How to Get a Student Loan

The vast majority of students need to borrow money to pay for college. Here’s how to get a student loan, so you can begin earning your degree.

With the cost of tuition, fees, housing, books, and more, most college students depend on loans to finance their education. Among bachelor’s degree recipients, 68% took out federal student loans to pay for college expenses, according to the most recent Department of Education statistics – and that doesn’t even account for private student loans.

If you’re among the vast majority of students who need to borrow money for college, here’s how to get federal and private student loans.

How to Get a Federal Student Loan

Federal student loans are issued by the Department of Education. They have low, fixed interest rates and come with robust borrower protections, making them a good first choice when borrowing money to pay for college expenses. Here’s how to apply for federal student loans.

Fill out the FAFSA

The Free Application for Federal Student Aid is used by colleges to determine your eligibility for financial aid such as federal loans, grants, and work-study programs. To complete the FAFSA, you’ll first need to create an account on the Federal Student Aid website.

It takes most people less than an hour to complete the FAFSA, according to FSA. Be sure to gather documentation such as your Social Security number or alien registration number, driver’s license or state ID, tax returns, bank statements, and other financial information. You’ll also need to list any schools you’re interested in attending.

Additionally, the FAFSA will ask a number of questions to determine your dependency status. Independent students generally receive more federal aid than dependent students, who must also report their parents’ financial information.

LENDER	LEARN MORE	FIXED APR	VARIABLE APR	LOAN TERM

View Disclosure	See Offers	4.50% to 14.83% with autopay	5.87% to 16.20% with autopay	10 to 15 years
View Disclosure	See Offers	4.45% to 14.90% with autopay	5.15% to 16.20% with autopay	5, 7, 10, 12, 15 years
View Disclosure	See Offers	4.44% to 15.32% with autopay	4.99% to 15.32% with autopay	5, 8, 10, or 15 years

Review Your Financial Aid Award Letters

After you submit the FAFSA, you’ll receive a Student Aid Report within three weeks. The SAR is a summary of the FAFSA data you submitted, which you can review and correct if necessary. However, the SAR doesn’t outline how much financial aid you’ll get. For that information, you’ll need to read your financial aid award letters from the schools you’ve chosen. Here are a few terms you may need to know while reviewing your financial aid offers:

Cost of attendance. The school’s certified cost of attendance may include tuition and fees, room and board, books, transportation, personal expenses, and other education costs. You can use this estimate to compare the cost of attending one university versus another.
Direct unsubsidized loans. With unsubsidized loans, you’re responsible for paying interest during all periods. If you defer payments while you’re in school, your interest will accrue and be added to the principal of the loan. You may also choose to make interest-only payments while in school to avoid graduating with a higher principal balance.
Direct subsidized loans. Direct subsidized loans are awarded to students based on financial need. If you qualify for subsidized loans, the government pays the interest on your student loans while you’re in school at least half-time, during deferment, and through the six-month grace period after graduation.
Grants and scholarships. “Gift aid” such as grants and scholarships does not need to be repaid. Federal grants, such as Pell Grants, are awarded based on financial need. You may qualify for academic scholarships or merit grants through your university, and you may be eligible for additional need-based grants from the state in which you live.
Work-study. The federal work-study program is a type of student aid, based on financial need, in which you earn money to pay for school through student employment. If you qualify for work-study funds, your school may match you with a job, or you may need to find and apply for a position on your own.

The amount of federal student loans you can borrow varies depending on the school’s cost of attendance and that academic year’s borrowing limits. The total loan amount is also based on your dependency status and the type of loans you need to borrow.

Accept Your Financial Aid Offer

Once you’ve reviewed your options, contact your chosen school to accept the financial aid offer. You should compare the total cost of attendance with your estimated financial aid award to determine whether you’ll need to borrow additional money to pay for school, such as through federal Parent PLUS loans or private student loans.

How to Get a Private Student Loan

Federal student loans should always be your first option when borrowing money to pay for higher education. When federal aid doesn’t cover the full cost of attending college, private student loans can bridge the financing gap. Private student loans may also offer lower interest rates and fees than federal PLUS loans issued to parents and graduate students.

Be careful to consider all of your options, including scholarships and work-study programs, before taking out private student loans. But if you need to borrow additional money to pay for school, here’s how to apply for a private student loan.

Check Your Credit

Unlike federal student loans, private student loans are issued based on your creditworthiness. You’ll need good credit and a low debt-to-income ratio to qualify for private student loans, especially if you want a competitive interest rate. You can check your credit score on a number of apps, and you can request a free copy of your credit report on AnnualCreditReport.com.

If you don’t meet the eligibility requirements for a private student loan, you may need to apply with a creditworthy co-signer who does, such as a trusted friend or relative.

Compare Offers From Multiple Lenders

Private student loan lenders let you prequalify to see your estimated terms, such as the annual percentage rate and monthly payment, with a soft credit check. This means you can shop around for the lowest interest rate without impacting your credit score. With multiple offers in hand, compare the terms to find the best loan for your financial situation based on the following criteria:

Fixed vs. variable APRs. Fixed interest rates remain the same while you repay the loan, while variable interest rates can change depending on economic conditions. Lower interest rates translate to cheaper loans, but be careful when borrowing a variable-rate student loan since the APR and monthly payment can rise over time.
Repayment terms. Shorter-term student loans will come with higher monthly payments, but they can save you money and help you get out of debt faster. A longer-term student loan can help you achieve lower monthly payments, but it will be more expensive to repay over time. Use a student loan calculator to estimate your future payments.
Hardship options. Private student loan lenders don’t offer the same forbearance and deferment options as federal student loans, but many private lenders have their own hardship programs. Be sure to compare each lender’s hardship options, so you can avoid delinquency or default if you experience unforeseen circumstances such as job loss.

Formally Apply for the Loan

Once you’ve chosen a student loan lender, you’ll need to complete your application. This will require a hard credit inquiry, which will leave a temporary negative impact on your credit score. The lender will need to know your citizenship status and Social Security number, as well as information on your income and debts. You’ll also need to provide information such as the name of your school, the school’s certified cost of attendance (as found on your FAFSA), and the type of degree you’re obtaining.

The lender will communicate with your university to certify the cost of attendance and release the funds directly to the school within a few weeks of approving your application. You may be able to defer private student loan payments while you’re in school, or you can make fixed payments or interest-only payments to reduce the principal balance when you graduate.

Pros and Cons of Private Student Loans



Private student loans aren’t beholden to the federal student loan borrowing limits. Private student loan lenders let you get prequalified to compare rates without hurting your credit. Private student loans may offer lower interest rates than federal PLUS loans for graduate students and parents. Many private lenders don’t charge student loan origination fees or refinancing fees. Private student loans may be available to international students who don’t typically qualify for federal loans.
Private student loans aren’t eligible for federal forbearance, deferment, or income-driven repayment plans. Private student loans don’t qualify for federal student loan forgiveness programs. Private student loans tend to come with higher interest rates than federal student loans for undergraduates. Applying for a private student loan requires a hard credit check, and you may need a co-signer with good credit. Private student loans are always unsubsidized, unlike federal student loans, which can be subsidized. While deferment may be available, you might be required to make fixed or interest-only payments while still in school.