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How to get a student loan

A step-by-step guide to financing your degree.

The process of applying for student loans is relatively complex — especially if you plan on taking out both federal and private loans. Taking time beforehand to apply for free aid and estimate your school’s net cost can help ensure you don’t borrow more than you need to.

5 steps before applying for student loans

You’ll need to figure out approximately how much you’ll need to borrow before applying for student loans. Follow these steps to get started:

Step 1: Apply to different schools.

It may seem obvious, but you’ll need to have an idea of where you’ll be going before you take out any loans. You won’t know how much you need to borrow until you’ve nailed down a school. And most private lenders require you to select the school you plan on attending when you complete the application.

Step 2: Look for scholarships and grants.

Scholarships and grants offer free money for school — so apply for these before you start searching for student loans. Many schools offer institutional scholarships and grants you’re automatically considered for when you apply. And many states offer scholarships to high-achieving students and grants to students demonstrating financial need.

Also apply for free aid from local and national organizations. If you’re still in high school, your guidance counselor might be a good resource to find scholarships you qualify for. Also check out our A-to-Z guide to scholarships for even more opportunities.

Step 3: Understand your school’s cost of attendance.

How much you have to borrow will depend on your school’s cost of attendance (COA), which includes tuition, fees, room and board, books and other personal expenses. You’ll usually find this on the school’s financial aid website.

Step 4: Determine how much you might need to borrow.

Once you know your school’s COA, subtract all of the financial aid you plan on receiving to get an idea of how much you’ll have to borrow in student loans.

The Free Application for Federal Student Aid (FAFSA) has a handy calculator to help you do this. Not only does it estimate how much federal aid you might receive, but it also allows you to factor in other types of aid — like scholarships and 529 savings plans — to calculate the true COA.

Step 5: Talk to potential cosigners.

Depending on the type of student loans you end up applying for, you might need to bring on a cosigner to help you qualify. This is especially the case with private student loans, which come with credit and income requirements that can be difficult to meet straight out of high school. Talk to family members or friends to see if any would be willing to cosign your loan.

How to apply for a student loan in 6 steps

Applying for student loans is a complex process — and it generally can’t be done in one sitting. Follow these steps to get started:

Step 1: Fill out the FAFSA.

To qualify for any type of federal aid — include federal loans and grants — you’ll need to fill out the FAFSA on the Federal Student Aid (FSA) website. The information you submit is also used to determine how much funding you qualify for from your school and state government.

With over 100 questions on the FAFSA, you might want to gather all of the documents you’ll need to fill it out before starting the application. This includes past federal income tax returns, W-2 forms, bank statements and other financial documents for both you and your parents.

Step 2: Review your financial aid award letters.

Your financial aid award letter will outline the school’s COA and any aid you’ve received from your school, as well as the state and federal government. This might include scholarships, grants, student loans, work-study or assistantships. Comparing the financial aid award letters from the different schools that have accepted you can help you find the best offer available to you.

Step 3: Accept your federal loans.

After you’ve decided on a college, reach out to the school’s financial aid office for instructions on how to accept your award letter and any federal student loans you wish to take out. You’ll then be sent your loan documents and a master promissory note to sign.

Step 4: Compare private student loans.

If you don’t qualify for enough federal student loans and other financial aid to cover the full COA, it’s time to compare your private student loan options. These typically come with higher rates and less-flexible repayment plans than federal loans, which is why they’re best saved for last.

When comparing lenders, you’ll want to look at eligibility requirements as well as rates, fees and terms of each provider. You might also want to consider whether they offer cosigner release, forbearance, deferment or other perks to help jumpstart your career.

Step 5: Fill out the application.

Once you’ve found a lender that works for your financial situation, it’s time to begin the application. Most allow you to apply online by filling out a form with information about yourself, your school, your finances and your cosigner’s finances — if applicable. Make sure to double-check all of the information you entered is correct before submitting the application.

Step 6: Review and sign your loan documents.

If you’re approved, it’s time to review your loan agreement. It should list your APR, loan term and potential fees as well as your repayment options and any deferment or forbearance programs you may be eligible for graduating.

Have a cosigner? Ask them to review your loan documents as well. This way, you’ll have two eyes checking over to make sure everything looks good. If you agree to the terms, sign the documents and return them to your lender to accept the loan.

What happens after I’ve signed my student loan documents?

The federal government or your private lender will send the funds directly to your school. Once your tuition, fees, and room and board are paid for, your school will issue you a student loan refund check for any remaining funds. You can use this money to cover other expenses that crop up while you’re attending school, like paying for books or traveling home for the holidays.

Reasons why you might have been rejected

Here are a few reasons why your private student loan application might have been rejected:

  • You exceeded your school’s COA. Due to federal regulations, you can only borrow up to 100% of your school’s COA. Double-check how much you need to cover with student loans and try resubmitting your application for a lower amount.
  • You have no one to cosign. If you haven’t had time to build up your credit history — or don’t have a steady source of income — you’ll have a hard time qualifying for a student loan without a creditworthy cosigner.
  • You made mistakes on your application. If you entered anything incorrectly on your application, ask if you can resubmit it with the correct details.

4 alternatives to taking out a student loan

These four alternatives can reduce the amount you need to borrow — easing the burden of student loan debt after you graduate.

  • Scholarships and grants. On top of scholarships and grants offered by your school and government agencies, you can also find opportunities for free aid from private organizations. And look into smaller scholarships — a few hundred dollars here and there can quickly add up.
  • Part-time job. A part-time job may not be ideal if you’re a full-time student, but it can supplement your day-to-day spending so you don’t have to borrow as much to cover smaller expenses.
  • Income share agreements. Schools and lenders are starting to offer income share agreements as an alternative to student loans. Rather than pay interest, you promise to pay a percentage of your income for a few years after you graduate.
  • Crowdfunding. If you have a large social network or generous family members, you might want to look into crowdfunding a portion of your college expenses. When creating your campaign, adding information about your career goals and volunteer experience might entice more people to contribute.

Bottom line

Exhausting your options for free aid and estimating your school’s net cost are key steps to take before applying for student loans. Then once you know how much you’ll need to borrow, begin by applying for federal loans through the FAFSA before turning to private lenders.

Learn more about how student loans work and compare your options with our guide.

Frequently asked questions

When do I need a cosigner to get a student loan?

Most private lenders have credit and income requirements that can be difficult to meet without a cosigner — especially if you’re straight out of high school. Several federal loans don’t require a cosigner to qualify.

What are the chances of getting a student loan with bad credit?

A few federal loans don’t come with credit requirements. But if you’re interested in taking out a private student loan, you’re unlikely to qualify with bad credit. Most private lenders require borrowers to have good to excellent credit — or a creditworthy cosigner — to be eligible.

How differently do graduate student loans work differently?

You still need to go through the same steps of filling out the FAFSA, accepting any federal loans you’re interested in and then comparing your private student loan options. Learn more with our guide to graduate student loans.

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