If you or your child is getting ready to attend college, there’s a good chance you’ll need to take out college loans. Student loan debt statistics show that more than 70 percent of students graduating from four-year colleges have debt, so you aren’t alone if you need to borrow to cover educational costs.
Unfortunately, deciding how much to borrow, what type of loans to take out, and where to get your loans, as well as understanding different student loan requirements, can be challenging. You don’t have to figure it out on your own, though.
This comprehensive guide will show you how to apply for both federal and private student loans so you can get the financing you need.
Step 1: Understand your options
Before you begin the process of applying for college loans, it’s a good idea to understand your options, which include:
- Federal loans for students
- Federal loans for parents
- Private loans for students
- Private loans for parents
For many students, federal loans are the first and best option.
“Federal student loans, such as the Federal Stafford Loan, are available to college students without any parental involvement,” student loan expert Mark Kantrowitz explained. They’re offered through the Department of Education, which provides more than $120 billion annually in loans, grants, and work-study funds.
Federal loans have significant benefits compared to private loans. This chart shows why federal loans typically are the best choice for students who need to apply for a student loan:
When applying for federal loans, you’ll usually want to take out as many subsidized loans as you can before taking out unsubsidized loans.
“Subsidized Direct Loans are federal loans where the federal government will pay the interest while the student is a full-time student in those programs,” said Fred Amrein, founder of Amrein Financial and College Affordability.
Both parents and students can apply for federal loans:
- Undergraduate students could be eligible for Direct Subsidized Loans and Direct Unsubsidized Loans, also called Stafford Loans. Perkins Loans used to provide another option for students with exceptional financial need, but the Federal Perkins Loan Program has expired.
- Parents could be eligible for Direct PLUS Loans if their children are undergraduates.
- Graduate and professional degree students could be eligible for Direct Unsubsidized Loans and Direct PLUS Loans.
It’s important to understand student loan requirements and limits for all loan types. For example, there are limits on the amount you can borrow, as this chart shows:
If you’ve exhausted your options for federal student loans, private loans can provide additional funding.
Both parents and students can borrow private student loans. However, Kantrowitz explained that a creditworthy cosigner usually is required for students taking out private loans because students might not have the income or credit history to qualify on their own.
Step 2: Gather your information
Whether you’re applying for federal or private loans, you’ll need to have some basic information available to apply for a student loan. You’ll need:
- Tax returns for the parents — and for the student if the student files taxes — from the two years prior to the academic year the loan is for (the IRS Data Retrieval Tool might be able to fill in your tax and income information for you)
- Adjusted gross incomes for the parents and the student from the two years prior to the academic year the loan is for
- Information about assets, including businesses and investments owned by the parents or the student
- Information about untaxed income, such as income from retirement savings plans or child support
- Social Security numbers and dates of birth for the parents and the student
- A list of schools the student is applying for
- Grants or scholarships the student has received
Documentation such as bank statements also might be required. It’s often easiest gather this information and keep it all in one place since you’ll need it when you complete loan applications.
Step 3: Complete the FAFSA
The FAFSA is one of the key forms you’ll fill out when you’re applying for college loans. “Filling in the Free Application for Federal Student Aid is a prerequisite for access to federal student loans,” Kantrowitz said.
You can complete the FAFSA for free, but you must complete it by the deadline. This chart provides information about FAFSA deadlines, which depend on when you’ll be attending school:
It’s best to act early. Funds might be limited, and they could be exhausted if you wait.
You can complete the FAFSA online on the FAFSA website or request a paper FAFSA by calling 1-800-433-3243.
By creating an account on the website, you can return to your application as needed. You’ll also benefit from faster processing of your application. If you complete the FAFSA online, it’ll be processed in three to five days — compared to seven to 10 days for the paper application.
If your parents won’t provide their information or help you fill out the FAFSA, you might be able to complete the form without them. This infographic can help you to determine whether you must provide your parents’ information:
Step 4: Review your student aid report
After you’ve filled out your FAFSA, you’ll receive a copy of your Student Aid Report (SAR), which summarizes your financial information and provides information about your Expected Family Contribution. If you identify any mistakes, log in to FAFSA to make corrections.
