What disqualifies you from getting a student loan?

Student loans are an important tool for financing education. However, not everyone will qualify for student loans. You can be disqualified for student loans if you don't meet enrollment requirements, citizenship requirements, or, in the case of private loans, if you don't meet the lender's credit and income requirements.

Disqualification factors for federal student loans

The majority of student loans are issued under the Direct loan program. You can lose your eligibility for federal Direct student loans for the following reasons:

• You didn't complete the Free Application for Federal Student Aid (FAFSA): The FAFSA is an application you use to apply for federal, state and institutional aid. It asks about your family income, assets and your financial need. Without it, you're ineligible for most forms of aid.
• You're enrolled less than half-time: Federal financial aid is only awarded to those who are enrolled at least half-time. If you aren't taking enough classes to meet that requirement, you're disqualified from receiving federal aid.
• You don't have a high school diploma or a qualifying equivalent: Federal aid requires borrowers to have a high school diploma or its equivalent. Without that, you cannot receive aid.
• You don't meet the citizenship requirements: Federal student loans are only for U.S. citizens and some qualifying permanent residents.
• You defaulted on federal loans: If you have existing federal student loans in default, you cannot take out additional loans.
• You don't meet your school's satisfactory academic progress (SAP) requirements: Each college or university sets their own standards for SAP, meaning the number of classes you have to successfully pass each semester as you work toward a degree. If you fall behind, you may be put on probation, and lose eligibility for financial aid.
• You have criminal charges filed against you: If you're convicted of a crime and are in a correctional or juvenile justice facility, you aren't eligible for federal student loans. When you're on probation or parole, you can regain eligibility.
• You reached the annual or aggregate maximum limits: There are annual and aggregate limits on how much you can borrow in federal student loans. If you meet the limit, you'll be ineligible for additional loans.

Disqualification factors for private student loans

Private student loans are issued by banks, credit unions and other financial institutions, so they can set their own eligibility requirements. You may be disqualified from taking out a private loan in following circumstances:

• Your program doesn't meet the lender's requirements: Typically, lenders require you to attend a four-year, Title IV-eligible school. If you're enrolled at a two-year school or for-profit institution, you may not be eligible for a private loan.
• You have poor credit or a limited credit history: Unlike federal loans, which don't have a minimum credit score requirement, private student loan lenders usually require borrowers to have good credit. College students often have limited credit histories, so you'll likely need a cosigner to qualify for a loan.
• You don't have a reliable source of income: Private student loan companies want to make sure you (or your cosigner) can afford the loan payments, so they set minimum income requirements. Without a steady source of income, you won't be able to take out a loan.

How to overcome disqualification from student loans

If you were disqualified from taking out federal loans, take the following steps to finance your education:

• Rehabilitate your loans: If you defaulted on your federal loans, you'll have to get out of default through federal loan rehabilitation or Direct loan consolidation before you can take out additional loans.
• Improve your grades: Talk to your school's registrar office about the college's SAP and what grades you need to earn to satisfy the requirements. If you meet the requirements for the semester, you can re-gain eligibility for federal aid.
• Boost your credit: Private lenders typically require good to excellent credit. Boost your credit by keeping your credit card balances low and making all of your payments on time.
• Explore other financial aid options: If you aren't eligible for federal student loans or other federal aid, other options include private scholarships, grants and state-based aid. You can visit your state education agency's website to find out what aid programs are available.
• Ask a relative to cosign a loan: If you plan on applying for private loans but don't meet the lender's income or credit criteria, you may be eligible for a loan if you have a creditworthy cosigner.

Navigating student loan qualifications

While student loans can be useful tools as you pursue a degree, you may be disqualified from receiving loans or other federal financial aid because of your grades, enrollment status, citizenship, loan status or because you reached the borrowing limits for federal loans.

If you aren't eligible for student loans, other aid, such as grants from nonprofit organizations or companies and state-based work-study programs can help pay for your education. And, if you have reached the maximum borrowing amount allowed under federal loans, private student loans can cover the remaining cost.