Student loan debt is at an all-time high totaling $1.71 trillion. In fact, the amount continues to grow at a rate 6 times faster than the nation’s economy.
When you need tuition for school, don’t be scared off by student loan debt. By comparing rates and loan terms, you can find the best option that won’t keep you too much in debt.
Find out how to apply for student loans and more with our guide.
If you’re wondering how to apply for student loans, you may also want to know when the right time to start is. After finding out you are going to college, apply as soon as possible.
This is essential if you are applying for federal loans because they are first come, first served. When you apply early, you have more access to financial aid.
If this is your first time applying for federal or private student loans, follow these tips for help:
The only way to receive federal student aid is by filling out the form from FAFSA. FAFSA stands for Free Application for Federal Student Aid so you won’t get charged for applying.
A new FAFSA form comes out every October. The year before you plan on going to school, you should apply for federal student loans. If you continue to use FAFSA the following years, you’ll have to reapply each time.
To reduce stress levels when applying, gather all of the necessary information beforehand. You or your parents must have the following to fill out a FAFSA form correctly:
Even if your parents aren’t going to help you pay for college, you may have to include them on the form.
After all your information is together, you can apply for federal aid. FAFSA is the best, and only, path to applying for federal student loans.
The best way to fill out your FAFSA application is online. After you register and make an account through the FAFSA website, you can fill out the form. If you need to edit it later on, you can.
Now, FAFSA has its own mobile app that you can also use to apply. To make things easier, you can use the IRS Data Retrieval Tool to autofill your financial information. You should still gather the proper information in case you have problems with the tool.
After filling out your FAFSA loan application, you will get a report reviewing the information you entered. You usually won’t get this report for a few days, sometimes even weeks.
Once you receive the report, check it for accuracy. If you find an error, it is essential to edit your application as soon as possible. Don’t delay fixing an error because federal aid is first-come, first served.
If the school you sent the financial assistance to selects you for verification, you may have to provide further documentation. This will help the school confirm what is on your FAFSA form.
Don’t fret if this happens to you. Schools may choose at random who they want to select for verification, others require everyone to provide more documentation.
Your chosen school should provide you with a deadline for the documentation. If you don’t get the documents to them in time, you risk not getting federal financial aid at all.
The chances of getting a loan through FAFSA are high only if you filled out the form correctly and made every deadline. Your colleges listed on your FAFSA application will send you an award letter stating the details. The amount of time this letter will take to arrive varies from school to school.
If you have been accepted to a college without receiving an award letter, you can contact the financial aid office to ask about the status of the aid.
The financial aid award letter will tell you if you qualify for grants, loans, or even a work-study opportunity. If your letter states that you only received student loans, you did not qualify for free aid.
If you’ve been offered loans, you may notice that some are subsidized and others are unsubsidized. The four types of direct federal student loans are subsidized, unsubsidized, PLUS, and consolidated.
Undergraduate students can apply for subsidized loans. They get this name because the government covers the interest during specific periods, usually while the individual is still in school. You must have a financial need to receive this type of loan.
Undergraduate, graduate, and professional students are all eligible to apply for unsubsidized student loans. You don’t have to have financial needs to receive these loans. Borrowers must pay interest on these loans which makes them a less attractive option compared to subsidized.
PLUS loans are Parent Loan for Undergraduate Students that is also available to graduate students and professional students. PLUS loans require a credit check and those with poor credit may have to take extra steps. These loans also have a higher interest rate than others.
A consolidated loan lets borrowers combine federal student loans into one. There are considerable drawbacks to these types of loans, but they can also simplify things for you.
You don’t have to take the aid that is offered to you. You can deny every option, accept every option, or pick and choose which financial aid you want to go with. Student loans must get repaid, unlike scholarships and grants.
When you qualify for loans, it is important to only take what you need. This can help you avoid being in unnecessary debt later down the line.
Before accepting anything, read the loan policies. They can help you understand how long it will take to repay the loans and how much interest you are expected to pay. It is also recommended to keep student loan debt low.
If you have yet to decide on a college, you may receive award letters from multiple schools. Comparing the aid packages can help you decide if your goal is to save the most money.
After applying for FAFSA, you may run into the issue of not having enough money to pay your entire college tuition for the year. You’ll get approved for an amount based on many factors, one big one being Expected Family Contribution (EFC). Even if your family is not planning on helping you pay for college, their income may leave you coming up short with federal loans.
For the 2022-23 FAFSA application cycle, EFC will get replaced with Student Aid Index (SAI). It is similar to EFC but does not assume the family is going to contribute money to pay for college. SAI will determine how much a person qualifies for.
If you need to fill the gap because federal loans just aren’t enough, you can apply for private student loans. Here’s all you need to know about these types of loans:
Many are aware of FAFSA when it comes to how to pay for college, but it is not always enough for college students. Instead, you can apply for private student loans through lenders outside of the government.
Just like you’d apply for other loans, you apply through private lenders the same way. The best student loans require you to have a cosigner. This is typical for new college students because they often have no credit or solid income.
A private loan is based on credit history instead of financial need. A good cosigner can help you get a better interest rate if you don’t have credit.
A family member, like a parent, is the perfect option for a cosigner. Borrowing money this way is risky for the cosigner because if you default on the loan in the future, a cosigner must make up the difference. Be sure you and the cosigner know what you are getting yourselves into before finalizing anything.
If you and the cosigner decided to apply for multiple private loans, you need to understand how to compare the offers to get the best deal. The interest rates range from low to high and you may not know what interest rate you’re getting until a loan offer comes in.
The top considerations you need to make when comparing private loans are:
Finding the lowest rate is probably at the top of your mind, but these questions are helpful to consider as well. If you accept a loan from a lender, you are going to have a relationship with them for a while. If you hit financial issues in the future, a good lender can provide options to help you out.
Private student loans are risky even though they may seem like a beneficial tool. There are some key facts you should understand about private loans before signing a loan agreement:
Private student loans are different than federal student loans. Although both come with risks, it is essential to understand their differences. Knowing the risk is part of choosing your options wisely.
Individuals learning how to apply for student loans often have other questions. This is a good thing as you should learn as much about the process as possible before applying. The most common questions are:
The amount you can borrow will depend on the type of loan you apply for. Federal loans take your school year and dependency status into consideration when making an amount decision. Undergraduates aren’t qualified to receive as much as Graduate and professional students.
Private lenders may give creditworthy borrowers up to 100% of the attendance cost. The loan limit through private student loans may depend on the degree program you are in.
With FAFSA, applying for loans happens quickly after completing the FAFSA form. Private loans are different, however, because you have to apply to ensure funding arrives on time.
Give yourself an ample amount of time if you plan on applying for private student loans. Once the application process is complete, you may not get approved for days or weeks. Your loan also must go through the process of certification through your college.
The latest you should apply for a private student loan is a month before a new semester. This is still cutting it close because it takes time to deliver the funds to your college after the approval process.
The fastest way to get a private student loan is by finding a cosigner ahead of time and try to get prequalified through a lender. Don’t forget to have your financial information ready as well.
If you need last-minute loans or federal loans aren’t covering enough of your tuition, private loans are a great alternative. A private lender often provides greater funding with the help of a cosigner who has good credit. Don’t choose the first lender you come across, compare loan policies before making a final decision.
To compare options and apply for student loans, enter your school name on the best student loan platform.
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