How to Get a Student Loan: 7 Steps to Follow

To get a student loan, you’ll need to fill out the FAFSA online and await your college acceptance letters with their financial aid packages. If the federal aid offered won’t cover the full cost of college, you’ll also need to apply for private student loans.

Not sure where to start? Below, we’ll walk you through how to get a student loan in seven steps.

Table of Contents

1. 7 steps to getting a student loan
   1. How to get federal student loans
      1. 1. Complete the FAFSA
      2. 2. Review your financial aid offers
      3. 3. Complete loan counseling
      4. 4. Accept your offer
   2. How to get private student loans
      1. 5. Compare lenders
      2. 6. Determine eligibility requirements
      3. 7. Apply and (if approved) accept
2. How do you use student loans to pay for school?
3. What happens if your student loans don’t cover what you need for school?

7 steps to getting a student loan

When applying for student loans, prioritize federal loans over private loans. If you can pay for your entire college education through grants, scholarships, and federal loans, there’s no need to take out a private loan.

Why federal loans over private loans? Several reasons:

• Federal loans don’t require a credit history or cosigner.
• Federal loans are eligible for income-driven repayment.
• Depending on your scenario, you may one day be eligible for loan forgiveness—but this only applies to federal loans.

Depending on the cost of your college education and the amount you’re approved to borrow through federal loans, you may also need to take out private loans. 

How to get federal student loans

Start your search for student aid with federal loans:

1. Complete the FAFSA

The first step to getting a federal student loan (and any kind of federal aid) is to fill out the Free Application for Federal Student Aid (FAFSA) with a parent or guardian, if applicable.

To do so:

• Create an account on the StudentAid website.
• Gather the required documents.
• Fill out the form online.

Though the government has made great strides in recent years to simplify the FAFSA, it can still be a stressful process. Be patient, have snacks on hand, and use the FAFSA Help page if you get stuck.

When you’ve completed the form, you’ll see a number representing your Student Aid Index (SAI). A negative SAI indicates greater financial need (and a greater likelihood you’ll get the max Pell Grant award).

You can also use the Federal Student Aid Estimator to get a better idea of your potential offers, but nothing is set in stone until you get actual offers from schools.

2. Review your financial aid offers

Although you complete the FAFSA with the Federal Student Aid office, you’ll get your official financial aid offers from the schools themselves. Your acceptance letter from a college or university will come with an award letter detailing the aid you’re eligible for, including:

• Grants
• Scholarships
• Work-study programs
• Direct Subsidized and Unsubsidized Loans

You’ll also see the cost of attendance. Compare the total aid package against this cost of attendance to determine whether your parents or guardians will need to apply for federal Parent Plus loans, or you’ll need to apply for private student loans.

3. Complete loan counseling

Because accepting massive student loans is such a big financial decision that could have effects for decades—and the vast majority of applicants are high-school students with no real-world personal finance experience—the Federal Student Aid office requires student loan entrance counseling before you can accept loan money.

The counseling is brief—it lasts only 30 minutes—but it’s a crucial step to getting a student loan. Beyond this counseling, we recommend first-time borrowers chat with a trusted advisor, such as an older relative or family friend (if not a parent), who can help them understand the full weight of their decision to borrow.

4. Accept your offer

Once you’ve received all your offers from the schools you applied to, it’s decision time. Of course, you should compare schools based on location and programs, but you should also consider cost and financial aid. If School A offers you enough scholarship money to cover tuition while School B does not, it’s likely a better financial decision to go with School A.

After you make your decision, contact the school to accept the offer. 

I encourage my clients to prioritize free funding options, such as scholarships, grants, and work-study programs, while strategically using college savings accounts. I also recommend exploring family contributions when feasible, provided it does not compromise their financial stability. I recommend favoring federal loans over personal loans, and students should maintain a budget-conscious lifestyle during college to facilitate effective debt management and repayment.

How to get private student loans

If your grants, scholarships, and federal loans won’t cover the full cost of your college education, talk with your parents about a federal Parent PLUS loan, or start investigating private student loans. Here’s how you’ll do the latter:

5. Compare lenders

As with any loan, don’t go with the first lender you find. Instead, research a handful of potential private student loan lenders; you may even be able to prequalify at some with a soft credit check, which doesn’t affect your credit. This will give you a better idea of how much you’ll be approved for and at what rate.

