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For the vast majority of college students who need to borrow, getting a student loan through the federal government is the best choice. But if you're a graduate student or a parent trying to help your child get through school, you may also want to consider private student loans.
Depending on which type of loan you're seeking, here are some steps you can take to get both federal and private student loans.
How to Get a Federal Student Loan
Federal student loans are offered as financial aid through your school. They are funded by the U.S. Department of Education and come with certain benefits you won't get with private student loans.
Those benefits include access to student loan forgiveness programs and income-driven repayment plans, as well as generous deferment and forbearance options. Here's how to apply for federal student loans.
1. Fill Out the Free Application for Federal Student Aid (FAFSA)
You'll share financial information about yourself and your family to help your school's financial aid office determine how much aid you qualify for in the form of student loans, scholarships, grants and work-study programs.
The Free Application for Federal Student Aid (FAFSA) becomes available each year on October 1, but the deadline can vary by state.
2. Review Your Financial Aid Award Letters
If you're an incoming freshman or transfer student, you may have applied to multiple colleges. In that case, you'll receive financial aid award letters from each. Review each one and compare the offers, which include federal student loans, to determine which school to attend. If you're already in school, review the award letter you receive from your college.
3. Reply to Your Aid Offer
The award letter will provide you with details on how to respond to your offer. Note that the student loan portion of the offer is the maximum you qualify for, but you don't have to accept the full amount. You may also be eligible for subsidized student loans, which can save you money on interest. Max out those loans before accepting unsubsidized loans.
4. Sign the Loan Agreement and Complete Entrance Counseling
Once you accept your loan offer, sign the agreement electronically to complete the process. If this is your first time receiving a direct loan, the Department of Education requires you to complete a 30-minute entrance counseling session, which you can do online.
Learn more >> How Much Should You Borrow in Student Loans?
How to Get a Private Student Loan
Private student loans are generally less appealing than federal loans because they aren't eligible for federal loan forgiveness programs, typically carry higher interest rates and rarely benefit from the same income-driven repayment plans that federal student loans do.
But if you've maxed out your federal loan limits—there are annual and aggregate caps with some loan programs—or you're a graduate student or parent, they may be worth considering (especially if you have great credit). Here's how to get started.
1. Check Your Credit
Most private student loan companies require a credit score in the upper-600s or higher to get approved. You can check your credit for free with Experian to get an idea of whether you have a good chance of getting approved. If not, you may consider asking a parent or other loved one with good credit to cosign your application.
2. Get Prequalified With Multiple Lenders
Most private student loan companies offer prequalification, which allows you to get a rate quote without impacting your credit with a hard inquiry. Go through this process with a handful of lenders so you can compare interest rates, repayment terms and other features side by side.
3. Choose a Lender and Apply
Once you've determined which lender offers the best mix of terms for your needs, apply directly with that lender through its website. You'll typically need to provide some basic information about yourself (and your cosigner, if applicable), your school, your degree program and how much you want to borrow.
4. Review and Accept the Loan Offer
If you're approved, the lender will provide you with an offer based on your creditworthiness—the terms may or may not be the same as the quote you initially received during prequalification. If you agree to the terms, you can sign the contract electronically and the lender will disburse the proceeds directly to your school.
Learn more >> How Can Student Loans Affect My Credit?
What to Consider Before Getting Student Loans
While student loans can help you pay for a variety of educational expenses, it's important to think carefully about your options and to ensure that you don't borrow more than you can afford to repay. Here are some things to keep in mind:
Your Other Funding Options
Federal student loans are easily accessible, but it's crucial that you first consider other forms of financial aid, such as scholarships, grants and work-study programs. These funding options typically don't need to be repaid.
Contact your school's financial aid office to learn more about opportunities, and also consider websites like Scholarships.com and Fastweb for private scholarship opportunities.
Your Credit History
Most federal student loans don't require a credit check, so you can fill out the FAFSA with bad credit or no credit history. Only direct PLUS loans, which are available to graduate and professional students and parents, require a credit check.
If you qualify for federal student loans, the terms—including the interest rate, loan fee and repayment period—are standardized, which means everyone who qualifies for a specific type of federal loan gets the same terms.
With private student loans, however, you may need a cosigner to get approved, and your interest rate will be based on your creditworthiness.
Loan Amounts
Before accepting a student loan, it's important to ensure that you're only borrowing what you need. Take a look at your eligible expenses and other funding sources to get a good estimate of how much you'll need.
If you borrow too much, you may be able to return some of the funds. With federal loans, for instance, you can cancel all or part of your loan within 120 days and avoid interest and fees.
Learn more >> Average Student Loan Debt
Frequently Asked Questions
Yes, it's possible to be denied a student loan. While most federal student loans don't require a credit check, there are other eligibility requirements you'll need to meet. Being denied a private student loan is more likely, however, due to more stringent credit and income guidelines.
College students don't need a cosigner for federal student loans, and it is possible to get private student loans without one if you have a solid income and credit history on your own. If you don't have great credit, however, you'll likely need a cosigner for private student loans.
Federal student loans come with a six-month grace period, and the same is true for most private student loans. However, some private lenders may give you a grace period of up to nine months after you graduate, leave school or fall below half-time enrollment.
Build Credit for Future Borrowing Needs
Your time in college is an excellent time to start building your credit history. The sooner you start, the better equipped you'll be to get financing after graduation, whether to buy a home or a car or to qualify for a credit card.
While student loans can help you build credit, they won't do much until you start making payments, which won't happen for most until after graduation. Student credit cards can be a great way to build credit because, as long as you keep your balance low and pay your bill on time and in full every month, you can avoid interest charges.
While you work to build credit, monitor your credit score regularly to keep track of your progress and address any potential issues as they arise.
Learn More About Getting Student Loans
- Subsidized vs. Unsubsidized Student Loans: What’s the Difference?
If you have the choice between subsidized and unsubsidized student loans, opt for subsidized. Here's why that difference matters. - How Much Can I Borrow in Student Loans?
Your dependency status, school year and degree level can all affect the amount of student loans you can borrow. For private loans, your credit matters too. - How Do I Qualify for a Private Student Loan?
Many lenders offer private student loans, but each has unique requirements. If your credit is poor, applying with a cosigner could help you get approved. - Do Private Student Loans Require a Credit Check?
A credit inquiry is usually required when applying for private student loans, and working on your credit could help you get approved with a low rate.