When borrowing for college, there are different types of student loans available, and each of them have certain requirements. For example, federal student loans require you to fill out the Free Application for Federal Student Aid (FAFSA) to qualify for a federal loan, among other requirements. But for private loans, these eligibility criteria can vary, such as having good to excellent credit and a stable income.
Both federal and private student loans have various similar conditions to apply, but they each have unique requirements.
| Requirements | Federal | Private |
|---|---|---|
| Fill out the FAFSA | Yes | No |
| Good to excellent credit | No | Yes |
| Allows cosigner | Not necessary for most federal loans | Generally, yes |
| Verifiable income | No | Yes |
| Demonstrate financial need | Yes, for Direct Subsidized Loans | No |
| Enrolled at least half-time | Yes | Generally, yes |
| Satisfactory academic progress | Yes | Yes |
| U.S. Citizen or eligible noncitizen | Yes | Yes |
| Enrolled in a eligible program | Yes | Yes |
Once you’ve exhausted your scholarship and grant opportunities, federal student loans are your best option to start borrowing for college. Here’s what’s required for federal student loans:
Interest rates on federal student loans are always fixed, meaning they’ll stay the same throughout the life of the loan. The rate you receive will depend on your year in school and the type of loan you select. For the 2022-2023 school year, rates were set at:
However, interest rates for federal loans were temporarily set to 0% on Nov. 22, 2022. This COVID-19-era relief was set to expire 60 days after June 30, 2023, pending the Supreme Court’s decision on mass student loan relief proposed by the Biden administration.
In most cases, it’s best to take out federal loans first. This is because these types of loans offer federal benefits, like income-driven repayment plans and student loan forgiveness programs. Federal loans also generally offer lower interest rates than private loans.
Here are some more details on the three main types of federal loans you might want to consider and each have limits to how much you can borrow.
Private student loans are offered by a variety of financial institutions, like banks, credit unions, and online lenders. Because of this, each lender has their own requirements. However, most lenders look for the following:
You can usually choose between a variable or fixed interest rate. Fixed rates never change but variable rates can fluctuate over time based on market conditions and affect your monthly payment.
The average private student loan interest rate ranges from:
It’s a good idea to shop around and compare all your options so you can find the ideal private student loan for your unique situation.
Related: Learn more about getting a private student loan
If you’re interested in a private loan, you should consider multiple factors:
If you have no credit or bad credit, a student loan cosigner can help you get approved for a private loan. This may be a parent, close friend, or anyone else with great credit who is willing to share responsibility for a private student loan with you.
Even if you can qualify for a private loan on your own, you may be able to lock in a lower interest rate with a cosigner. Just remember that they’ll be responsible for your loan if you don’t make your payments. If you default on your loan, you risk ruining your relationship with them.
It can be difficult to find someone to cosign a private loan. After all, they have to agree to pay back your loan in the event you don’t. Here are some tips to help you find a cosigner.
Once you’re ready to apply, here’s what you need to do:
Related: Learn more about getting a private student loan