How to Apply for Student Loans

A Beginner’s Guide to Getting the Loans You Need to Graduate

Paying for college can be tough unless your parents have saved a lot of money or have high salaries. Most students need loans to help cover the costs. Working through college isn’t as easy as it used to be either. So, student loans have become very common. Here’s how you can apply for them.

Key Points How to apply for Student Loan

• Fill out the FAFSA (Free Application for Federal Student Aid) to apply for federal loans.
• There are two main types of federal loans: subsidized and unsubsidized. Subsidized loans are cheaper if you qualify.
• Other options include federal PLUS loans for parents and private loans from banks.

Step 1: Fill Out the FAFSA

The first thing you need to do is fill out the FAFSA. This is a form from the government that asks about your family’s income and investments. Based on your answers, it calculates your Student Aid Index (SAI), which was previously called the Expected Family Contribution (EFC). This number shows how much money the government thinks your family can pay for college.

You can complete the FAFSA online at the Federal Student Aid website. To save time, gather all your account information before you start. Remember, you need to fill out the FAFSA every year you want to receive aid.

The SAI is not how much you have to pay but helps schools figure out how much aid you can get. The FAFSA Simplification Act changed the name and some rules about how Pell Grants are given out.

Step 2: Compare Your Financial Aid Offers

After you fill out the FAFSA, colleges use your information to decide how much aid to offer you. They calculate this by subtracting your SAI from their cost of attendance (COA). The COA includes tuition, fees, room and board, and other expenses.

Colleges will put together a financial aid package for you. This might include federal Pell Grants, work-study jobs, and loans. Grants are great because you don’t have to pay them back. They are for students with exceptional financial need.

When you get your award letters from different colleges, compare them. Look at how much each school offers in loans and whether they are subsidized or unsubsidized.

• Subsidized Loans: These are for students with exceptional financial need. The government pays the interest while you’re in school and for six months after you graduate.
• Unsubsidized Loans: These are available to everyone, and interest starts as soon as you get the loan.

Federal loans have low, fixed interest rates and flexible repayment plans. But there are limits to how much you can borrow each year and in total. First-year students can borrow up to $5,500, with only $3,500 of that being subsidized.

If you need more money, you can consider a federal PLUS loan for parents. These loans have higher limits but require a credit check.

Step 3: Consider Private Student Loans

If you need more money than federal loans offer, you can apply for private loans from banks or credit unions. These loans are available regardless of need and require a good credit rating or a co-signer with good credit.

Private loans usually have higher, variable interest rates and fewer repayment options than federal loans. They are also not eligible for federal loan consolidation.

Step 4: Choose Your School

When choosing a college, consider how much you’ll need to borrow. Graduating with a lot of debt can be stressful and limit your future choices. Think about your future career and salary when deciding how much debt to take on.

Relevant Topic: What Are the 4 Types of Student Loans

FAQs

Conclusion

Student loans can help you pay for college. Federal and private loans each have pros and cons. Federal loans are needs-based with lower interest rates and flexible repayment options, while private loans are based on credit and may have higher rates. Do your research to find the best option for you.