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There’s no denying the fact that a higher education can open the door to a higher income. According to the United States Social Security Administration, men with a bachelor’s degree earn about $900,000 more over their lifetime than men with a high school diploma, while women with a bachelor’s degree earn an average of $630,000 more than women with a high school diploma.
So, even with education costs on the rise, a college degree is typically a wise investment. Student loans give you the ability to make an investment in your education today and pay for that investment in the future — usually when you’re making more money. And, while there are both private and federal student loan options, there are a few reasons why it could make sense to chooseprivate student loans over federal options.
For example, you may not qualify for a federal student loan because your parents earn too much money, you may have borrowed the maximum amount of money they allow or there could be another reason these loans simply don’t work in your situation. In these cases, private student loans may be an effective alternative. But you’ll have to meet borrowing requirements to borrow money with a private student loan. So, what are the borrowing requirements you’ll need to meet to qualify for a private student loan?
Find out the private student loan rates you could qualify for today.
What are the private student loan borrowing requirements?
As mentioned above, you’ll need to meet qualification requirements to take advantage of a private student loan. Here are the requirements you’ll likely need to meet to get approved:
Educational requirements
Student loans are designed to help you cover the cost of a higher education. That means you’ll typically need to pursue a degree or certificate to qualify for them, but that’s not true in all cases.
For example, while you’ll need to attend an accredited school to qualify for a federal student loan, that may not be the case for private loans, though it depends on the lender. So, you might be able to qualify for a private student loan even if you want to enroll in an unaccredited or non-degree program.
Apply for a private student loan now to take your education to the next level.
Income requirements
Your income will also likely play a role in your ability to qualify for a student loan. After all, lenders want to know that even if you don’t achieve your desired degree, you have enough income to pay the loan back. For example, Earnest requires you to earn at least $35,000 per year to qualify for their student loans. However, some lenders may offer student loan approvals to applicants with lower incomes.
Credit score requirements
As with most other loans, your credit score will likely play a major role in your ability to access a private student loan. You’ll typically need a 620 or higher credit score to qualify for a private student loan, though there may be options for borrowers with bad credit.
However, your credit score isn’t just a qualification requirement; it’s also a primary factor in your private student loan cost. Higher credit scores typically equate to lower interest rates, and even a small reduction in interest can result in thousands of dollars in interest savings over the life of your student loan.
So, even if you meet the minimum credit requirements, it may be wise to take steps to improve your score before you apply for a private student loan.
Age and citizenship requirements
While it varies by lender, you’ll typically need to either be a citizen or permanent resident of the United States who is at least 18 years old (or 19 in certain states) to qualify for a private student loan. It’s worth noting, though, that some lenders will have specific age requirements for borrowers.
Some lenders may also offer loans to non-citizens or international students, but you could need to meet other requirements, like having a cosigner, to qualify.
What if you don’t qualify for a private student loan?
If you don’t qualify for a student loan on your own, there are a few things you can do to gain access to the money you need to further your education:
Get a cosigner: Consider asking your parents, grandparents, or spouse to cosign your application with you. If your cosigner meets the borrowing requirements, they may be the key to approval. Improve your credit score: If your credit score is holding you back from loan approval, consider taking steps to improve it. Make an effort to settle any past-due debts you have and make all future payments on time. If you have a limited credit history, consider opening a secured credit card to start building a credit history.Increase your income: If your income is holding you back, it may help to increase it. Consider asking for a raise or working a side gig to earn more money.
The bottom line
A college education can significantly increase your earning potential over your lifetime. So, it may be worth taking out a private student loan to access the money you need to pay for your education. And, if you don’t qualify for the loan you’re looking for, consider taking the steps above to improve your chances of approval.
Joshua Rodriguez is a personal finance and investing writer with a passion for his craft. When he’s not working, he enjoys time with his wife, two kids and two dogs.