Here’s a sample of what the report will look like:
Your SAR will be sent to the colleges you listed when you completed the FAFSA, and they’ll use it to provide information on the financial aid you’re eligible for.
Step 5: Fill out a CSS Profile
In addition to federal aid, institutional aid also might be available to you. It comes in the form of loans, scholarships, and grants. Close to 400 colleges award institutional aid to students who apply through the College Board’s CSS Profile.
If you complete a CSS profile, you can find out about and apply for grants, scholarships, and loans made available by different academic institutions you might be interested in attending. To apply, visit the CSS Profile website and create an account. Once you do, you’ll need to:
- Select the schools you’re interested in
- Provide information about your parents and yourself, including Social Security numbers, tax returns, W-2 forms, bank statements, investment statements, and mortgage information
There’s a fee of $25 for one college report, and you’ll pay $16 for each additional report. The fees can be waived, however, and if you received an SAT fee waiver, you’ll get an automatic waiver for the CSS Profile as long as you log in to the CSS Profile site with the same ID you used for the SAT.
Step 6: Review your financial aid award letter
After you submit your FAFSA, the schools you applied to will send you a financial aid award letter. This letter might provide information on:
- The total estimated cost of attendance, including tuition and fees, housing and meals, books and supplies, and personal and miscellaneous expenses
- Scholarships and grants you qualified for
- Work-study opportunities
- Subsidized and unsubsidized loans
Letters will vary from school to school. This sample letter shows you what type of information you can expect:
If you want to accept the financial aid award, you’ll generally need to sign and return the letter. Most schools send letters by mail that you’ll need to mail back, but some have established secure online portals for the exchange of documents.
Step 7: Determine if you’ll need to apply for private loans
You might find that the amount of financial aid you receive doesn’t cover the cost of the school you want to attend. If that’s the case, you’ll need to determine how to cover the difference. Your options could include:
- Family contributions if parents or other family members are willing and able to pay
- Scholarships or grants from community groups or other sources
- Parent PLUS Loans
- Private student loans
Step 8: Learn how to apply for private student loans
Both parents and students can apply for private student loans. However, there are different student loan requirements for private loans versus federal loans.
For example, private lenders have strict requirements for your credit score and debt-to-income ratio, which is calculated by dividing your monthly debt payments by your gross monthly income. Lenders use your debt-to-income ratio to determine if you can afford the amount you want to borrow.
Because there are many private student loan lenders, it’s a good idea to shop around. You should consider:
- Loan eligibility requirements: What do you need to qualify?
- Loan terms: How long do you have to repay the loan?
- Repayment terms: When do you need to start repaying, and is there a prepayment penalty?
- Fees: Is there a cost to apply for the loan or a loan origination fee?
- Interest rates: Is the rate fixed or variable? How much will you pay to borrow?
You can visit our private student loan marketplace to find private student loan lenders offering loans to parents and students.
You’ll need much of the same information you needed when you filled out your FAFSA to apply for private college loans. While there isn’t a deadline to apply like there is with the FAFSA, you should apply as early as possible to ensure you have enough time to receive approval and funding.
You’ll also need to complete a Private Education Loan Applicant Self-Certification form for each private loan application you submit. This form details the cost of attendance and your existing financial aid.
When you complete your application, be prepared with information about the school you’re attending and the amount you want to borrow. Your financial aid award letter will help you determine how much money you need from a private loan.
It can take several weeks to get approved for private student loans. When you do get approved, the approval letter should specify the interest rate. Compare loan options from different private lenders to see which loans make the most sense for your situation.
Step 9: Borrow only as much in college loans as you need
Whether you’re interested in learning how to apply for private student loans or how to apply for federal loans, you’ll likely want to borrow the minimum you need to cover your educational costs. If you keep your loan balance as low as possible, it’ll be easier to repay your loans after you graduate so you can become debt-free faster.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.99% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|3.82% – 12.82%3||Undergraduate and Graduate||Visit Ascent|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|3.88% – 12.88%6||Undergraduate and Graduate||Visit SunTrust|
|4.68% – 9.77%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.04% – 12.01%9||Undergraduate, Graduate, and Parents||Visit Citizens|