If you’ve just been accepted into college, congratulations! You’re about to embark on one of the most exciting periods of your life, where you’ll meet lifelong friends and get an education that will empower you with the tools you need for your career.
However, college is expensive. According to The College Board, a single year at a public, in-state university is $9,410. Opt for a private school, and that number jumps to $32,410. Few people can afford to pay that out of their own pockets, so most turn to student loans to foot the bill.
Where do you even start? Between federal and private loans and the different application processes, it can be overwhelming. But don’t worry. Here is a step by step guide on how to apply for student loans.
Before even thinking about submitting an application for student loans, make sure you exhaust all of your other options first. There are other forms of financial aid you can use to pay for college:
By utilizing these forms of financial aid, you can minimize how much you need to borrow in student loans.
When it comes to student loans, there are two main options: federal and private student loans.
Federal student loans are offered by the government, and tend to have lower interest rates and more generous repayment terms than private student loans. As an undergraduate student, you may be eligible for subsidized or unsubsidized Direct Loans, which both have an interest rate of 5.05% for the 2018-2019 school year.
With subsidized loans, the government covers the cost of the interest that accrues while you’re in school and for six months after you graduate. With unsubsidized loans, you’re responsible for all the interest that accrues on your loan, even when you’re still in school.
Federal loans have a grace period. It’s a six-month period after you graduate when you don’t have to make payments on your loans, giving you time to find a job.
When you enter repayment, federal loans have unique perks, such as the ability to enter into an income-driven repayment plan. Under these plans, you may be able to qualify for a much lower monthly bill that is based on how much you make.
If you need more help paying for school than you can get from the federal government, private student loans can help fill the gap. Private student loans are offered by banks or financial institutions and interest rates can vary from lender to lender. Depending on the loan repayment plan you choose, you may have to start making payments while you’re in school.
As an undergraduate student, you’re unlikely to qualify for a private loan on your own. You’ll probably need a cosigner. A cosigner— usually a parent or relative with a stable income and good credit — acts as a guarantor on the loan. Having a cosigner decreases the risk to the lender, making it more likely you’ll get approved for a loan.
Whether you plan on applying for federal or private student loans, you’ll need to collect some information before you complete the process.
To qualify for financial aid, you must complete the Free Application for Federal Student Aid (FAFSA). It’s what the federal government and colleges use to determine your aid.
It’s free to complete the FAFSA, but it’s a good idea to submit your application as soon as possible. The earlier you complete it, the more likely you are to qualify for financial aid, including grants.
You can complete the FAFSA online. You’ll need to create a Federal Student Aid ID, which you then use to access your application in the future.
Once you finish the FAFSA, you’ll receive a Student Aid Report. This is a summary of your financial information and provides your Expected Family Contribution (EFC), or how much your family is expected to pay toward your education. If you notice a mistake on the Student Aid Report, log into your FAFSA to update it right away.
Besides federal aid, you may be eligible for institutional aid, which comes from the school you attend. To qualify, you must submit the CSS profile.
To do so, create an account. Then, select the schools you’re interested in — not all schools participate — and provide information about yourself, your family’s finances, and your assets. There is a $25 fee for submitting the profile, and you’ll have to pay $16 for each additional report.
The College Board has a comprehensive guide on how to complete the CSS profile if you need additional help.
After you complete the FAFSA and are accepted into college, schools will send you a financial aid award letter, which details what aid you’re eligible to receive. The letter will detail the total cost of attendance, what you got in the form of scholarships or grants, and what federal student loans are available. To accept, you generally need to sign the letter and return it to the school financial aid office.
In some cases, you may find that you need more aid than the school and government provides. If that’s the situation, private student loans can help.
It’s a good idea to shop around with different lenders to ensure you get the best deal. Luckily, you don’t have to comparison shop manually on your own. Purefy’s rate comparison tool allows you to compare offers from multiple lenders at once.
When you apply, you’ll need to provide much of the same information as you did on the FAFSA. Make sure you know how much you want to borrow and what school you want to attend.
After submitting your application, it can take a couple of weeks to receive your funds. So, fill out an application as soon as possible to make sure you get the money you need on time.
Now that you know how to apply for student loans, you can get the funding you need to pay for college. Make sure you understand all of your options so you can minimize how much you need to borrow. Reducing how much you take out in student loans now will help you in the long run after you graduate.
If you need help paying for school, get multiple private student loan offers in minutes . And if you have any questions, feel free to reach out to us by phone at 202-524-1115 or by email at email@example.com.