How to Get a Student Loan

College can be pricey, costing an average of $36,346 annually after all expenses are included. It’s worth it for most people—the average lifetime return on investment ranges from 350% to 1,200%—but about a third of all students must rely on student loans each year. 

Student loans can have pros and cons. They can make budgeting tougher for you and your family after graduation. They also give you a starting point to build good credit and allow you to focus on your studies.

But to unlock those opportunities, you’ll need to know how to get a student loan in the first place. 

Where to get student loans

Student loans fall into two categories: federal and private. Federal student loans come from the U.S. government, and private loans come from banks, credit unions, and online lenders.

Here is how they compare:

	Pros	Cons
Federal	Easier qualification Lower interest rates No cosigner needed Built-in borrower protections	Finite borrowing limit Can’t refinance for a lower rate
Private	Larger borrowing limits More types of loans offered Possibility of lower interest rates	Higher interest rates Rate may be variable Cosigner generally needed Fewer borrower protections

As you can see from this table, federal student loans come with more benefits and fewer downsides than private student loans—and that’s why most experts recommend relying on federal student loans first. 

How to get student loans

Applying for student loans can look different depending on the type of loan you’re choosing. Here’s how it’ll work:

How to get federal student loans

It’s easy to apply for federal student loans. If you’ve filled out the Free Application for Federal Student Aid (FAFSA), you’ve already completed most of the application process. 

Here’s a more detailed breakdown of how to get federal student loans:

1. Fill out the FAFSA: Not only does this serve as your application for scholarships and grants, but it’s used to determine your eligibility for different types of federal student loans. 
2. Receive a financial aid package: Your school uses the information on the FAFSA to determine which types of financial aid to award you—including the option to accept federal student loans.
3. Accept student loans: You’re not obligated to accept any federal student loans as a part of your financial aid package. But if you do, your school will let you know how to accept them.
4. Fund disbursement: If you accept any federal student loans, your school will first use them to pay off your student account balance. If anything remains, it’ll send you the rest to use for other education expenses. 

When choosing among multiple federal student loans, review the terms and pick the one(s) that are favorable. Create a budget, and pick only the ones you need.

Eric Kirste

CFP®

If federal student loans are part of your college funding plan, completing the FAFSA as soon as it becomes available is best. Typically, that happens on October 1 for the upcoming academic year; for 2024-2025, however, the FAFSA was released in December. 

It’s worthwhile looking at the different types of federal student loans you may be offered. This can help you get ready to make faster decisions, if needed, about the right types of funding for your situation:

Loan type	Who is it for?	Loan limits	Main points
Direct Subsidized	Undergraduate and graduate students	Undergraduates: Up to $12,500 per year, combined across subsidized and unsubsidized Direct loans	Interest doesn’t accrue in school Offered to students in need
Direct Unsubsidized	Undergraduate and graduate students	Undergraduates: Up to $12,500 per year, combined across subsidized and unsubsidized Direct loans Graduates: Up to $20,500 per year	Interest accrues while in school Availability isn’t need-based
Direct PLUS for parents	Parents of dependent college students	Up to 100% of your child’s remaining cost of attendance	Parents are liable for the loan; not children Availability isn’t need-based Must pass a basic credit check
Direct PLUS for graduates	Graduate students	Up to 100% of your remaining cost of attendance	Availability isn’t need-based Must pass a basic credit check

How (and when) to get private student loans

If you’ve completed the FAFSA and you still don’t have enough funds to pay for your upcoming semester after taking federal loans and financial aid into account, it may be time to consider private student loans. 

You can apply for private student loans whenever you want, but applying at least two months in advance is best. This gives you enough time since it can be tougher for some people to get approved. Here is how to get a private student loan:

1. Know your qualifications: Most private lenders require full-time students to apply with a cosigner, such as a parent or grandparent, who meets certain credit and income qualifications. Have them check their credit report in advance to ensure it’s correct. 
2. Research lenders: Considering your cosigner’s qualifications, you can start to shop for private student loan lenders. Pay close attention to the rates and any repayment support programs, such as cosigner release or forbearance options. 
3. Get prequalified: Many private lenders allow you to submit a basic applicant profile to see if you’re likely to be approved. They may also provide estimated rates and terms, allowing you to accurately compare your options. 
4. Submit an application: Choose the best lender and submit a full application, which may include financial documents and your college study plans. Do this in advance if the lender declines you or needs more info, which can slow things down.
5. Receive funds: Private student loan lenders generally send the funds directly to your school, just like with federal student loans, with any remainder being paid out to you by your school. 

About one-third of private student loan borrowers applied with a cosigner in 2020. This was linked with a better chance of approval (36%, vs. 9% for applicants without a cosigner), but most applicants still needed to apply with more than one lender.

Interested in a loan from a bank? See our resource on banks offering student loans.

Should you get a loan for school?

Whether it’s a good idea to take out student loans depends on many different factors; there isn’t a simple yes-or-no answer for everyone. 

However, most experts agree that relying on other things first is best, especially college savings, grants, and scholarships. These things are essentially free money, with few or no strings attached. Once you’ve exhausted these routes, then it’s time to consider other options.

Dropping down to part-time status so you can take on a side job, or even dropping out entirely to save up more cash to pay for college later, is always an option. But if you’d rather stay in school, student loans may be the best way to complete your education. 

That said, consider how taking out debt now may impact you in the future, especially if you form a family or your post-graduation career doesn’t work out, for example. 

Ask the expert

Eric Kirste

CFP®

Once you have exhausted your access to federal student loans and other avenues, such as college savings, grants, and scholarships, private student loans are a good next step. However, private student loans should be considered secondarily after all other federal financial aid and alternative funding sources have been explored. Private student loans may offer lower interest rates and more favorable terms around costs, origination fees, etc. If you do not have established credit, you may need a co-signer. It will also be important to put together a budget because you may be required to make payments while you are still in school.

Most important steps to take before getting a student loan

Before you sign on the dotted line, make sure you run through this checklist first:

• Read through the loan promissory note
• Exhaust all of your options for free financial aid first
• Calculate how much money you actually need, and don’t borrow more
• Exhaust all of your federal student loans first before resorting to private loans
• Understand how amortization works and why some payments go mostly to interest
• Estimate your potential student loan payment and compare it to your potential income
• Find a creditworthy adult who trusts you and is willing to cosign your private student loan (if applicable)

How to get school loans in specific situations

Having good loan qualifications of your own—or at least assistance from people who do—isn’t something everyone can access. That can put a big dent in your college funding plans, but you may still have more options than you think.

How to get a loan for school if you have bad credit?

Federal student loans are much easier to get if you have bad credit, especially for undergraduate studies. Having a creditworthy cosigner on your loan can help you qualify for private student loans and may be required for some federal Direct PLUS loans too.

How to get loans for school if you don’t have parents?

You don’t need parental sign-off on the FAFSA if you’re an independent student, which happens if you marry, for example. In addition, any creditworthy adult can cosign on your private student loan if needed; it doesn’t have to be a parent. 

How to get a school loan if you don’t have a cosigner?

Cosigners aren’t required on most federal student loans. You stand a better chance of approval when applying for a private student loan with a cosigner, but it’s certainly not required—especially if you already have good credit.