How to Apply for Student Loans

Applying for student loans makes sense for students who have looked into potential grants and scholarships but still need additional financing to afford their education costs.

In most cases, we recommend federal student loans for borrowers because they offer more borrower protection than private student loans. However, due to federal student loan amount limits, some students may need private loans to cover additional costs. 

This guide will help you understand how to apply for student loans from the federal government and private companies.

How to apply for a student loan

You generally have two options for student loans: federal and private loans.

The application process differs depending on which type you’re pursuing.

Students and parent-borrowers should exhaust all federal student loan options before applying for private student loans. You should apply for federal student loans even if you don’t think you’ll qualify for federal aid because it’s often a prerequisite for other types of aid.

How to apply for federal student loans

You can apply for Stafford Loans and all loans from the government in three steps:

1. Fill out the Free Application for Federal Student Aid (FAFSA)
2. Wait for your financial aid award letter
3. Accept your aid, and begin using it

Here’s more about each step to applying for federal student loans.

1. Fill out the FAFSA

To apply for federal student loans (and qualify for many scholarships), you must fill out the Free Application for Federal Student Aid (FAFSA). You can do this by visiting the Federal Student Aid website. New users must create an account, and those who have done so can log in to their account.

You can complete the FAFSA in about 30 minutes online. You must provide information about your finances. If you’re a dependent undergraduate student, you’ll provide details about your family’s finances. 

Examples of information you might need to complete the FAFSA form include:

• Tax returns
• Current bank account balances
• The net worth of your investments or businesses 

Are you a dependent?

You’ll want the above information for you and your parent(s) or guardian.

Are you married?

Be prepared to provide the requested information for you and your spouse.  

You’ll also need to provide details about the schools where you’re applying so you can get a financial aid package for each college.

2. Wait for your financial aid award letter

After completing your FAFSA, each school you apply and are admitted to will send you a letter summarizing the aid you can get. This will include the types of loans you’re eligible for, details about the available loan amounts, and information about other types of aid you may receive (e.g., grants). Your award letter might come by email, mail, or both.

The federal student loans you may be able to get include:

Type of loan	Borrower	Borrowing limits	What to know
Direct Subsidized loans	Undergraduate students	No more than $3,500 to $5,500 per year Aggregate limit of $23,000	This type of Stafford Loan is only available to undergraduate students with demonstrated financial need
Direct Unsubsidized loans	Undergraduate and graduate students	No more than $5,500 to $12,500 per year for undergraduates, with an aggregate limit of $57,500 No more than $20,500 per year for graduate students, with an aggregate limit of $138,500	Borrowing limits include the combined amount of Subsidized and Unsubsidized loans you can get annually and in aggregate   Graduate student aggregate limit includes undergraduate loans
Direct Parent PLUS loan	Undergraduate students’ parents	Cost of attendance at your child’s school, minus any financial assistance the child receives	You can’t transfer this loan to your child and will be responsible for repaying the loan A credit check is required
Direct Grad PLUS loan	Graduate or professional students	Cost of attendance at your school, minus financial assistance from other sources	A credit check is required
Direct Consolidation loan	Eligible federal student loan borrowers	Balance of combined student loans	Most federal student loans are eligible, but the student can’t combine Direct Parent Plus with their other loans  Married couples can’t consolidate their debt

3. Accept your financial aid, and put it to use

Once you review your financial aid award letter, you must contact the financial aid office at your chosen school to accept the loans. You’ll then complete additional paperwork, including a Master Promissory Note so the school can facilitate funds transfer.

The Department of Education will pay your federal student aid funds to the school you’re attending. The school will take the tuition cost out of your loaned funds. If you live on campus, it will also take room and board out of your borrowed money. 

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Tip

You don’t have to borrow the maximum available loan amount. If you don’t need the excess funds, tell your school. It will handle returning the funds or letting the U.S. Department of Education know you don’t need to borrow as much. 

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The school will then refund to you any balance remaining after these direct education costs are covered. You can use these funds to pay for food, textbooks, rent, and other eligible expenses. 

Balance the need for loans with your long-term goals: Our expert’s advice

Erin Kinkade

CFP®

Remember: A student loan is an investment in yourself. If you need additional funding to get the degree you’re pursuing, I recommend you focus on investing in yourself knowing you’ll repay the debt. Investing in yourself and graduating with a degree can open doors of opportunity to earn income that might have been unattainable if you didn’t complete your degree due to the lack of funds. I’m not saying it will be an easy road because life isn’t easy. But it will make your path easier, increase your self-confidence, and ideally help you build a work ethic to support your income needs to meet your current and future goals.

