Applying for student loans makes sense for students who have already looked into potential grants and scholarships, but still need additional financing to afford their education.
In most cases, federal student loans are the preferred option for borrowers since they have more borrower protections than private loans. However, due to federal limits, private loans are usually needed to cover what federal loans can’t.
This guide will help you understand how to apply for student loans from both the federal government and private companies.
In this guide:
- How to Apply for Federal Student Loans
- How to Apply for Private Student Loans
- Resources to Help You Apply for Student Loans
How to Apply for Federal Student Loans
Students and parent-borrowers should exhaust all of their options for federal student loans prior to applying for private student loans. You should apply for federal student loans even if you do not believe that you will qualify for federal aid, as it’s often a pre-requisite for other types of aid.
Here is how to apply for student loans from the federal government.
1. Fill Out the FAFSA
To apply for federal student loans (and to qualify for many scholarships), you’ll need to fill out the Free Application for Federal Student Aid (FAFSA). This can be done online at FAFSA.ed.gov. New users will need to create an account while existing users can log into their account.
You can complete the FAFSA in about 30 minutes online, although you will need to provide some information about your finances. If you are a dependent undergraduate student, you’ll need to provide details about your family’s finances. Some of the information you will need include:
- Your Social Security number
- Your driver’s license
- Your federal income tax returns (and your parents’ forms)
- Your W-2 forms (and your parents’ forms)
- Bank statements for you and your parents
- Records of untaxed income earned by you or your parents
- Investment and business records for you and your parents
You also need to provide details about the schools you are applying for so you can get a financial aid package for each college.
2. Wait for Your Financial Aid Award Letter
After you’ve completed your FAFSA, you will receive a letter summarizing the aid that you are eligible for. This will include the types of loans that you qualified to receive, details about loan amounts available to you, and information on other types of aid you may receive.
Some of the different kinds of federal student loans you may be able to obtain include:
- Direct Subsidized Loans: These are a type of Stafford Loan and are available only to undergraduate students who demonstrate financial need. The government will pay the interest on these loans while payments are deferred both as you are attending school and during the grace period after graduation.
- Direct Unsubsidized Loans: These are available to undergraduate and graduate students. Demonstrating financial need isn’t necessary, but the government won’t subsidize interest on these loans.
- Direct PLUS Loans: Parents of undergrads and graduate students can obtain Direct PLUS Loans. Interest isn’t subsidized, and you cannot borrow with an adverse credit history. Both origination fees and interest rates can be higher on PLUS Loans than on Direct Loans.
- Direct Consolidation Loans: When you already have eligible federal student loans, you can consolidate them through a Direct Consolidation Loan obtained from the Department of Education. Your interest rate on a consolidation loan is a weighted average of the rates on the loans you consolidated, so the interest you pay doesn’t change if you consolidate
3. Accept Your Financial Aid (And Put it to Use)
Once you have received your financial aid award letter, you have to contact the financial aid office at the school you are attending to accept the loans that you have been offered. There will be additional paperwork to complete, including a Master Promissory Note, so the school can facilitate the transfer of funds.
The money from your federal student aid will be distributed directly to the university that you are attending. The school will take the money for your tuition out of your loaned funds. If you live on campus, the school will also take room and board out of your borrowed money. Any balance remaining will be sent to you by your university so you can use the money to pay for food, textbooks, rent, and other eligible expenses.
How to Apply for Private Student Loans
Even if you qualify for federal student aid, chances are good that you’ll need to borrow more to pay for all the costs associated with attending college. This means you may need to turn to private student loan companies to find the money federal loans won’t provide.
Applying for private student aid can be done in just a few minutes, but you will need to have some paperwork and personal information available before you start the process, including:
- Your Social Security number
- Your driver’s license
- Your tax returns (and the tax returns of cosigners)
- Your pay stubs (and the pay stubs of cosigners)
- Bank statements, investment account statements, and other information about your assets (and the assets of any cosigners)
- Details about the school you are attending
Because there are many different options for private student loans, it’s important to shop around to find the right lender. The companies below are well-known in the industry and are a good place to start your search for a private loan.
Compare Private Student Loans
- Rates from 1.04% to 12.99% APR
- Your choice of full, interest-only, flat, or deferred payments
- Borrow between $1,000 and 100% of the school-certified cost of attendance
- Rates from 1.05% to 12.78% APR
- Skip a payment once per year
- Borrow between $1,000 and 100% of the school-certified cost of attendance
- Rates from 1.21% to 11.04% APR
- Know how much money is available to you for multiple years with Multi-Year Approval
- Borrow between $1,000 and $150,000
Can I Apply for a Student Loan in the Middle of the Semester?
If you find you need more funds, you can generally apply for student loans at any time during the school year. Private lenders aren’t constrained by FAFSA deadlines and loan funds from private lenders won’t run out.
>> Read More: Student loans for past due tuition
Resources to Help You Apply for 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