Credible takeaways
- College students can take out federal student loans, private student loans, or a combination of both.
- Federal student loans should usually be your first stop for borrowing, due to their easier approval requirements and borrower benefits.
- Most private student loans have credit requirements, so you may need to apply with a cosigner to qualify.
- Shop around with multiple lenders before choosing a private student loan to find the most affordable offer.
After exploring grants, scholarships, and personal savings, you may need to consider student loans to cover the remaining cost of college. According to the latest data from the National Center for Education Statistics, nearly 40% of undergraduate students rely on student loans to finance their education.
Starting with federal student loans is usually your best bet. You can access these by completing the Free Application for Federal Student Aid (FAFSA). If there's still a gap in your funding, private student loans from banks, credit unions, or online lenders can help bridge it.
Here's a closer look at how to get student loans to finance your education effectively.
How to get federal student loans
Federal student loans are typically the best starting point for borrowing money. They offer competitive, fixed interest rates and numerous borrower protections. For instance, federal loans can qualify for income-driven repayment, forbearance, deferment, and forgiveness programs. Additionally, most federal student loans don't require a credit check. Here's how to secure loans from the U.S. Department of Education.
1. Fill out the FAFSA
To access federal student loans, you must submit the FAFSA. This free application usually opens on Oct. 1 each year. It gathers information about your and your parents' finances and takes about an hour to complete.
Colleges use the information on your FAFSA to determine your eligibility for various types of financial aid, including scholarships, grants, federal student loans, and work-study programs.
Submit your FAFSA as early as possible since some aid is limited. You'll need to complete it every year you want to borrow. The FAFSA for the 2024-25 school year is available online through June 30, 2025.
2. Review your aid award letter
If a college accepts your application for admission, it will send you a financial aid award letter, which details how much financial aid you're eligible for. If you're an undergraduate student, you may be offered Direct Subsidized Loans, Direct Unsubsidized Loans, or both. You can learn more about the differences between subsidized vs. unsubsidized loans here. Graduate students may receive Direct Unsubsidized Loans or Grad PLUS loans.
Compare your financial aid offers to determine how much each school would cost you. Most colleges also publish their cost of attendance on their website, including tuition, fees, and an estimate of living expenses.
Review these costs so you can determine the amount you need to borrow to pay for college.
3. Accept your loans
Once you've chosen a college, you can indicate which student loan offers you'd like to accept. Direct Subsidized Loans are your best option, since the government covers interest while you're in school, during your grace period, and during periods of deferment.
However, Direct Subsidized Loans are exclusively for undergraduates with financial need and have fairly low borrowing limits. By contrast, Direct Unsubsidized Loans are available to both undergraduates and graduate students, regardless of financial need, and have higher loan limits.
Good to know
You don’t have to accept the full amount of federal student loans offered to you. If you can get by with a lower amount, you’ll find yourself with less debt to pay back after graduation.
How to get private student loans
If you've hit your borrowing limits for federal student loans and need additional money for school, consider private student loans to help fill in the gaps. Private student loans can come from banks, credit unions, state agencies, or schools. Follow the steps below to get a private student loan:
1. Review your credit
Most private lenders check your credit when considering your application for a loan. Requirements will vary, but some want to see a good credit score of 670 or higher. If your score is low or you lack sufficient credit history, you might need a cosigner to qualify.
A cosigner is usually a parent or family member who agrees to share responsibility for the loan. Most undergraduates (93%) and graduate students (69%) apply for private student loans with a cosigner.
Before you start applying, you can review your credit score for free via AnnualCreditReport.com, through your credit card company, or at myFICO.com.
2. Compare lenders and rates
Every lender sets its own rates, terms, and requirements, so it's worth shopping around to find your most affordable loan offer. Some lenders let you prequalify for a loan online, which lets you view your estimated rate without impacting your credit score.
As you compare your options, look for a loan with a low interest rate and repayment terms you can afford. Most lenders let you pick a term somewhere between five and 15 or 20 years. You may also have the option of postponing loan payments while you're in school and for a six or nine month grace period after you graduate.
Check out: Best Student Loan Companies of 2024
Current student loan rates
3. Submit a loan application
Once you've prequalified with multiple lenders and decided on a loan offer, your next step is to submit an official loan application to the lender, which you can often do online. You'll fill out your personal details, as well as provide information on your or your cosigner's finances and the school you'll be attending.
If the lender approves your application, it will contact your school to certify its official cost of attendance. Most lenders will send your loan proceeds directly to your school's financial aid office, which will apply the loan to tuition and fees before sending any leftover amount to you.
You can use any leftover funds for other educational expenses or return the excess amount to the lender to reduce your debt.
Frequently asked questions
When should you apply for a student loan?
For federal student loans, submit the FAFSA as soon as possible and accept your loans once you receive your financial aid award letter. For private student loans, apply at least a month before your tuition is due, as approval and disbursement can take time.
Do you apply for student loans every semester?
No, you only need to submit the FAFSA once per academic year. Private loans are also typically annual, but check with your lender to see how frequently you need to apply for funding.
Are student loans hard to get?
Federal student loans are easy to get if you meet eligibility requirements, as they don't require credit checks or cosigners. Private loans are tougher, often requiring a minimum credit score or income, and many students use a cosigner.
How long does it take to get student loans out?
The process of borrowing student loans can take a few weeks to a few months. The lender will verify costs with your school and disburse funds, which the school's financial aid office will use to pay tuition and fees before releasing any leftover funds to you.
Related: Guide To Every Type Of Student Loan
