Private student loan requirements: Here’s how to qualify

Private student loans can help students fill financial aid gaps, but their qualification requirements are stricter than federal student loans’ are. Federal student loans don’t require a co-signer and some don’t even require a credit check. That isn’t the case with most private student loans.

Requirements for private student loans will vary depending on the lender. Borrowers also need to know the rules on how they can use the funds before taking out the loan.

Private student loan eligibility requirements

College is more expensive than ever. The average cost of tuition and fees for a full-time undergraduate student attending a four-year institution was $11,260 for the 2023-24 academic year — an increase of 2.5 percent from the prior year, according to College Board’s Trends in College Pricing and Student Aid 2023 report. This figure jumps to $41,540 for students attending a private nonprofit four-year institution, which is 4 percent higher than in 2022-23.

So, even after applying for federal student loans, you may still need to cover leftover expenses with private student loans. Private student loans generally have tougher eligibility requirements than federal loans. In addition to age, income and credit score minimums, students must be enrolled at an eligible school and use funds for specific expenses.

Students who do not qualify independently may qualify by adding a co-signer.

Before applying for a private student loan, it’s a good idea to 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 enrollment

Private lenders typically start with the basics.

They’ll first require that you’re a student pursuing education. You’ll also need to attend an accredited school, which typically includes four-year colleges and sometimes two-year community colleges and trade schools.

Most lenders also require you to be enrolled at least half time at your school. However, some lenders have private student loans specifically designed for part-time or career-training students.

The funds must also be used for qualifying expenses, including:

• Tuition and fees
• Housing expenses
• Transportation to and from school
• Meals
• Textbooks and supplies

Credit score

Private lenders typically check a borrower’s financial standing to help them analyze the risk they take 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 independently without a credit history or a limited one. Because few students have a well-established credit history, many lenders require a co-signer (such as a parent or guardian). Your co-signer’s credit matters more than yours.

Many lenders won’t advertise a specific minimum credit score, but a score in the mid-600s or higher can help you or your co-signer 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.

If you do not have a co-signer and also lack a high credit score, look into no-co-signer student loans. Some lenders, such as Ascent, consider your grades and future earning potential when approving you for a loan.

Income

In addition to credit requirements, lenders typically require a minimum income. Sometimes, it can be as little as $24,000, but the higher your income, the better.

Lenders typically ask for documentation showing your and your co-signer’s employment status and earnings. They will calculate your debt-to-income ratio to see how much of your monthly income goes toward debt.

Age and citizenship

Most lenders also include requirements surrounding age and citizenship status. An applicant must usually have a Social Security number and be a U.S. citizen or permanent resident.

Borrowers must also be at least 18 with a high school diploma or equivalent, such as a GED. Some states set the minimum age at 19.

How to qualify for a private student loan if you have bad credit

If you’re new to credit or 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. Most lenders require applicants to have good credit, but you may be able to qualify even with bad credit.

Apply with a co-signer

One common way to get a student loan with bad credit is to apply with a co-signer who has good credit. A co-signer agrees to repay the loan if you can’t, so you share the responsibility for repayment. If you default on the loan, it’ll hurt both your credit score and your co-signer’s credit score.

Consider applying with a lender that has a low minimum credit score requirement

If you cannot find a co-signer, consider applying with a lender with a low minimum credit score requirement. For example, Earnest’s minimum credit score requirement is 650, though you’ll need an income of $35,000 to qualify. In addition, FundingU relies on academic progress, career paths and other merit-based factors to make lending decisions.

The bottom line

Many private student loans require a minimum income or credit score, so borrowers should be prepared for a credit check. They will also want to be sure that their school and enrollment qualify for private loans before borrowing. Many states also set a minimum age for borrowing these types of loans.

Students who are not eligible to borrow on their own may be able to do so with the help of a co-signer.

Comparing private student loan rates, requirements and terms is an important part of choosing a lender. Companies can have different eligibility requirements and repayment terms, so knowing the nuances can save borrowers time and money when making a decision.

Frequently asked questions

• Do you have to qualify for private student loans?

  Different lenders have different borrowing requirements for private student loans. Before applying, ask your lender for eligibility information to see if you are likely to qualify.

• Can you apply for a private student loan at any time?

  Yes, most lenders will allow you to apply for a private student loan at any time of year. Your eligibility for a loan may depend on your enrollment status, so be mindful of your lender’s requirements.

• Should you apply for federal or private student loans first?

  It’s generally best to max out your federal student loan eligibility first before considering private loans. Federal student loans come with access to benefits such as income-driven repayment (IDR) plans and student loan forgiveness programs. Plus, federal student loans have fixed rates typically lower than those private lenders offer.