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Apply for Private Student Loans

If you received your financial aid package and it’s not enough to cover your college costs, you may want to consider borrowing a private student loan. Private student loans are normally your last resort. It is recommended that you take advantage of all forms of free financial aid (grants and scholarships) and consider your federal student loan options before taking out private student loans.

When it’s time to apply, here are the steps you should take: know your credit score, choose a lender (if needed, get a cosigner), apply.

Credit Score Needed for Student Loan

Private student loans will require you to have strong credit, a good debt-to-income ratio, and to demonstrate at least two years of work history. It may be worth it to take a look at your credit to have an idea of how you’re doing. Each lender will have their own credit score criteria, but in general, you will need a score of at least 660.

Borrowers with the strongest credit qualify for lower rates. If you are worried about qualifying on your own, you can apply with a creditworthy cosigner. Even if you do qualify on your own, you can also use a cosigner to help you qualify for better terms and rates.

How to Choose a Private Student Loan Lender

It’s important to put in the time to choose a lender. This will require some research. Compare what each lender is offering as far as rates, fees, repayment terms, and loan benefits. Also note the lender’s customer service record. After all, you will be working with them for a long time. Not all lenders work with all schools. As soon as you find a lender you like, check to see if that lender will make a loan for the school you attend. You can use our site which allows you to easily compare lenders in our marketplace – and even better, you can input your school.

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How Much in Student Loans Can You Take Out?

You first want to determine how much you need to borrow. Now there’s a difference between how much you can borrow, and how much you need to borrow. We recommend that you wait for your financial aid letter from your school, then determine your budget for the term (or year), then decide on an amount you need to borrow.

Keep in mind that some lenders may limit how much you can borrow. There may be minimum or maximum loan limits, but you can never exceed the cost of attendance, as certified by your school.

Do I Need a Cosigner for My Private Student Loan?

You might need a cosigner if you don’t earn little to no income, you have a low credit score, or you have limited (or no) credit history. A cosigner can help you qualify for a student loan. And even if you qualify for a loan on your own, a cosigner can help you qualify for better terms.

If you decide to use a cosigner, it would likely make your cosigner feel better if you create an agreement up front on how the student loan will be handled and repaid. For example, will you be able to pay the interest while you’re in school, or would you expect your cosigner to do so? Are you choosing a lender that offers a cosigner release option? If so, make sure you understand the terms and conditions (i.e. number of on-time payments required and credit requirements) so you can explain to your cosigner how you plan to qualify. You may want to sign up for automatic payment deductions, for example, so you’re less likely to miss any payments. Bonus tip: most lenders offer an interest rate reduction (such as 0.25%) when you sign up for auto-debit.

It’s not uncommon to need a cosigner as an undergraduate student. According to a MeasureOne survey, in the 2019-2020 academic year, over 90% of undergraduate students needed a cosigner to borrow a private student loan.

When Do You Need to Apply for a Student Loan?

You don’t want to wait until the last minute to apply for a student loan, if you can avoid it. Getting a private student loan can take some time, so it’s recommended that you start your research and get rate quotes at least 60 days before the start of your term or school year.

You should submit your application no later than 30 days before the start of your term. There are actually a few steps in the application process, including school certification and mandatory waiting times before the loan is disbursed.

Once you’ve decided on which school you are attending and had a chance to review your financial aid package from your school and determine how much you need, you should start your application process.

Note: The information above addresses paying for college at the start of your school term, when most charges are due to the school. However, private student loans may be applied for anytime throughout the school year when additional funds are needed.

Student Loan Application

A private student loan application will ask you some of the basics, like name, address, and social security number. If you have a cosigner, they will need to provide the basics as well. Your lender will also ask you to provide information on the school you plan to attend and details about your enrollment status (like full-time, or half-time) and grade level. And finally, you will need to disclose an amount you would like to borrow.

You (and cosigner, if applicable) will be asked to provide financial information as well. Along with a few questions regarding your current income, they may ask you to provide certain documentation to verify your information. Carefully read what your lender is requesting, they may ask for a certain number of pay statements, or tax returns from previous years.

Student Loan Application

A private student loan application will ask you some of the basics, like name, address, and social security number. If you have a cosigner, they will need to provide the basics as well. Your lender will also ask you to provide information on the school you plan to attend and details about your enrollment status (like full-time, or half-time) and grade level. And finally, you will need to disclose an amount you would like to borrow.

You (and cosigner, if applicable) will be asked to provide financial information as well. Along with a few questions regarding your current income, they may ask you to provide certain documentation to verify your information. Carefully read what your lender is requesting, they may ask for a certain number of pay statements, or tax returns from previous years.

Student Loan Credit Check

As part of your student loan application, you will be asked to authorize a credit check—if you have a cosigner, they will also need to authorize a credit check. Your lender will review your credit and may reach out to you if they have any questions about items listed on your credit report.

How Long to Get Approved for Student Loan?

Once you complete the application, depending on your lender, you may be immediately approved, or it make take a few days or longer. Even if you don’t receive an approval right away, most lenders will confirm that your application has been submitted. Sometimes additional information or documents are required before a full credit approval can be provided. Or in some cases, the lender will encourage you to add a cosigner.

If you do not hear from your lender within one week, you may want to call and check the status of your application.

Student Loan Certification

Regardless of the type of student loan you apply for, your school will need to certify the amount you want to borrow. Your lender will communicate and work with your school directly. Basically, your lender will need to make sure your private student loan will not exceed your cost of attendance minus all other financial aid received.

How Are Private Student Loans Disbursed?

Private student loans will be disbursed directly to your school. If your loan overpays the amount you owe to your school and creates a credit, your school will then issue a refund to you (the borrower of the loan).

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