Private Student Loan Requirements

A private student loan comes attached with certain requirements that must be met before you can qualify for one. There are many lenders that offer private student loans, but you should always make use of the federally funded loan programs before you begin seeking assistance from a private lender.

You must be a US Citizen or Permanent Resident

In order to obtain a private student loan you must either be a US citizen which means you must have been born here, or have otherwise claimed US Citizenship through the naturalization program, or you must have permission to permanently live in the United States as evidenced by what is commonly known as a green card.

Credit Check

The bank will perform credit check to have a look at your history. You will look at things such as jobs you’ve had, previous payment record, current debt, any accounts that are referred for collection and of course your credit score.

You must understand that these loans are not federally subsidized, so while the lender knows that you are a student, and it will be some time before you will begin making payments. They are taking a much bigger risk with their funds than the lender who makes student loans with government backing.

It is for that reason that they are much stricter than the typical student lender. If there are any derogatory marks on your credit, then your application for a private student loan may very well be declined.


You will likely be required to have a cosigner, even if your credit is good. The cosigner will have to go through the same credit check process as well, and the lender will look at the same criteria that were looked at in your credit history. If there are any marks on the cosigners credit history the private student loan will likely be declined as well for that reason.

Private Student Loan Repayment

There are 3 repayment plans that are available with a private student loan. These are:

Full Deferral: Both payments of interest and principal will be deferred for the entire time you are in school. The cut-off for this is 4 years however. Keep in mind that interest accrues during this period and is added to the loan balance. Payments generally begin 6 months after your day of school.

Interest Only: On this payment plan, you pay only the interest that has been earned by the lender while you are in school. Regular payments consisting of principal and interest will begin approximately 45 days after you have completed school, or otherwise aren’t attending any longer. By making these payments, you are actually helping yourself because you will prevent 4 years of accrued interest from ballooning into a much larger payment for you when school is complete.

Immediate Repayment: On this plan, you begin to repay the loan immediately as soon as the loan is disbursed. If you can afford this, then by all means you should do so. It prevents interest from accruing over a 4 year period, and once you have completed school you will be student loan free. The downside however, is that you will likely have little time left for studying. Depending on the size of the payments, you may find yourself needing to work full time to keep up.


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