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How to Get Student Loans: A Comprehensive Guide

Haley Rogers • November 29, 2023

A college degree is essential for pursuing many career paths today, but not everyone can count on grants and scholarships to cover tuition. That’s why many students will rely on student loans to pay for their higher education and related expenses.

But where to get student loans, you ask? You can get loans from the government (federal student loans) or financial institutions (private student loans). Each type of loan has its own application process, lending terms, and benefits. Here’s how to get student loans for college.

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How to get a federal student loan

A federal student loan is financial aid issued by the Department of Education. Unlike private loans, federal loans tend to have lower, fixed interest rates and more borrower protections like eventual loan forgiveness or income-based repayment plans.

Below are the steps for how to take out a loan for college.

1. Fill out the FAFSA

To start the application process, create an account on the Federal Student Aid website and fill out the Free Application for Federal Student Aid (FAFSA) online. The application typically becomes available in October. This year, the College Board made some updates, and it’s now available in December.

It can take 30 minutes to an hour to complete the form if you have your supporting documents and info ready. Gather your list of schools, social security number, driver’s license, federal tax return, proof of income like a W-2, bank statements, and records of investments (if applicable). Many students won’t have proof of income, so you’ll just need the same information from your parents if you’re a dependent.

Once you’ve applied, you’ll receive your Student Aid Report (SAR) within two weeks. The report summarizes everything you entered so you can review it for accuracy – this report does not outline any offers.

You will resubmit your FAFSA form each year through your Federal Student Aid account for the new school year.

We’ve got you covered – here’s your complete guide to filling out your FAFSA.

2. Compare your offers

Once you have chosen a handful of schools to receive your FAFSA information, you’ll start to receive your financial aid award letters from each individual institution. And don’t worry — while you can automatically send your information to a few schools via the FAFSA website as you complete the application process, there is no limit to how many colleges you can apply to or send your financial aid information to in general.

In your award letters, you’ll see the cost of attendance, work-study opportunities, grants, scholarships, and loans you are eligible to receive. Your offers will vary by school, so it may help to create a spreadsheet with breakdowns of each offer so you can easily compare. Here are a few key reminders as you consider offers:

Figure out the cost of attendance

A school’s cost of attendance, which can often be found on the university’s website, will include tuition and fees, books, room and board, transportation, personal expenses, and other costs. Once the school determines how much aid you’re eligible for, you can calculate the gap between your offer and the cost of attendance: the difference is what you’ll have to cover financially.

It’s never too early to start saving for college – check out our college savings calculator.

Understand the difference between direct subsidized or unsubsidized loans

There are two types of federal student loans:

  • Direct subsidized loans: These loans are for undergraduate students with demonstrated financial needs. The Department of Education pays the interest on these loans while you’re in school at least part-time, for the first six months after you leave school (your grace period), and during deferment (also known as the postponement of your loan payments).
  • Direct unsubsidized loans: These are not based on financial need, and while you do not have to make payments while in school or during deferment, your interest starts accruing immediately. You can make interest-only payments while in school to help lower your loan principal. This would make it a little easier when you have to start paying off your student loans.

Apply for grants and scholarships

Grants and scholarships are known as “gift aid” – they do not require repayment. For example, Pell Grants are federal grants awarded to students with financial need. You may also qualify for scholarships or grants through your chosen university based on academic performance. Using scholarship search engines, like Scholarships.com or Fastweb, is another way students can find and apply for gift aid.

If you demonstrate enough financial need, you could be eligible for a work-study program: working part-time to pay for school. Sometimes, the school will assign you a job. In other cases, you may have to find the job yourself. Use our College Finance Guide to help prepare you for your financial life as a college student.

3. Choose your school

After carefully reviewing your options, it’s time to choose your school! Then, contact the institution to accept their financial aid offer. At this point, you’ll know how much additional money you’ll need to borrow to fully pay for your yearly college costs.

Your loan mix could include a Parent PLUS loan, another federal loan made to the parent or legal guardian to help cover your costs. Or, you could take out a private student loan.

How to get a private student loan

Banks, credit unions, online lenders, and other financial institutions offer private loans regardless of level of need. Your eligibility is based on your finances, such as your income, credit history, and credit score.

Here’s how to get loans for college through a private lender.

1. Check your credit and debt-to-income ratio

There are a few differences between private and federal loans. Unlike with federal loans, the borrower’s credit score matters to private lenders. You — or most likely your parents if they act as your co-signer — will need good credit, so a credit score around 670 or above, to get a lower interest rate.

You or your parents will also need to have a low debt-to-income ratio – which means being able to make payments on your private loans while meeting other debts. If you don’t have good credit, you’ll need a co-signer who does.

2. Shop lenders and compare different offers

Compare offers from multiple lenders by looking at loan amounts, fees, repayment plans, and other benefits.

Review the terms of repayment

Repayment terms depend on the lender. Short-term private loans will result in higher payments, but you may be able to pay the loan off faster. Longer-term private loans give you a lower monthly payment, but it can be more expensive to pay the loan back over time as your interest continues to grow.

Many private loans require small interest-only payments while you’re still in school, though some may offer deferment or a grace period after graduation. Private lenders do not offer any income-driven repayment plans or loan forgiveness like federal loans do. And unlike subsidized student loans, you’ll be responsible for all the interest.

Look into hardship programs

Some private student loan lenders will offer financial hardship programs. As you consider taking out loans through financial institutions, ask about temporary pauses on loan payments, the terms for modifying your loan if needed, or private student loan consolidation or refinancing.

Financial hardship options help you think ahead to avoid going into student loan default — being penalized for missing many loan payments.

Make sure you understand the APRs

One of the most important factors to understand when it comes to getting student loans is the difference between fixed vs. variable annual percentage rates (APRs) — the interest charged for borrowing the student loan.

Depending on the private loan, you could have a fixed rate, which doesn’t ever change, or a variable rate, which can change at any time and rise throughout the life of the loan.

3. Apply for your loan

To apply for your private loan, you or your parents will need to first agree to a credit check and then provide the name of your school, cost of attendance, driver’s license, citizenship status, social security number, proof of income, loan amount requested, co-signer information, anticipated graduation date, and any debt obligations.

The timing of this process may vary across lenders, but once they verify the cost of attendance with your chosen university, the lender should release funds to your chosen school.

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Know before you borrow

Student loans are often a necessity today, enabling students to get the education they need to pursue their chosen career paths. Before you borrow for school, make sure you know how to take out a loan for college: apply for FAFSA first to get all the federal and gift aid possible, then fill in the gaps by applying for student loans, preferably with fixed interest rates.

Whether you’re applying for private or federal loans, carefully compare all financial offers by reviewing interest rates, repayment terms, and potential hardship programs.

Learn more about how to get loans for college and be fully prepared for when it’s time to start repayment.

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