Best Student Loan Options for Low-Income Students

The financial burden of going to college is a significant barrier for low-income students. A study by the National College Attainment Network (NCAN) found that only 33% of public, bachelor's degree-granting institutions were considered affordable for students who demonstrated financial need. The study also found that the average low-income student faces a funding gap of $1,690 per school year.

Fortunately, there are sources that students in need can tap to bridge this gap. Federal student aid programs for low-income students and private student loans are all financing solutions to explore.

Can low-income students get student loans?

Although having a low income might present barriers for consumer loans, like auto loans and personal loans, education loans are a different story. With federal student loans, low-income students aren't required to meet a minimum income or credit score threshold to qualify.

There are no FAFSA income limits that prevent students from applying for federal student aid. The Department of Education offers financial aid programs that are uniquely tailored to students who demonstrate financial need, including federal grants, work-study, and subsidized student loans.

Additionally, some institutions have student aid policies that are designed to support low-income students.

“Many schools have reduced or no-loan policies — often these programs are based on the student's family['s] total income,” says Sean Martin, director of financial aid services at Connecticut College.

“Additionally, many schools have policies associated with outside scholarships that can reduce a student's loan indebtedness,” he adds. “For example, some schools allow outside scholarship funding to reduce a student's packaged loan funding dollar-for-dollar.”

Federal student loans for low-income borrowers

Through the FAFSA, students can potentially access a handful of federal student loan options. The federal Direct Loan program offers the following loan types:

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Parent PLUS loans 
• Grad PLUS loans
• Direct Consolidation Loans

Direct Subsidized Loans are available to low-income undergraduate students who demonstrate financial need and meet other eligibility criteria. Subsidized loans are advantageous because students aren't required to pay the interest that accrues while they're in school at least half-time, during the loan's six-month grace period, and during any period of deferment.

Direct Loans have annual and aggregate limits. The amount you're actually awarded is decided by your school's financial aid administrator, and it can't exceed your financial need.

The first step to access federal student aid for low-income students, including Direct Subsidized Loans, is submitting a FAFSA. You'll need to create a Federal Student Aid (FSA) ID online and then fill out the FAFSA at StudentAid.gov. You'll need to enter your and your parents' personal and financial information, along with information about your school.

Grants and scholarships for low-income students

The FAFSA can also unlock gift aid, such as grants and scholarships, that don't need to be repaid. Here are a few examples:

• Pell Grant: Undergraduate students who demonstrate exceptional need and haven't already earned a bachelor's degree or higher might qualify for a federal Pell Grant. The maximum Pell Grant award is $7,395 for the 2025-26 award year, and students can apply every year through the FAFSA.
• Federal Supplemental Educational Opportunity Grant (FSEOG): The FSEOG is another federal need-based grant that's available to eligible undergraduate students. It awards between $100 and $4,000 per year, depending on your level of financial need.
• State-based aid: Some states sponsor their own grant programs for residents who enroll in an in-state institution. Check your state's department of education website to learn more.
• Institutional scholarships: Your school might also offer valuable scholarships or grants for students with financial need. Speak to your institution's financial aid officer to explore its programs.

Best private student loan lenders for low-income students

If you still find yourself short on funding after receiving federal student aid, a private student loan can help bridge the gap. However, qualifying for student loans without income or a strong credit history can be challenging.

A common way to address this hurdle is by applying for a private student loan with a cosigner. A cosigner is typically a trusted relative, like a parent or spouse. They must have good credit and be willing to accept financial liability for the debt if you're unable to repay the loan. Not only can a cosigner improve the likelihood of loan approval, but their credit and steady income can potentially unlock lower rates, too.

Here are some of the best private student loans for low-income students:

Why you can trust our Credible experts

The Credible editorial team is independent and unbiased. Partners do not influence our editorial content. To help you find the best student loan for your situation, we conduct thorough research and analyze thousands of lender data points. Using data-driven methodologies, we score criteria that are important to you. This allows us to objectively rank student loan lenders and products. To learn more, read our methodology below.

Methodology

To determine the best student loan lenders for low-income students, Credible collected more than 1,000 points of data on two dozen companies and evaluated them on several different categories: repayment options, eligibility, interest rates, loan terms, and customer support. We assigned a score out of five stars to each lender based on our findings. Below are the weightings assigned to the general categories for the best student loan companies — which comprise individual criteria that are also weighted.

• Repayment options: 30%
• Eligibility: 25%
• Interest rates: 20%
• Loan terms: 15%
• Customer support: 10%

While the best lender for you will depend on your unique needs and financial circumstances, these findings should help answer your questions and assist you in your search for the best student loan.

Learn more about our methodology.

Tips to reduce borrowing if you have a low income

Borrowing enough student loans to cover the cost of attendance at a four-year institution isn't always feasible for some students. Here are a few strategies that can help lower your reliance on student loans:

• Apply for gift-based financial aid: Scholarships and grants are a valuable aid source since they don't need to be repaid upon leaving school. You can find scholarship and grant opportunities by researching available aid from professional associations related to your major or future career pursuits, private corporations, and local organizations in your area.
• Consider the work-study program: Federal work-study likely won't cover all of your college costs, but working a part-time job through this need-based program can help with your day-to-day expenses.
• Create a realistic budget: Following a budget can help you manage school costs like tuition, mandatory fees, and living costs such as rent, transportation, and food. One budgeting method to consider is the 50/30/20 rule, which allocates 50% of your money toward needs, 30% toward wants, and 20% toward savings.
• Start your higher education locally: Going straight to a four-year school comes with a heavy price tag. Consider reducing tuition costs by completing your first two years of school at a community college. If a direct four-year institution is your preferred path, attend a public in-state school that offers reduced tuition rates for state residents, and live at home during your education.
• Don't rule out private schools: “A common misconception is that schools with higher sticker prices are unaffordable,” says Martin. “In many instances, schools that cost more (often private institutions) have very generous aid policies — specifically need-based financial aid.” Martin suggests that high-cost private schools can be more affordable than in-state public institutions after accounting for total need-based financial aid awards.

Another tip for low-income students and their families is to stay informed about the latest news regarding federal student aid.

Jack Wang, a financial adviser at Innovative Advisory Group and host of the Smart College Buyer podcast, notes that recent policy proposals will have a “huge impact” on college affordability for low-income families if passed.

“One example is [the proposal] to eliminate the American opportunity tax credit, which provides up to $2,500 in annual tax credit when paying for college,” says Wang. “Another is to sunset the parent PLUS and grad PLUS loans, which can help low-income families take out loans for college when their finances may not otherwise qualify them for private loans.”

Despite the current uncertainty of some federal aid programs, Wang says it's still worthwhile to fill out a FAFSA.

“Fortunately, there are many aid programs from the federal government, state governments, and the colleges themselves to help first-generation, low-income students,” says Wang. “Examples include the NY State TAP, Cal Grant, and many of the Promise programs around the country.”