A Beginner’s Guide to Applying for College Loans

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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:

apply for student loan

Image credit: Federal Student Aid

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:

college loans

Image credit: Federal Student Aid

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:

how to apply for private student loans

Image credit: Indiana Tech

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.

The College Board has a step-by-step tutorial detailing how to complete the CSS profile. You also can check out our guide to submitting the CSS Profile.

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
  • Savings
  • 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 2020!
LenderVariable APREligibility 
* 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.

1 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

2 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

1Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

2This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a first year graduate student borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 5/18/2020. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.


3 Important Disclosures for Ascent.

Ascent Disclosures

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). 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. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.

  1. Variable rate loans are based on a margin between 2.90% and 16.50% plus the 1-Month London Interbank Offered Rate (LIBOR) rounded to the nearest 1/100th of a percent. The current LIBOR is 0.667%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an Annual Percentage (APR) range between 3.18% and 13.92%. Fixed rate loans have an APR range between 4.00% and 14.92% based on your credit worthiness and your selected program. Competitive variable rates calculated monthly at the time of loan approval. Rates are effective as of 05/01/2020 and reflect an Automatic Payment Discount of 0.25% on the lowest offered rate and a 2.00% discount on the highest offered rate. Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. (See Automatic Payment Discount Terms & Conditions.)
  2. Payments may be deferred. Subject to lender discretion, forbearance and/or deferment options may be available for borrowers who are encountering financial distress.
  3. Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. There are three (3) flexible in-school repayment options that include fully deferred, interest only and $25 minimum repayment.
  4. Flexible repayment plans may be offered up to a fifteen (15) year repayment term for a variable rate loan and ten (10) year repayment term for a fixed rate loan. Students must be enrolled at least half-time at an eligible school. Minimum loan amount is $2,000.
  5. Interest rate reduction of 0.25% for enrollment in automatic debit applies only when the borrower and/or cosigner signs up for automatic payments and the regularly scheduled, current amount due (including full, flat, or interest only payments, as applicable) is successfully deducted from the designated bank account each month. Interest rate reduction(s) will not apply during periods when no payment is due, including periods of In-School, Deferment, Grace or Forbearance. If you have two (2) returned payments for Nonsufficient Funds, we may cancel your automatic debit enrollment and you will lose the 0.25% interest rate reduction. You will then need to re-qualify and re-enroll in automatic debit payments to receive the 0.25% interest rate reduction.
  6. All applicants (individual and cosigner) are required to complete a brief online financial literacy course as part of the application process to be eligible for funding.
  7. Eligibility, loan amount and other loan terms are dependent on several factors, which may include: loan product, other financial aid, creditworthiness, school, program, graduation date, major, cost of attendance and other factors. Aggregate loan limits may apply. The cost of attendance is determined and certified by the educational institution.
  8. The legal age for entering into contracts is eighteen (18) years of age in every state except Alabama where it is nineteen (19) years old, Nebraska where it is nineteen (19) years old (only for wards of the state), and Mississippi and Puerto Rico where it is twenty-one (21) years old.
  9. 1% Cash Back Graduation Reward subject to terms and conditions. Click here for details. In order to be eligible for the 1% Cash Back Graduation Reward, borrower must meet the following criteria after graduation:
    • The student borrower has graduated from the degree program that the loan was used to fund.
    • The student borrower may change majors and/or transfer to a different school, but must obtain the same level of degree (e.g. – undergraduate or graduate)
    • The graduation date is more than 90 days and less than five (5) years after the date of the loan’s first disbursement.
    • Any loan that the student has borrowed under the Ascent loan is not more than 30-days delinquent or in a default status as of the graduation date and until any Graduation Reward is paid.
  10. Students can apply to release their cosigner and continue with the loan in only their name after making the first 24 consecutive regularly scheduled full principal and interest payments on-time and meeting the other eligibility criteria to qualify for the loan without a cosigner.

* Application times vary depending on the applicant’s ability to supply the necessary information for submission.


4 Important Disclosures for Discover.

Discover Disclosures

  1. Students who get at least a 3.0 GPA (or equivalent) qualify for a one-time cash reward on each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  2. View Auto Reward Debit Reward Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward.
  3. Aggregate loan limits apply.
  4. The interest rate ranges represent the lowest and highest interest rates offered on Discover student loans, including Undergraduate, Health Professions, Law, MBA, Residency, and Private Consolidation. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 1.00% as of April 1, 2020. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Our lowest APR is only available to customers with the best credit and other factors. Your APR will be determined after you apply. It will be based on your credit history, which repayment option you choose and other factors, including your cosigner’s credit history (if applicable). Learn more about Discover Student Loans interest rates.
  5. Get a variable interest rate from 2.99% APR to 6.24% APR (3-Month LIBOR + 1.99% to 3-Month LIBOR + 5.24%) for either a 10-year or 20-year repayment term. Or lock in a fixed interest rate from 3.74% APR to 6.49% APR for a 10-year repayment term or from 3.74% APR to 6.49% APR for a 20-year repayment term. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. The margin is based on your credit evaluation at the time of application and does not change. For variable interest rate loans, the 3-Month LIBOR is 1.00% as of April 1, 2020. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both.
Lowest APRs shown are available for the most creditworthy applicants.

5 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).

  1.  Rates are as of July 1, 2019 and include auto-pay discount. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment. Variable rates may increase after consummation.

6 Important Disclosures for Citizens.

Citizens Disclosures

Undergraduate Rate Disclosure: Variable interest rates range from 3.54%- 6.40% (3.54% – 6.40% APR). Fixed interest rates range from 3.79% – 6.65% (3.79% – 6.65% APR).

Graduate Rate Disclosure: Variable interest rates range from 2.72% – 6.11% (2.72% – 6.11% APR). Fixed interest rates range from 3.49% – 6.36% (3.49%-6.36% APR).

Business/Law Rate Disclosure: Variable interest rates range from 1.47% – 8.35% (1.47% – 8.20% APR). Fixed interest rates range from 4.45% – 10.74% (4.45% – 10.59% APR).

Medical/Dental Rate Disclosure: Variable interest rates range from 1.47% – 7.25% (1.47% – 7.10% APR). Fixed interest rates range from 4.40% – 9.64% (4.40% – 9.49% APR).

Parent Loan Rate Disclosure:  Variable interest rates range from 3.09%-6.23% (3.09%-6.23% APR). Fixed interest rates range from 5.48%-8.52% (5.48%-8.52% APR).

Bar Study Rate Disclosure:  Variable interest rates range from 4.79% – 9.93% (4.79% – 9.85% APR). Fixed interest rates range from 7.39% – 12.94% (7.39% – 12.82% APR).

Medical Residency Rate Disclosure:  Variable interest rates range from 3.88% – 7.38% (3.88% – 7.04% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR).

Variable Rate Disclosure: Variable Rates are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of May 1, 2020, the one-month LIBOR rate is 0.44%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%.

Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.

Lowest Rate Disclosure: Lowest rates require a 5-year repayment term, immediate repayment, a graduate degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.

Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer. Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.

Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.

Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.

Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.

2.00% – 10.01%*,1Undergraduate and Graduate

Visit SallieMae

1.49%
11.98%
2
Undergraduate, Graduate, and Parents

Visit College Ave

3.18% – 13.92%3Undergraduate and Graduate

Visit Ascent

2.09%
11.49%
4
Undergraduate and Graduate

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3.52% – 9.50%5Undergraduate and Graduate

Visit CommonBond

3.54% – 6.40%6Undergraduate and Graduate

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.