Senior year of high school is an exciting time, especially if you’re among the majority of seniors planning to go to college. Comparing academic programs and visiting schools can be a lot of fun, but there’s also a practical issue to think about. If you and your parents can’t afford to pay for your education in full, you’ll need to figure out how to get student loans to pay for college.
If you’re planning to borrow money for school, you’re definitely not alone. In fact, you’ll be joining 44.2 million of your fellow Americans with student loan debt.
Thanks to the high costs of tuition, borrowing for college has become necessary for most students — but you want to make sure you’re getting the right student loans at a reasonable price. Start with this six-step guide to learn how to get student loans for college, and you’ll end up with the money you need.
1. Learn the basics of student loans
Student loans are money you borrow through the federal government’s Department of Education, or from private lenders such as your local bank, an online lender, or a credit union.
Federal student loans are often easier to qualify for since they’re backed by the government. For example, you don’t need to provide proof of income or credit history for most federal loans (that’s not the case with private student debt).
College loans can be used to pay for many of the expenses you incur during school, including tuition, textbooks, and room and board. However, you don’t want to borrow more than necessary because interest is charged on these loans. You’ll have to repay the full amount of your debt (plus interest and fees) by making monthly payments during school or after graduation.
Check out our comprehensive guide for more details on how private and federal student loans differ.
2. Research different student loan options
Once you know how student loans work, learn about the different types of college loans available. You have multiple options for loans, including:
- Direct Subsidized Loans: These federal student loans are offered by the Department of Education to undergraduate students with proven financial need. Because the loans are subsidized, the government pays your interest while you’re in school.
- Direct Unsubsidized Loans: These loans are also offered by the Department of Education, but you don’t have to demonstrate financial need to qualify. You aren’t required to make payments while in school, but interest accrues and is added to the loan balance immediately.
- Private Student Loans: You or your parent could take out private student loans from banks, credit unions, or online lenders. You must have good credit and provide proof of income to qualify; if you want to take out private loans in your own name, there’s a good chance your parents will have to cosign.
- Parent PLUS Loans: These federal student loans are offered to parents by the Department of Education. They aren’t available to parents with an adverse credit history. They typically cost more than other federal loans and don’t offer the same flexible repayment options that student borrowers are granted.
3. Compare different types of college loans
The Consumer Financial Protection Bureau advises most students to max out federal student loan options before taking private loans. This means you should borrow as much as you are allowed to through the Direct Loan program. Direct Loans have many advantages compared with private student loans. For example:
- Direct Loans are easier to qualify for. You don’t need to have good credit, provide proof of income, or have a cosigner to qualify for most federal student debt.
- Direct Loans typically cost less. Interest is often much lower on Direct Loans compared with private student loans. The lower your interest rate, the less you pay to borrow money.
- Direct Loans offer many repayment options, including income-driven repayment plans. With more flexible repayment options, you can lower your monthly payments or even receive loan forgiveness after 20 years of repayment.
- Direct Loans provide financial relief to borrows, including deferment and forbearance if you return to school or lose your job. When you defer or forbear your debt, you can temporarily pause your payments (though interest continues to accrue in most cases). While some private lenders offer similar benefits, there might be stricter requirements to qualify and shorter loan-suspension periods.
- Direct Loans may offer Public Service Loan Forgiveness. If you and your employer meet qualifying criteria, you could have your outstanding loan balance forgiven after making payments for 10 years. Private lenders don’t offer loan forgiveness for public service.
Since federal loans obviously sound like a better deal, why doesn’t everyone use these loans to pay for college? Unfortunately, there are limits to how much you can borrow with federal aid, so federal loans may cover only a portion of your costs. This means you might need to explore other sources of funding, including private student loans.
4. Fill out your FAFSA
The key to eligibility for federal financial aid is a document called the Free Application for Federal Student Aid (FAFSA). The FAFSA is not only essential if you want to qualify for federal student loans, but it can also determine eligibility for the different types of federal aid, too.
You and your parents will need to provide financial information for the FAFSA, including details about your family’s income and assets. Your family must provide this information because, unless you’re independent from your parents, it’s expected most parents will pay something towards their child’s education. The information you and your parents provide on the FAFSA is used to calculate the amount and type of federal aid you qualify for.
The FAFSA becomes available every October for the upcoming school year. If you’ll be going to college in the 2019-20 school year, your FAFSA would be available in October 2018. This guide will help you understand exactly what you need to fill out the FAFSA.
5. Receive your financial aid award
Once you’ve completed the FAFSA, the information is sent to the schools you’re considering. Each school will review your financial info and prepare a financial aid award letter. The award letter will detail all the different sources of aid you’re entitled to, including scholarships or grants provided by the school or government, as well as federal student loans.
You’ll reply to the financial aid letter indicating what aid you wish to accept. If the financial aid you’re offered isn’t enough to cover your costs, you’ll have to look into private loan options, unless your parents are willing to borrow in their own name through PLUS Loans or private loans for parents.
6. Explore private loan options
Private lenders each have their own application process, and loan terms can vary from lender to lender. You can use our private student loan marketplace to find and compare different borrowing options.
However, unless you have a reliable income and good credit score, you probably won’t qualify for a private loan on your own. You’ll need a parent or other relative with an established credit history and good income to cosign for you. A cosigner agrees to take shared responsibility for the loan; if you don’t pay back what you borrow, your cosigner could get stuck with the bill.
If you’ve found a cosigner or think you can qualify for private loans on your own, submit applications to several lenders to compare loan options available. Some key criteria to consider include:
- What interest will you be charged? You may be offered fixed or variable rate loans. Variable rate loans may start lower but could rise if interest rates go up. Fixed rate loans will stay the same the whole time you have the loan.
- Will you have to pay back the loan while in school? Most private lenders allow you to put off payments until six months after you’ve graduated. Some lenders will ask you to make interest-only payments while in school.
- How long do you have to pay back the loan? Your repayment period could range from five years to 20 years, depending on the lender. If your repayment term is longer, you will likely pay less each month but more over the life of the loan.
- Is there an origination fee? This is an initial cost you pay up front to get a loan. Most private lenders don’t charge origination fees, but some do.
Learning how to get student loans can seem overwhelming, but just remember the basics laid out above. By starting the process early and making sure to carefully research your options, you can save yourself a lot of stress after graduation when it comes time to repay your loans.
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 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.
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|
|3.82% – 12.82%3||Undergraduate and Graduate||Visit Ascent|
|4.34% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|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|
|4.72% – 9.81%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|