amount. Prepare for the conversation by researching how much you’ll borrow, the monthly payment on the loan, your postgraduation salary and how you’ll fit the monthly payment into your budget. This might alleviate your co-signer’s concerns. How to apply for a private student loan
Before you even submit an application, it’s important that you take the time to shop around and compare offers from multiple lenders. You can do this by getting prequalified with each individual lender or by using a loan aggregator like . In addition to interest rates, you’ll also want to look at repayment terms, customer satisfaction ratings, co-signer release options, deferment and forbearance plans and other features that are important to you. Once you pick the offer you want, you’ll be able to submit an application directly to the lender via its website. You’ll provide information about yourself and your school, and you’ll also need to provide the necessary documentation for yourself and your co-signer, if applicable. The lender will underwrite your application and provide you with a final offer, which may or may not look like the initial quote. If you agree to the terms, read the loan agreement and sign it electronically. Once everything has been completed, the lender will typically disburse your loan directly to your school. If there’s any money left over, you’ll receive a refund, which you can use for other eligible expenses. SHARE: Chelsea has been with Bankrate since early 2020. She is invested in helping students navigate the high costs of college and breaking down the complexities of student loans.