How to Get a Student Loan When Financial Aid Isn’t Enough

how to get a student loan

In an ideal world, financial aid you don’t have to pay back would fund your entire college education. Unfortunately, that’s not always the case.

Many colleges and universities offer scholarships during freshman year to entice you to attend their institutions. But once you’ve relocated and made friends, you may find that certain scholarships will not be renewed in subsequent years and you’re on the hook for more costs than you expected.

How to get a student loan

So what can you do when grants, scholarships, money you and your parents saved, and working doesn’t fully cover the cost of your education? At this point you may want to investigate how to get a student loan. 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 during certain periods for eligible loans
  • A grace period 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

Fortunately, if you’re wondering how to get a student loan, you should know that the qualification for federal student loans is determined using the same process as many grants and scholarships – the FAFSA. Check out our ultimate guide to filling out the FAFSA to make sure you are offered everything you qualify for.

Your financial aid package will include the total amount of federal student loans that you qualify to borrow. However, it’s important to note that just because you qualify for a certain amount 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 a loan.

This means that it can be to your benefit to live as frugally as possible while attending school so that you can enjoy your grown-up salary once you’ve graduated. That will give you the freedom to do such things as buy a house, have children, or take a lower-paying job that you find rewarding rather than having to take a higher paying job that you don’t enjoy just pay back your loans.

Although the question of how to get student loans is simple, know that you do have to fill out the FAFSA every year. Because certain forms of financial aid are first-come, first-served, it’s important to fill out the form as soon as you can to limit the amount of student loans you have to take out. It opens every year on Oct. 1.

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. 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 at the discretion of the lender/servicer, rather than by the federal government

However, rather than having annual and aggregate limits to how much you can borrow, private loans typically let you borrow up to 100 percent of the cost of attendance minus financial aid.

For example, you might attend a private university or an out-of-state school; it’s possible that your cost of attendance will exceed 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 directly to the bank, credit union, state agency, school, or other lender that will be supplying the loan. Because terms, conditions, interest rate, and other factors can vary widely depending on the lender chosen, it is 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 they do not 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 – in January for the next academic year if possible. 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.

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