Applying for student loans can be a complicated process. It doesn’t help that you have to apply for both federal student loans and private or alternative student loans. So, how do you get student loans? I wish I could say that a magic student loan fairy comes down from the sky and hands you a bag of cash. It’s a little more complicated than that, but I’m going to help you navigate the process by telling you exactly how to get student loans.
How to Apply for Federal Student Loans:
To apply for federal student aid, you must fill out a Free Application for Federal Student Aid (FAFSA). The FAFSA opens on January 1rst of each year and you have until June 30, 2015 to complete it. However, many states and colleges have much earlier deadlines for filling out the FAFSA. By filling out this application, you become eligible not just for student loans but for all kinds of student aid. It’s crucially important in many states to fill this out as soon as possible because there are limited state grants and they might be given out on a first come, first serve basis. If you wait, you’ll lose out.
This can be confusing since the FAFSA asks for financial information for the last tax year that you or your parents often haven’t yet received. Don’t wait to file until you have all the final numbers. You can file with estimated numbers and correct any errors later. Just check the ‘will file’ box. You’ll even get a reminder in April to update your information after your tax returns have been filed. Just estimate your and your parents’ income based on your last pay stub, any additional income, and any bank or brokerage statements that apply.
When you apply via FAFSA, you have to list the schools that you will be applying for. You should always list these schools in alphabetical order. Some students list these schools by preference and that has lead some schools to deny them admission in anticipation that they will not accept the offer.
When you receive an admission offer from a school, the financial aid office at the school will send you an aid offer. This offer will include the amount of financial aid you will receive should you attend that school from the school and from federal, state, and private sources. This is your total aid package including student loans, scholarships, and grants. Each school you get accepted at will provide you with different amounts of aid from these sources since your financial aid package is based on the cost of attending each particular school.
How To Apply for Private Student Loans:
The first thing you need to do to apply for private student loans is to do your research. Unlike federal student loans, you have a lot of options for what to choose. That means that you should look into the differences between the options to find the private student loan that is best for you. Your school’s Financial Aid office might have a list of favourite lenders to suggest.
If not, check out options from:
Each private student loan offers very different terms. Be sure to look for loans that give you opportunities to pause your payments if you have a financial crisis, or for a loan that allows you to pay it back faster without penalties. Read all the fine print and compare the options between several lenders. Also, compare the interest rates and repayment terms.
Next, you’ll need to get your information together and fill out the online application for the student loan. Many young students need a cosigner to qualify for a private student loan or get a lower interest rate since they don’t have an established credit history. Consider asking someone to cosign for you. It’s always best if you can get the loan without a co-signer, but sometimes that’s not an option. Some student loans require a cosigner but after a number of on-time payments by the principal borrower take the cosigner off the loan.
Next, you’ll need to consider if you want to pay interest on your loan while you’re in school or if you want your loan deferred until 6 months after you graduate. I have a whole post on why it makes sense to pay the interest on your student loan while you’re in school.
Finally, you choose a loan provider and sign the student loan contract. Then, the money is on the way! It goes directly to your school to pay any outstanding tuition or fees, but after that is taken care of your school will send your money to you.