Who Is Eligible for Student Loans?

Who Is Eligible for Student Loans

BIG Ideas:

  • Eligibility requirements vary for federal and private student loans.
  • Federal loans are based on need while private loans are based on your income and credit.
  • Exhaust all federal aid and loans before applying for a private loan.

At this point in your college journey, you may have come to an important realization: College isn’t cheap. It is, though, one of the best investments you can make in your future.

You also may realize that in order to pay those college tuition bills, you’ll have to join the ranks of the tens of millions of students who have student loans. According to the Education Data Initiative, federal student loan debt in the US exceeds $1.7 trillion.

But before you start filling out student loan applications, it’s key to understand the student loan eligibility requirements. Let’s look at them:

Eligibility Requirements Vary By Loan Type

There are essentially two types of student loans: Federal loans offered by the federal government and private loans, which are provided by banks, credit unions, non-profits, and other lenders.

Federal loans are based on need and private loans are based on your income and creditworthiness. Learn more about the differences between federal and private student loans.

Federal Student Loan Eligibility

To qualify for a federal loan, in general, you must:

  • Be a U.S. citizen or eligible non-citizen
  • Demonstrate financial need
  • Have a Social Security number (though some geographic exceptions apply)
  • Be enrolled in an eligible degree or certificate program
  • Complete and submit the Free Application for Federal Student Aid (FAFSA)

Private Student Loan Eligibility

If you’ve exhausted all federal aid and your savings and need additional funds to help with the cost of attendance, you can apply for a private loan. The private student loans eligibility requirements vary by lender and are often stricter than those for federal loans. In general, to qualify, you must:

  • Be at least 18 years of age, have a Social Security number, and be a citizen of the U.S. or permanent resident.
  • Be enrolled in school at least half-time.
  • Use funds for qualified educational expenses, such as tuition, housing, fees, textbooks and equipment (such as a laptop), and transportation back and forth to school.
  • Have an established credit score, which is a numerical calculation that helps lenders assess how likely you are to pay back a loan. The credit score you’ll need to qualify will depend on the lender.
  • Also, the higher your credit score, the lower the rate you’ll receive, which can help you reduce your payments and interest charges over the life of your loan. If you haven’t yet established a credit history, you can obtain a co-signer to help you. Learn more about how to choose a co-signer.
  • Private lenders also require a certain income level and will calculate your debt-to-income ratio (the percentage of your income used for paying bills) before you qualify. Again, if you don’t have a steady income, you’ll want to get a co-signer.

An Informed Borrower is a Wise Borrower

Because financial aid, including federal loans, often doesn’t cover the full cost of attendance, you’ll likely have both private and federal loans. Before you apply, make sure you understand the requirements of both and shop around for private lenders since rates and terms can differ.

Brazos Makes Paying for College Affordable

For more than 40 years, Brazos Higher Education has been helping make education more affordable for students. As a Texas non-profit, we offer great rates and no fees on private student loans. Contact us to learn more.