Hey, High School Seniors: Here’s How to Get Student Loans for College

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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 and will make a positive impact in your life. 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 understand what you are buying, and consult 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. Please do your homework and let us know if you have any questions or concerns.

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.

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1 = Citizens Disclaimer.

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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 and will make a positive impact in your life. 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 understand what you are buying, and consult 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. Please do your homework and let us know if you have any questions or concerns.