In an ideal world, financial aid you don’t have to repay would fund your college education. Unfortunately, most students can’t get enough grants and scholarships to cover all their tuition. If you max out on free sources of financial aid, you’ll need to figure out how to get a student loan to pay the remaining costs of your education.
How to get a student loan
So what can you do when grants, scholarships, money from savings, and working doesn’t cover the full cost of your education? At this point, you’ll need to explore your options for federal student loans and private student loans. Here’s how to do it.
Federal student loans
It’s always a good idea to max out federal student loan options before you consider private loans. This is because federal loans come with a variety of unique benefits, including:
- Student loan interest rates set by the government
- Subsidized interest for eligible loans in deferment
- A grace period before repayment begins after graduating or dropping below full-time status
- Access to income-driven repayment plans
- Clear criteria for deferment and forbearance
- Eligibility for student loan forgiveness if you work in a qualifying public interest position
Fortunately, figuring out how to get a student loan from the federal government is easy.
The process starts with filling out the FAFSA. The FAFSA should be completed as soon as possible when it becomes available on Oct. 1 each year, as many sources of financial aid are limited. Our ultimate guide to filling out the FAFSA can help you complete this online form.
Completing the FAFSA is necessary not only to qualify for federal loans but also to become eligible for many sources of free financial aid, such as need-based Pell Grants. You have to fill out the FAFSA every year to receive financial aid. The forms should be completed in the year before you need aid to pay tuition.
When you complete your FAFSA, you’ll list the schools you’re interested in attending. Information from your FAFSA will be sent to those schools. Each school will put together a financial aid package that shows how much in federal student loans you qualify to borrow.
However, it’s important to note that just because you qualify for a certain amount of federal loans doesn’t mean you have to borrow the full amount. The less debt you take on while in school, the less you’ll have to pay back when you graduate. Your school will tell you how to accept all or part of your financial aid package.
Undergraduates can take out between $5,500 and $12,500 per year in Direct Subsidized Loans and Direct Unsubsidized Loans.
Private Student Loans
Private loans work a little bit differently from federal loans. So it’s important to figure out how to get student loans from private lenders. When considering private loans versus federal loans, remember that with private loans:
- Interest rates are determined by your creditworthiness.
- Interest generally begins accruing as soon as your loan is disbursed.
- Repayment terms and benefits are determined by the lender or servicer, rather than by the federal government.
Borrowing limits also differ with private student loan lenders. Rather than having annual and aggregate limits to how much you can borrow, private loans typically let you borrow up to 100% of the cost of attendance minus financial aid. If your cost of attendance exceeds the maximum amount of federal student loans you’re able to borrow, private loans can help fill that gap.
Also unlike federal student loans, you don’t qualify for private loans through the FAFSA. Instead, you apply to the bank, credit union, or another lender. Because terms, conditions, interest rates, and other factors can vary depending on the lender, it’s important to do your due diligence and research private lenders to make sure you’re getting the best deal possible.
Again, while it might be tempting to take out the maximum amount you’re approved to borrow, you should explore all other options for funding your education before relying on student loans, particularly private student loans. This is because private loans don’t offer the generous repayment benefits that federal student loans do.
As far as timing goes, you should fill out the FAFSA as soon as you are able. Then, wait to apply for private student loans until you have received your complete financial aid package from your institution. That way, you know you’re only borrowing as much as you absolutely need.
Honey Smith contributed to this article.
Need a student loan?Here are our top student loan lenders of 2019!
|2 Important Disclosures for College Ave.
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.
(1)All rates shown include the auto-pay 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.
(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7% variable Annual Percentage Rate (“APR”): 96 monthly payments of $179.28 while in the repayment period, for a total amount of payments of $17,211.20. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 5/29/2019. Variable interest rates may increase after consummation.
* 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.
3 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
4 Important Disclosures for Discover.
5 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.
©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
* Offer valid for new Custom Choice Loans for which applications are submitted for a credit decision between 12:00:00am EST on June 1, 2019 and 11:59:59pm EST on August 31, 2019. A 0.50% interest rate reduction will be included in the loan options presented to an applicant during the online application process, upon passing the initial credit review. The interest rate reduction will be applied as of the first disbursement date and will be effective for the life of the loan.
6 Important Disclosures for LendKey.
7 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.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.99% – 11.98%2||Undergraduate, Graduate, and Parents|
|4.50% – 11.35%*,3||Undergraduate and Graduate|
|4.84% – 11.99%4||Undergraduate and Graduate|
|3.27% – 10.80%5||Undergraduate and Graduate|
|4.46% – 9.43%6||Undergraduate and Graduate|
|3.74% – 9.72%7||Undergraduate, Graduate, and Parents|
|3.99% – 11.64%8||Undergraduate, Graduate, and Parents|