How to apply for private student loans

Even if you qualify for federal student aid, you may need to borrow more to pay for all the costs to attend college. If so, you can turn to private student loan companies to fund the money federal loans won’t provide.

Applying for a private student loan involves the following steps:

• Consider your finances. Unlike most federal loans, many lenders require good credit and a source of income to repay a private student loan before they’ll approve you. If you don’t think you’ll qualify on your own, you may be able to rely on the credit and income of a cosigner (e.g., a parent or grandparent).
• Shop around for a lender. You’ll have many options for private student loans, so it’s essential to shop for the right lender. Take time to compare each lender’s terms, rates, and eligibility requirements to find the right one for your situation.
• Gather the paperwork you’ll need. Ensure you can easily access information about you and your finances. Be prepared to share your personal information (including your address and Social Security number), income verification (such as tax returns, W-2s, and pay stubs), bank statements, and details about the school you plan to attend.
• Apply online. You can apply for private student aid online in just a few minutes, especially if you have your paperwork and personal information on hand before you start the process. In most cases, you’ll find out right away whether you’re approved. 
• Receive your loan funds. Your lender may distribute the funds to your school, to you, or a combination of both. Confirm with your lender how it will distribute the funds during the application process so you know what to expect. 

If you’re unsure where to start searching for a private student loan lender, check out our private student loans guide. 

Know how student loans affect your credit score and future borrowing ability: Our expert’s take

Erin Kinkade

CFP®

A student loan adds to your debt-to-income ratio, can affect your credit score, and can preclude future borrowing if you don’t handle repayment responsibly. It can also help with future borrowing ability with responsible repayment, including during times of financial hardship. Always contact your lender by phone, email, or online to notify it of a financial hardship and work out a repayment plan.

Federal vs. private student loans

Here are the primary differences between federal and private student loans:

	Federal	Private
Who offers them?	U.S. government	States + individual banks, credit unions, and online lenders
When to apply for student loans	Deadline is generally June 30 of the year spring term occurs in (e.g., June 30, 2024, for the 2023 – 2024 school year), but apply as early as possible so you don’t miss out on any aid	You can apply any time, but avoid waiting until the last minute
Where to apply for student loans	Online	Online or in a branch (if applying with a local bank or credit union)
How do I apply for a student loan?	Fill out the FAFSA	Visit the lender’s website or a local branch
Who qualifies?	Most U.S. citizens enrolled in eligible higher-education degree or certificate programs	Borrowers often need good credit and consistent income—or a cosigner who meets these qualifications
Credit check required?	❌ (except PLUS loans)	✅ (in most cases)
How are rates determined?	Set by the government each year	Generally based on borrower’s or cosigner’s income and credit qualifications
How to accept student loans	Once you review your financial aid award letter, contact the financial aid office at your chosen school	If you’re approved, you can accept online or in person at a branch and sign the necessary disclosures, often the same day
Benefits	May offer loan forgiveness options Income-driven repayment plans Government might subsidize (pay or waive) some of your interest costs	Depend on the lender, but no private loans offer benefits as generous as federal loans

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Tip

If you can’t qualify for a private student loan alone, you might also be able to use the credit and income of a cosigner to qualify. Not all lenders allow cosigners, so ask your lender about your options if your loan is denied or you suspect you can’t qualify. 

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Resources to help you apply for student loans

Check out the following for further answers to questions about student loans:

• How do student loans work?
• How long does it take to get a student loan?
• How does student loan underwriting work?
• How does student loan disbursement work?
• How do student loans affect credit score?
• Private student loan eligibility requirements
• Parent student loans
• Graduate student loans
• Student loans without a cosigner

FAQ

Should I apply for school loans?

Applying for school loans is a personal decision that depends on your financial situation and educational needs. Consider school loans if grants and scholarships aren’t enough, if you view the loan as an investment in your future and ensure the potential return justifies the debt, and if you’ve prioritized federal loans over private loans due to their more favorable terms and borrower protections.

Can I apply for a student loan in the middle of the semester?

Yes, it’s often possible to apply for student loans in the middle of a semester. The deadline for federal student loans is typically at the end of the academic year (June 30). Private lenders generally allow applications year-round. Check specific lender requirements and processing times.

Is it ever too late to apply for student loans?

Deadlines exist, but you might be surprised find out it isn’t too late to apply for student loans. The FAFSA deadline to apply for student loans is June 30 of the academic year. Private lenders may have more flexible application periods.

When is the best time to apply for student loans?

The best time to apply for student loans is as early as possible: Applying early can ensure you get the necessary funds on time. It allows you to review you options and feel confident you’ve found the best fit, plan your finances more effectively with a clear understanding of the loan amounts and terms, and meet important deadlines, especially for federal loans.