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

Written by Christy Rakoczy

February 28, 2018February 28, 2018Paying for CollegeFeatured, Student Loans750Christy Rakoczy

Updated on February 28, 2018

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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.

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This 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 4/19/2022. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term. ² Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply. ³ Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest. Earnest Disclosures Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.49% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.19% APR to 10.14% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. ⁴ Important Disclosures for Ascent. Ascent Disclosures Ascent loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: AscentFunding.com/Ts&Cs Rates are effective as of 05/01/2022 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes income-based loans). 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. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions, please visit AscentFunding.com/Cashback. Cosigned Credit-Based Loan student borrowers must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs are available for the most creditworthy applicants and may require a cosigner. ⁵ Important Disclosures for SoFi. Sofi Disclosures UNDERGRADUATE LOANS: Fixed rates from 3.47% to 11.16% annual percentage rate (“APR”) (with autopay), variable rates from 1.89% to 11.92% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.60to 11.06% APR (with autopay), variable rates from 2.59% to 11.82% APR (with autopay). PARENT LOANS: Fixed rates from 4.48% to 11.16% APR (with autopay), variable rates from 1.69% to 11.92% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 05/04/2022. Enrolling in autopay is not required to receive a loan from SoFi. Loans originated by SoFi Lending Corp. or an affiliate (dba SoFi), licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org). ⁶ Important Disclosures for Citizens Bank. Citizens Bank Disclosures Undergraduate Rate Disclosure: Fixed interest rates range from 3.48% – 11.64% (3.48% – 10.78% APR). Graduate Rate Disclosure: Fixed interest rates range from 4.89% – 11.64% (4.89% – 11.34% APR). Business/Law Rate Disclosure: Fixed interest rates range from 4.49% – 10.39% (4.49% – 9.68% APR). Medical/Dental Rate Disclosure: Fixed interest rates range from 4.43% – 9.19% (4.44% – 8.89% APR). Parent Loan Rate Disclosure: Fixed interest rates range from 4.80%-8.23% (4.80%-8.24% APR). Bar Study Rate Disclosure: Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.83% APR). Medical Residency Rate Disclosure: Fixed interest rates range from 6.99% – 10.49% (6.98% – 10.09% APR). ERL Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of May 1, 2022, the 30-day average SOFR index is 0.29%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the 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 are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical 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. 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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. ⁷ Important Disclosures for Funding U. Funding U Disclosures Offered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service. ⁸ Important Disclosures for Edly. Edly Disclosures 1. Loan Example: Loans from $5,000 – $20,000 Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan. Payments deferred for the first 12 months during final year of education. After which, $270 Monthly payment for 12 months. Then $379 Monthly payment for 44 months. Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan. About this example The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment. 2. 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