Student loans. It seems like everyone has them, and too many of them. The government and banks must hand them out to anyone who wants one, right?
It’s actually a little more complicated than that. Federal student loans can help with the cost of tuition, but they often don’t cover the full cost of attendance. To apply for a federal student loan, the first step is to fill out the FAFSA. (More on that here.)
Federal student loans offer more repayment options than private student loans. They’re also the only way to get Public Service Loan Forgiveness. So, federal student loans are a good place to start. Also, by filling out the FAFSA, you’ll determine whether you’re eligible for any grants or scholarship from the government — free money for college!
If you’re still short of tuition after you’ve received any federal loans for which you’re eligible, many students will consider private student loans to cover the difference. We created a checklist so you can apply for a private student loan with confidence. Here’s how to get started:
Make sure your credit and income criteria meet the bar. According to Student Loan Hero, private lenders look at three main factors:
Your credit history - Most lenders look for a score in the mid 600s or higher.
Your income - Be prepared to show proof of a steady income.
Your debt-to-income ratio - Lenders often prefer a low ratio of existing debt in comparison to your salary.
Have your school’s tuition info handy. When you’re applying for a student loan, a student loan provider will often confirm the cost of attendance with a school. The school will also communicate any other financial aid you’ve received with the lender so they have a complete picture.
You must be a U.S. citizen or permanent resident and be of legal age. In order to qualify for a private student loan, you have to be 18 years of age or older and be a U.S. citizen or permanent resident.
Be prepared to show you’re enrolled in an eligible school. Many student loan providers require you to show proof that you’re a student enrolled in college before they’ll approve a loan. Your school also needs to be eligible for private student loans. If you’re unsure if your school qualifies, ask your financial aid office.
Ask someone close to you to be a cosigner. If you’re a student in high school, you may not have much of a credit history or steady income. Your cosigner is responsible for paying back the loan if you aren’t able. Often cosigners are a parent or close relative. Ninety-four percent of undergraduate loans involve a cosigner.
Do you meet all of the requirements above? Awesome, you’re ready to get started. But, before you apply, make sure you look for a private student loan lender with a good interest rate. The lower interest rate, the less you’ll pay over the long haul.
Wondering how much student loan debt is too much? You can read more in our guide here.