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Denied for a private student loan? Here’s what to do

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Don’t worry—you’ve got options

Getting denied for a private student loan can be a tough situation. But don’t worry, it doesn’t have to be the end of the road. There are still plenty of ways to move forward, whether that means improving your application, exploring other ways to pay, or coming up with a new game plan. Here’s what you can do next.

Reasons you might be denied a student loan

The first step is to check with the lender to find out why your application was denied. Knowing the reason will help you fix the issue and improve your chances next time.

Every lender has its own requirements for approving a student loan. But they usually look at credit history, credit score, income, debt-to-income ratio, and enrollment status.

One of the most common reasons is not meeting the lender’s FICO®Credit Score requirements. Your FICO® Credit Score is a three-digit number that helps lenders decide if you’re likely to repay a loan. If you’re new to credit and haven’t built a history yet, your score may be too low. If you’ve borrowed before but missed payments or have too much debt, your score could also be affected.

Other common reasons for denial include:

  • Not enough income. Some lenders require a minimum income to make sure that you can repay the loan.
  • High debt-to-income ratio (DTI). If you already have a lot of debt compared to your income, lenders may see it as a risk.
  • Incomplete application. If your application is missing important details like your Social Security number, income, or school enrollment status, lenders may deny your loan.
  • Not meeting enrollment requirements. Some lenders require you to be enrolled at least half-time in an eligible degree program.

Need money for college?

Consider a Sallie Mae® private student loan

  • Available for online or on-campus study
  • Competitive fixed and variable rates
  • No origination fee or prepayment penaltyfootnote 1
  • 95% of undergraduate students who’ve been approved with a cosigner were approved again when they returned with a cosigner the following yearfootnote 2
Photo webImage blog Cross Sell study Girl.

What to do if you were denied for a student loan

Maximize scholarships, grants, and federal loans

Before you even consider a private student loan, make sure you’ve explored every option to pay for college that is out there.

Fill out the FAFSA® (Free Application for Federal Student Aid). It’s the first step in getting federal student loans, scholarships, and grants. If you need help with the application, we have a FAFSA® Guide than can answer your questions and walk you through it.

Apply for scholarships. It’s free money you don’t have to pay back. Scholly® Scholarships by SallieSM can help you filter through thousands of scholarship opportunities to find the best ones for you.

Consider a creditworthy cosigner

If you were denied a student loan on your own, ask a creditworthy person in your life to apply with you as a cosigner. A cosigner with good credit may be able to help overcome your limited or negative credit history so that together you qualify for the loan.

Many students ask their parents, but if that’s not an option, you can also ask a guardian, relative, or someone trustworthy in your life to be your cosigner. Just make sure to have an open and honest discussion about responsibilities beforehand.

Keep in mind your cosigner shares full responsibility for your loan. That means if you miss a payment, they’re on the hook to pay it. If they don’t, it can impact both of your credit scores.

After you’ve met certain requirements from your lender, like making a certain number of on-time loan payments, you may be able to release your cosigner from their responsibility for the loan.

Check your credit report

Reach out to one of the three national credit bureaus (Experian, Equifax, and TransUnion) to view your credit report. You can check your credit for free with each of these bureaus once a year to get a better understanding about what is impacting your score. By keeping an eye on your credit and starting with simple steps like making on-time payments and paying off your balances, you’ll build your credit health in no time.

For students new to credit, talk to your parents about opening a secured or student credit card and practice good credit habits like keeping your balance low and never missing a payment.

Don’t be afraid to ask for help

Figuring out how you’re going to pay for college doesn’t have to be a challenge. If you’ve been denied a student loan, work on building or improving your credit, and don’t be afraid to ask the people around you for help. If you’re still having trouble, don’t hesitate to contact your school’s financial aid office. They may have other suggestions to help you pay, like a tuition payment plan that allows you to pay your tuition bill in monthly installments. Don’t let a student loan denial put a damper on your college journey.

footnote Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own financial advisor, tax advisor, or attorney about your specific circumstances.

footnote External links and third-party references are provided for informational purposes only. Sallie Mae cannot guarantee the accuracy of the information provided by any third parties and assumes no responsibility for any errors or omissions contained therein. Any copyrights, trademarks, and/or service marks used in these materials are the property of their respective owners.

footnote Sallie Mae, the Sallie Mae logo, and other Sallie Mae names and logos are service marks or registered service marks of Sallie Mae Bank. All other names and logos used are the trademarks or service marks of their respective owners. 

footnote FAFSA® is a registered service mark of U.S. Department of Education, Federal Student Aid. 

footnote 1. Although we do not charge you a penalty or fee if you prepay your loan, any prepayment will be applied as provided in your promissory note: first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal. 

footnote 2. Sallie Mae loans cover enrollment periods of up to 12 months. Students must apply for a new loan each school year. This approval percentage is based on students who were approved for a Sallie Mae undergraduate loan with a cosigner in the 2021/22 school year and were approved for another Sallie Mae undergraduate loan when they returned with the same or new cosigner in 2022/23. It does not include the denied applications of students who were ultimately approved in 2022/23.


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