Each lender will have its own requirements for taking out a loan. With most loans, credit score and income are taken into account. Higher scores and incomes tend to get the best rates or higher borrowing amounts. However, since undergraduate borrowers are less likely to have established credit or an income, lenders will usually require students to apply with a co-signer. Some lenders who have loans for borrowers without a co-signer will consider career and income potential.

Loan tip#9: Since the Department of Education sets virtually no student loan borrowing standards to vet would-be borrowers, and outstanding student debt is now reported to be 1.3 trillion dollars, many bad-actors in the business of education have been for years falling over themselves attempting to gain access to this seemingly endless taxpayer funded pot of gold. Isn’t it past time that the DoED became more seriously proactive in protecting the hoards of naive student borrowers on the front-end before they fall victim to many post secondary schools that spend more on marketing than insuring that retention and graduation rates along with educational standards do not perpetuate the moral hazard of not having to perform to be enriched. The quid pro quo for schools that derive 80-90% of their revenue from these loans should not be measured arbitrarily in ever changing arcane regulations but in the firm expectation that graduation rates of 3% or even 30% (over a six year allowable tabulation period) are clearly unacceptable. Without this firm line in the sand drawn, there is no impetus for these businesses to effect positive change. Good, bad or indifferent, they know they will get a payday. Until strictly quantifiable measures are undertaken, the department’s purported advocacy for for the underserved student will continue to be gamed by some ingenuous students and many avarice colleges alike.


We’ve updated our Top 10 List of student loan tips for students preparing to graduate and enter “the real world.” Many students are looking at their student loans more closely now than they ever have before, and wondering how they will handle the burden. Our tips can help young people keep payments affordable, avoid fees and extra interest costs, and protect their credit rating.
As you can see, federal student loans have many benefits, including fixed interest rates and student loan forgiveness programs. Because of those benefits, it often makes sense to prioritize paying off private student loans first if you have multiple student loans. You’ll need to know you know how much you owe and make a personalized plan for your situation.
There are several ways to have your student loans forgiven, such as the Public Service Loan Forgiveness Program, which applies to qualifying loans after 10 years of payments. You can work for a government agency, non-profit organization or other qualifying organizations. Your state may also offer some repayment assistance in which they repay part of your loan, but you need to work in an area in which the state needs assistance.
You’ll have a hard time finding a private student loan from a bank, credit union or online lender if you have bad credit. Federal student loans don’t require borrowers to demonstrate creditworthiness, so they’ll be your best option. If you’ve already hit your limit on federal loans, you may be able to get a private student loan if you apply with a co-signer who has solid credit — typically scores in the high 600s or better.
Many students ignore their loans until after graduation, but it’s wise to start paying them off while you’re in school. Get a part-time job while you’re in college and dedicate most or all of the earnings to your student loans. If you can pay off $800 a month while you’re in school, then you’ll have paid off $30,000 or more by the time you graduated. For some people, that’s their entire amount owed!
Many students ignore their loans until after graduation, but it’s wise to start paying them off while you’re in school. Get a part-time job while you’re in college and dedicate most or all of the earnings to your student loans. If you can pay off $800 a month while you’re in school, then you’ll have paid off $30,000 or more by the time you graduated. For some people, that’s their entire amount owed!
There are legitimate ways to have your loans forgiven, but there are often very specific requirements you must meet in order to qualify. Research forgiveness programs ASAP, as it may affect your repayment strategy. For example, if you’re interested in Public Service Loan Forgiveness, you’ll want to make sure you have the right type of loans from the get-go (which may mean you have to consolidate), and you’ll want to make sure to get on an income-driven repayment plan.
Lenders rarely give complete details of the terms of the private student loan until after the student submits an application, in part because this helps prevent comparisons based on cost. For example, many lenders will only advertise the lowest interest rate they charge (for good credit borrowers). Borrowers with bad credit can expect interest rates that are as much as 6% higher, loan fees that are as much as 9% higher, and loan limits that are two- thirds lower than the advertised figures.
Many people who are overwhelmed by student loan debt hope that bankruptcy may offer a solution to their problem. However, if you declare bankruptcy, you still must pay your student loans back. One of the only ways you can get out of paying your student loans is in the event of your death, or if you qualify for certain student loan forgiveness programs. 
Federal student loans offer borrowers protections and alternative repayment options that private loans may not, such as income-based repayment and forgiveness programs. Federal student loans also have flat interest rates set by Congress, while the interest rate on a private student loan depends on your or your co-signer’s credit. Without a credit score of at least 690, you'll likely pay a higher interest rate for a private loan than you would for a federal loan.

If you or your recent grad has this type of loan—which makes up 15 percent of total U.S. education debt—this may seem like an odd move. After all, the interest rates on variable private loans (given by banks and credit unions) are currently lower than the fixed rates on federally backed and private loans. But historically this situation is unusual, and if the economy improves, interest hikes are probable in the near future. “Rates could climb 5 to 6 percent over the next four years, making your monthly burden unmanageable,” says Kantrowitz. That’s why it’s wise to unload these balances as soon as possible. If you can, pay twice the required amount until you have eliminated this debt and make only the minimum monthly contribution toward your fixed-rate federal loans, since those rates cannot increase.
You may have already realized that automatic online loan payments make your life easier. What you may not know is that all government and some private lenders charge a slightly lower interest rate (usually 0.25 percent less) if you make your monthly remittance this way. Over 25 years of payments, you’ll reduce your repayment period by at least a year, says Reyna Gobel, the author of Graduation Debt ($15, amazon.com). Best of all, you can sign up now, even if you’ve been repaying your loans for years.
Each lender will have its own requirements for taking out a loan. With most loans, credit score and income are taken into account. Higher scores and incomes tend to get the best rates or higher borrowing amounts. However, since undergraduate borrowers are less likely to have established credit or an income, lenders will usually require students to apply with a co-signer. Some lenders who have loans for borrowers without a co-signer will consider career and income potential.
As a general rule, students should only consider obtaining a private education loan if they have maxed out the Federal Stafford Loan. They should also file the Free Application for Federal Student Aid (FAFSA), which may qualify them for grants, work-study and other forms of student aid. Undergraduate students should also compare costs with the Federal PLUS Loan, as the PLUS loan is usually much less expensive and has better repayment terms.
Applying for federal student loans is easy amd takes about an hour to complete. In filing the FAFSA you have already applied for federal student loans. The FAFSA is your application for Direct Subsidized and Unsubsidized Student Loans and for the federal Perkins loan.  Before you begin, make sure to have this information handy to make the process go faster:
Before you take out a loan, it’s important to understand that a loan is a legal obligation that makes you responsible for repaying the amount you borrow with interest. Even though you don’t have to begin repaying your federal student loans right away, you shouldn’t wait to understand your responsibilities as a borrower. Get the scoop: Watch this video about responsible borrowing or browse the tips below it.
×