Over 50 years, the series has not been consistent on this. The original 1963-1989 series, plus spinoff novels, suggested that Gallifreyans became Time Lords after they went through an academy. The revival series has referred to Time Lords as a race and that Gallifreyans and Time Lords are one and the same. Episodes of particular note are "the Doctor's Daughter", "A Good Man Goes to War" (in which Time Lord DNA is discussed) and "Let's Kill Hitler". So based on the original series, Gallifreyans (and, in the webcast animated production Death Comes to Time, others including human Ace) can become Time Lords via an academy; in the revival series, they are born.