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How to Get a Student Loan
By
Cece Gilmore
Cece Gilmore is a Content Writer at Scholarships360. Cece earned her undergraduate degree in Journalism and Mass Communications from Arizona State University. While at ASU, she was the education editor as well as a published staff reporter at Downtown Devil. Cece was also the co-host of her own radio show on Blaze Radio ASU.
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Caitlyn Cole is a college access professional with a decade of experience in non-profit program and project management for college readiness and access organizations.
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Maria Geiger is Director of Scholarship Services at Scholarships360. She is a former online educational technology instructor and adjunct writing instructor. In addition to education reform, Maria’s interests include viewpoint diversity, blended/flipped learning, digital communication, and integrating media/web tools into the curriculum to better facilitate student engagement. Maria earned both a B.A. and an M.A. in English Literature from Monmouth University, an M. Ed. in Education from Monmouth University, and a Virtual Online Teaching Certificate (VOLT) from the University of Pennsylvania.
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Beginning your educational journey is an exciting time, but the cost of higher education can be daunting. Lucky for you, this guide will go over how to get a student loan to help make your dreams of academic success a reality.
Types of student loans
Federal student loans
Direct Subsidized Loans
Direct Subsidized Loans are available to undergraduate students who demonstrate financial need. Interest does not accrue (increase) while an undergraduate student is in school at least half-time, during the grace period, or during forbearance periods.
Direct Unsubsidized Loans
Direct Unsubsidized Loans are available to undergraduate and graduate students with no requirement to demonstrate financial need. Interest is charged during all periods and may be capitalized which means that unpaid interest can be added to your loan’s principal balance.
Grad PLUS Loan
Grad PLUS Loans are available to graduate and professional students enrolled at least half-time at an eligible school in a program leading to graduate or professional degree or certificate.
Check out: Top graduate school scholarships
Parent PLUS Loan
Parent PLUS Loans allow parents or guardians of dependent students to borrow money to cover any costs not already covered by the student’s financial aid package. Parent PLUS Loans are the financial responsibility of the parents/guardians, not the student.
Private student loans
Private loans are made by private organizations such as banks or credit unions and have terms set by the lender.
Reasons for taking out federal student loans
Federal student loans are an investment in your educational future! Luckily, federal student loans offer a range of benefits compared to other loan options.
- The interest rate on federal student loans is fixed
- There is no credit check or cosigner needed to obtain most federal student loans
- You do not have to repay your federal student loans until after you leave college or drop below part-time
- Federal student loans offer flexible repayment plans and postponing options
- You may be eligible to have your student loans forgiven if you meet certain conditions
Don’t miss: Best student loans
Step-by-step instructions on how to get a federal student loan
Submit the FAFSA
The FAFSA is the beginning of your federal student loan journey! To begin, you will need to fill out the FAFSA in its entirety which includes providing personal information such as your Social Security Number and income information. If you are a dependent student, you will also need your parent’s financial information. Not only does the FAFSA give you access to federal student loans, it also is used by your chosen colleges to generate a financial aid offer. You can add your chosen schools to the FAFSA and your information will be shared with those schools once you submit your application. Remember, you have to complete the FAFSA each year you are enrolled in school.
Review your Financial Aid Award Letter
Once your FAFSA has been processed, your selected schools will send you financial aid award letters. These letters will contain different types and amounts of federal student aid you are eligible for including grants, scholarships and loans. Be sure to compare your financial aid award letters to determine which is the best financial aid scenario for you!
Accept the Federal Student Loans
If you decide to accept any federal student loans found in your financial aid award letter, you will need to follow the instructions provided by the school. This will often involve logging into your selected institution’s financial aid portal to read and sign information about your loans and that you agree to pay them back. You can decide to accept all or part of the loans offered so make sure you are taking your time to make a well-informed financial decision! You will then be assigned a lender approximately three weeks after your loan is disbursed so you should keep careful track of your email and consider creating a folder to keep everything organized.
