The Ultimate Guide to Planning Your Student Loans

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Before You Read, Lower Your Student Payment

It’s that quick & easy — really. Our free tool checks a network of top refinance lenders and shows you options in one easy chart.

Checking rates takes 2 minutes with no impact on your credit
Federal & private loans are eligible
No maximum loan amount

As an aspiring college student, you’re likely looking forward to everything the college experience has to offer.

Being able to afford your education expenses, though, is another story entirely.

Because it’s unlikely you or your parents are an experienced student loan planner, here are some ways to help you plan student loans to pay for college — without going overboard on debt.

How student loans can help

In an ideal world, you’d be able to pay for college using savings, current income, scholarships, grants, and other non-debt sources. But 69% of students in the Class of 2019 graduated with student loans, so it’s unavoidable for many.

Student loans can help bridge the gap between the cost of attending college and the sources you have to pay for it. Becoming a knowledgeable student loan planner can help you apply for student loans with the lowest costs, and avoid taking on more debt than you actually need.

There are two types of student loans: federal and private.

Federal student loans

Federal student loans are loans offered by the U.S. Department of Education. These loans don’t require a credit check, so they’re easy to get for young college students who haven’t yet had a chance to establish a credit history.

They also come with relatively low interest rates for undergraduate students and access to several benefits, including:

  • Student loan forgiveness programs
  • Eligibility for government agency-provided student loan repayment assistance programs
  • Income-driven repayment plans
  • Generous deferment and forbearance options

That said, federal loans also come with an upfront loan fee, which is deducted from the loan amount when it’s disbursed. Also, you can’t choose which company will service your loan.

Private student loans

Private student loans are loans provided by private lenders. These companies don’t have the same financial backing as the federal government, so they use risk-based pricing to determine whether you qualify and what interest rate you pay.

To do this, they run a credit check when you apply for the loan. If you have bad credit or haven’t had the chance to establish a credit history yet, you likely won’t get approved unless you have a creditworthy cosigner — like a parent or close relative. Even then, you may not qualify for a lower interest rate than what the federal government offers.

That said, some private lenders may offer lower interest rates than what the Department of Education provides, and they typically don’t charge upfront fees. On the flip side, you won’t get access to loan forgiveness programs or income-driven repayment plans, and some private lenders skimp on forbearance and deferment options. But there still are useful repayment solutions available for private loans that you can take advantage of in the future, such as student loan refinancing.

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How to apply for student loans

Learning how to plan student loans involves the entire financial aid process. It’s important to know what your options are for paying for college and how to maximize the sources that don’t require you to pay the money back.

Complete the FAFSA and CSS profile

The Free Application for Federal Student Aid (FAFSA) provides your school’s financial aid office with the information it needs to determine your eligibility for federal financial aid.

For federal student loans, the FAFSA is effectively the student loan application process. You won’t need to submit a separate application to find out if you qualify for federal loans and the amount you can borrow.

Also, plan to fill out a College Scholarship Service (CSS) profile application with the College Board. Your CSS profile is used by more than 400 colleges and scholarship programs to help you qualify for non-federal financial aid.

You’ll need to complete both the FAFSA and CSS profile application once every school year, and you’ll likely need financial information from your parents to determine your expected family contribution.

Assess your financial aid award letters

After you fill out the FAFSA, your school’s financial aid office will send you a financial aid award letter that spells out all of the federal financial aid you qualify for. Take your time to read the letter carefully to make sure you understand the terms.

Also, make sure you distinguish between the different types of federal aid that may be available to you including federal loans, scholarships, grants, and work-study programs.

Start with other types of financial aid

When it comes to paying for college, student loans are just one potential solution. However, you should consider borrowing money only after you’ve exhausted all of your other options. That includes:

  • Scholarships: Your school may offer scholarships based on your academic performance or for other specific reasons. You can also apply for scholarships from private organizations through websites like and Fastweb.
  • Grants: If you come from a low-income family or you’re considered an independent student, you may qualify for Pell grants from the federal government. Also, some schools and private organizations may offer grants at the local, state, and federal levels, so take the time to research your options.
  • Work-study program: The federal work-study program assists students in getting part-time jobs to help pay for school. Of course, it won’t cover all of your costs. Also, you may be able to find a job on your own that pays better, so keep your options open.

None of these programs are perfect, and they may not be enough to pay for college on their own, but they can allow you to reduce how much you have to borrow significantly.

Determine which federal student loans you want

As an undergraduate student, you may be able to get subsidized or unsubsidized student loans. With the former, which is reserved for students with financial need, the federal government pays interest as it accrues while you’re in school, during the six-month grace period after you leave school or fall below half-time enrollment and during future deferments.

In contrast, unsubsidized loans accrue interest during those times, then capitalize it by adding it to your principal balance once your repayment period begins.

If you qualify for unsubsidized student loans, those are your best bet to lower your costs of borrowing money. However, you may still get relatively low interest rates on subsidized loans.

Before you take any money, make sure you know what’s being offered and the potential benefits of each option.

Determine if private student loans are needed

In general, it’s best to avoid private student loans, if possible. That’s primarily because they’re harder to get as a college student without a cosigner, and you may end up paying more in interest.

But if the combined value of all of your other financial aid options, including federal loans, isn’t enough, private loans can help bridge the gap.

If you’re planning to apply for private student loans, take some time to shop around and compare multiple lenders before you settle on one. You can do this quickly with Purefy’s Compare Rates tool, which can provide rate quotes from multiple lenders in one place with no impact on your credit score.

This process of shopping around can help ensure you get the best deal available to you with the lowest rate and best terms — with or without a cosigner.

The bottom line

Becoming a knowledgeable student loan planner doesn’t happen overnight. The process can be daunting, especially if you’ve never dealt with student loans and other forms of financial aid in the past.

However, as you take the time to research all of your options, you’ll have a better chance of reducing how much money you have to borrow and how much you ultimately pay for that debt.

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