Once you’ve narrowed down your list, compare the lenders against a number of factors, including:

• Rates: The lower the interest rate, the less you’ll spend on your student loans. But the rate is more than just a number; read the fine print to determine whether the rate is fixed or variable. Use caution with variable-rate loans; even if they’re lower now, they could increase over time.
• Repayment terms: Different lenders may offer unique repayment terms, i.e., how long you’ll have to pay back the loan. The longer the term, the smaller your monthly payments will be—but the more you’ll pay in interest over time. Use our student loan calculator to see how adjusting repayment terms affects your monthly payment and the total cost of the loan.
• Reputation: Read reviews about each lender online using the Better Business Bureau, Trustpilot, and similar websites. Prioritize lenders with a positive reputation; after all, you may be stuck with them for decades.
• Hardship options: Some private lenders offer hardship programs that can help if you fall on hard times. These usually aren’t as robust as federal hardship programs, but it’s important to find a lender that offers some kind of assistance.

6. Determine eligibility requirements

Private lenders want borrowers to have good credit. The problem? Many borrowers are high-school students who have never so much as opened a credit card.

Check the credit score requirements with each lender, and see whether they allow cosigners (typically a parent or guardian) to improve your approval odds. Some lenders may not have credit score requirements; instead, they’ll look at your academic record or degree to determine future earning potential.

7. Apply and (if approved) accept

Once you’ve found a private lender with agreeable rates and terms—and one that you’re likely to be approved through—fill out the application online. The lender will want to know information about you (and your cosigner, if applicable), such as:

• Monthly income
• Monthly debts
• The degree you’re pursuing
• The cost of your school

If your application is accepted and you want to move forward, sign on the dotted (or digital) line.

If you are repairing damaged credit, be patient. It takes time for negative items to fall off your credit history.

How do you use student loans to pay for school?

We’ve covered how to apply for student loans, but how do student loans work once you’re approved? It depends on the type of loan.

How to use federal student loan funds

Federal student loans go to the school. The loan proceeds cover the cost of tuition, as well as room and board (if applicable). Whatever is left over goes to you, which you can then use to pay for other school-related expenses, such as textbooks and lab equipment.

If you’re not living in on-campus housing, you can use the federal student loan proceeds to pay for rent and utilities, as well as groceries and toiletries. And if you commute, you can use the proceeds for transportation costs such as gas and parking. You can use student loans for many expenses you’ll encounter during your student years, including childcare during class time.

You can’t use student loan proceeds for vacations, entertainment, or real estate, however. Nor should you; you could be paying interest on these loans for decades. Try to spend as little as possible to keep long-term costs down.

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How to use private student loan funds

Private student loans may go to the school, but they may also go directly to you. It depends on the lender. Even if the funds go to you, the same rules apply: You should only use the funds for education-related expenses, which can include living costs while in school.

What happens if your student loans don’t cover what you need for school?

If your student loans won’t cover your full school expenses, you aren’t out of options. The first step you can take is to reach out to your school’s financial aid office to see whether you qualify for additional aid—called an “aid adjustment.” You might qualify for this if the FAFSA didn’t accurately reflect your family’s financial situation because of more recent circumstances, such as:

• A layoff or reduction in work hours
• Incarceration of an income-producing parent
• A serious illness or injury that has led to extended time off work
• A death in the family
• Divorce or separation

In those cases, schools may reevaluate your need and adjust your aid package.

Beyond asking your school to reconsider, you can explore other options to help:

• Apply for scholarships: You can find these through your school’s financial aid office, but you can also look elsewhere: community organizations, your employer, and online.
• Set up a tuition payment plan: If you can’t finance your education through a loan, see whether your school will set up a tuition payment plan that allows you to pay for classes in installments rather than an upfront lump-sum payment.
• Work during school: You may need to take fewer classes and thus extend your time at college, but getting a part-time job to cover food and housing can make a huge difference.
• Consider government benefits: See whether you qualify for the Supplemental Nutrition Assistance Program (SNAP) through the USDA. You may be able to find affordable health insurance on the marketplace if you’re no longer covered by your parents’ plan.