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While a college education can create opportunities for your future, it's not cheap. According to College Board, the average annual non-resident tuition for four-year public schools is $28,240 for the 2022-23 academic year, and that jumps to $39,400 for private nonprofit four-year schools.
If you can't afford to pay for college on your own through savings, scholarships, grants and a part-time job, student loans can help you bridge the gap. But depending on the type of loan you're considering, eligibility requirements can vary. Here's what you need to know before you start the student loan application process.
Who Qualifies for Student Loans?
Most college students can qualify for student loans, but some programs and lenders may not be available to you based on your situation. Understanding the requirements upfront can help you determine which loans to apply for.
Federal Student Loan Requirements
The government offers various types of federal student loans, each with different rules and requirements. Most don't require a credit check or cosigner. However, some are only available to students who can demonstrate financial need, meaning they don't have another way to pay for college.
To qualify for a federal student loan, you must meet basic eligibility criteria, such as:
- You are a U.S. citizen or eligible non-citizen
- You have a valid Social Security number (with a few rare exceptions)
- You're enrolled or have been accepted as a regular student in an eligible degree or certificate program and are qualified to obtain that education (by receiving a high school diploma, GED or other allowed high school completion verification)
- You're making satisfactory academic progress
- You're enrolled at least half time (for direct loans)
After you submit the Free Application for Federal Student Aid (FAFSA), your school's financial aid office will use the information you provided for yourself and your parents (if applicable) to determine your eligibility.
If you exhibit financial need, you may qualify for subsidized loans, which is where the government pays accruing interest while you're in school and during future deferment periods.
If you're applying for a direct PLUS loan, which is available for graduate and professional students, as well as parents, you must also undergo a credit check to ensure that you don't have an adverse credit history. However, there's no minimum credit score or income requirement.
Private Student Loan Requirements
If you can't qualify for a federal loan or you need more than one can provide, you also have the option to take out a private student loan. However, requirements are more stringent, and they can vary depending on the lender:
- Age and citizenship: You typically need to be at least 18 years old—or the age of majority in your state—to apply for private student loans. Additionally, many lenders require that you be a U.S. citizen or a permanent resident. However, there are some lenders that will work with international students, which is an area without much flexibility with federal loans.
- Credit score: You'll need to undergo a credit check when you apply, and your credit score must meet the lender's minimum. That minimum can vary, but it's usually in the mid-600s. Note that some lenders may offer private student loans with no credit check requirement, but their interest rates can be high.
- Income: You must also prove that you can repay the loan, which means your income must meet the lender's minimum. Income requirements can vary by lender. Lenders will also look at your debt-to-income ratio to determine your ability to pay.
- Enrollment: While many private lenders require you to be enrolled at least on a half-time basis, some are willing to work with part-time students. That said, you'll need to attend an eligible educational institution, and some lenders may have stricter requirements than others when it comes to which schools qualify.
If you're unable to meet some of these requirements on your own, particularly citizenship, credit and income, you may be able to get approved with a creditworthy cosigner who does meet the criteria.
How to Apply for a Student Loan
Once you're ready to apply for student loans, here are the steps you'll want to take:
- Fill out the FAFSA. Complete the form and submit it by your school's deadline. Note that some forms of financial aid are on a first-come, first-served basis, so don't wait until the last minute. In addition to federal student loans, the FAFSA will also determine your eligibility for financial aid from the federal government, your state and your school.
- Compare financial aid offers. If you're an incoming freshman and considering multiple schools, compare financial aid offers from each school to determine which one offers the most aid.
- Submit an application for a direct PLUS loan. If you're a graduate or professional student who wants a direct PLUS loan, or you're a parent, you'll need to fill out a separate application in addition to the FAFSA.
- Consider private student loans. If there's a gap between your financial aid and federal loan eligibility and your cost of attendance, private student loans may be required. Shop around and compare lenders, then apply with the lender that offers the lowest rate quote.
Consider All Alternatives Before Applying for Student Loans
The process of qualifying for student loans is relatively straightforward, especially with federal student loans. But while they can be an easy way to fund your college education, their long-term costs can become a significant financial burden.
Additionally, like other forms of credit, student loans can impact your credit history. While on-time payments can help you build a positive credit history, missing a payment can negatively impact your credit and make it harder to get approved for financing in the future.
Before you apply for student loans, make sure you exhaust all other sources of financing, including savings, part-time income, scholarships, grants and more. While you may not be able to avoid student loans altogether, you can alleviate some of the burden for your future self.