Alternative Student Loan Credit Approval

Each lender creates alternative student loan credit criteria that are used to determine whether a borrower is approved for the loan. In the current financial environment, lenders have been faced with a “credit crunch.” It has become much more difficult to borrow money to lend out, and many smaller student loan companies can no longer access capital to fund loans for students. For those companies that can borrow money, the high cost of acquiring funds combined with increasing delinquency and default rates are factors that lenders consider in decisions to tighten alternative student loan credit criteria.

How can I get an alternative student loan credit approval?

Borrowers are still getting approved for alternative education loans. Chances that you will be approved are greater with a credit-worthy co-signer, than if you apply on your own. Nearly all lenders are requiring a credit-worthy co-signer for an alternative student loan credit approval.

Even if you receive an alternative student loan credit approval, you may have been approved with high interest rates and fees. If so, you may want to try applying with another co-signer to see if your loan terms and conditions improve.

What if I cannot get an alternative student loan credit approval?

If you cannot find a credit-worthy co-signer, or your co-signer is denied for the loan, you should definitely contact your school’s financial aid office. Here are some other tips:

  1. Apply with another lender for alternative student loan credit approval.
  2. Try finding another co-signer with better income or credit history. A co-signer can be any adult you know who is willing to accept the responsibility of the loan with you. See our Finding a Co-Signer page for more information.
  3. Even if your parent is unable to co-sign for alternative education loans, they may still qualify for the Federal Parent PLUS Loan. The PLUS Loan is a loan made in your parent’s name, and still requires a credit check, but the criteria are generally less stringent than alternative education loans.