3 steps to increase your chances of getting a private student loan despite their low approval rate (2024)

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• Only about 21% of applicants were approved for private student loans in 2020, according to data from LendEDU.
• Unlike federal student loans, private student loans can have stringent requirements that can make getting approved as a student difficult.
• To increase your chances for approval, work on raising your credit score, finding a co-signer, and applying with multiple lenders.
  

Getting a private student loan isn't easy. According to data from LendEDU, which analyzed data from "hundreds of thousands" of applicants who went through its portal since 2016, only about 21% of applicants who applied for private student loans have been approved in 2020.

Unlike federal student loans, private student loans often have stringent requirements. Many private student loan lenders have a minimum credit score or income requirement, which can be tough to qualify for if you're applying on your own as a college student.

It's worth making sure that you've borrowed as much as you can from the federal student loan program before turning to the private student loan marketplace. Federal student loans are easier to get approved for with no minimum credit score requirements, often have lower interest rates than private student loans, and can also come with repayment assistance like income-driven repayment plans.

But, if you need a private student loan, here's how to boost your chances for approval.

1. Raise your credit score

Your credit score is an important part of getting approved for any loan, and raising your credit score could help you get approved for a lower interest rate.

Your credit score is like a grade, measuring your repayment history, borrowing history, and the types of credit accounts you have open. The higher your credit score, the more creditworthy lenders find you, and the better rates they offer.

According to LendEDU data, private student loans require high credit scores. The average student loan applicant in 2020 had a credit score of 638 out of 850, but the average approved borrower had a credit score of 748.

Raising your credit score before you apply could be a good way to boost your chances for approval. Check your credit report (the data your score is based on) for free to understand your score before you apply. Paying down debt and making on-time payments consistently could help raise your score with time. If you're relatively new to credit, becoming an authorized user on a parent's credit card account could help you establish some credit. If you're surprised by your credit score, checking for errors on your credit report and disputing any you might find could help eliminate incorrect information and raise your score.

2. Get a co-signer

If you're young and haven't build much credit yet, or you don't have time to raise your own credit score, a co-signer can help you get approved.

A co-signer is someone with a solid credit history who applies for the loan with you. Your co-signer will become equally responsible for the loan. If you don't pay, it will hurt their credit score, and could be held responsible for repayment. Anyone from a parent to a friend can co-sign, but know that the person you're asking to co-sign is taking on a big responsibility.

However, most people who applied for a student loan and got approved in 2020 had a co-signer on their application. In 2020, the approval rate for borrowers with a co-signer was 38%, while the approval rate for borrowers without a co-signer was just 8%.

Adding a co-signer to your private student loan application will raise your chances of being approved, but it could mean putting someone else in a risky position.

3. Try applying with several different lenders

With approval rates hovering around 20%, there's a good chance that your first application may not get you the loan you need. But, trying to get approved through several different private student lenders may work out in your favor in the long run. To get started, consider lenders like SoFi student loans, Earnest, and Discover student loans, which offer student loans with no fees, flexible repayment terms, and low interest rates.

Submitting multiple applications will allow you to look for the lowest interest rates and fees offered by several different companies. Each lender will consider your situation differently. While one company may not approve your loan, another may. Shop around to see which company has the best rates for you, and keep trying to get approved.