Reasons for taking out private student loans
- Private student loans may offer cheaper rates for parents and graduate students
- Typically, private student loans will have higher borrowing limits allowing students to borrow up to the cost of attendance minus any financial aid received
- There is typically a fast application process
- Allows students who do not qualify for federal student loans to have an option to obtain loans
Check out: Student loans: the good, the bad, and the ugly
Step-by-step instructions on how to get a private student loan
Choose a loan lender
It’s important to search for a reputable loan lender source. To begin, you should look at your intended institution’s website to see if they offer a lender list. Then, you should double check and confirm that the lender does indeed work with the school of your choice. In addition, make sure you are looking at the right private loan for your situation as there may be different loans depending on your level of education such as undergraduate or graduate.
Don’t miss: Best student loans
Choose an interest rate type and repayment option
After selecting your loan lender, you will then be asked to choose an interest rate type and repayment option. Here are some examples of these different types of interest rate types:
Fixed interest rate
A fixed interest rate stays the same for the life of loan. This means that you can have a constant interest rate that does not change overtime which means your monthly payments will be predictable. However, the cost of the loan may be higher than the starting variable interest rate.
Variable interest rate
A variable interest rate may go up or down due to an increase or decrease in the loan’s index. This means that your rate can rise or fall throughout the months, so your loan payments may vary over time.
Here are some examples of different types of repayment options:
Deferred repayment
A deferred repayment plan means that you do not have to make any loan payments while you’re attending school or during a grace period which is typically 6 months after leaving school. However, unpaid interest typically will be added to your principal amount at the end of your grace period.
Fixed repayment
A fixed payment plan means that you will pay a fixed amount every month while you are in school and during the grace period and then pay the remaining balance after the grace period similar to a deferred repayment plan.
Interest repayment
An interest repayment plan means that you will pay your interest every month you are in school and during the grace period.
Also see: Best student loan repayment plans
Get approved and take out a private student loan!
Once you have selected your loan provider, interest rate type and repayment option you are ready to take out a private student loan! First, you need to get approved. Most private student loans require borrowers to have good credit and an income that can support loan payments. If you do not meet these requirements, you will need a co-signer who can.
Don’t miss: How to lower student loan payments
Instructions on how to get loans for parents
Parents who want to borrow loans for their children’s education have federal and private loan options that all require a credit check.
Direct PLUS loans
Direct PLUS loans are the only type of federal student loan that parents can take out. In order to obtain a direct PLUS loan, parents will need to submit a FAFSA along with their child and complete a parent direct PLUS loan application.
Co-signed private student loan
Co-signing a loan with your student will allow you to become equal borrowers. So, before deciding to co-sign a private student loan with your child, make sure you have good credit, a steady income and can take on the responsibility of paying off the debt if your student cannot.
Private college loans for parents
There are a lot of private loan lenders that offer college loans to parents rather than parents co-signing on a student loan. This would mean that all debt is the parents responsibility.
Instructions on how to get loans for graduate students
Federal direct unsubsidized loans
Graduate students are able to borrow up to $20,500 federal direct unsubsidized loans annually. In order to apply for the federal direct unsubsidized loans, you will need to submit the FAFSA. It’s important to note that there is no credit check needed!
Federal direct PLUS loans
Graduate students are able to borrow up to the cost of attendance minus any other financial aid. To apply, you will need to submit the FAFSA and complete a graduate student direct PLUS loan application. It is important to note that there is a credit check needed.
Also see: What is a student loan credit score?
Private student loans
There are an abundance of private student loans available for graduate students. Students will typically be able to borrow up to the cost of attendance minus any other financial aid.
Related: Grad school financing options
Some helpful tips about getting a student loan
Getting a student loan can be an intimidating task, however it can be crucial in funding your academic journey. Before accepting any loans, you should ensure that you have exhausted all other options such as scholarships and grants. This is because these do not have to be paid back and do not accumulate interest of any kind. Once these options are used, you should then attempt to take out federal student loans instead of private student loans. However, private student loans are a viable last-resort option. Remember, student loans can be a powerful investment tool toward your education and they can also be a significant financial burden if you don’t explore all your options and borrow responsibly.