How to Apply for Student Loans – Both Federal and Private Student Loans

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By Kate Dore

March 13, 2020

While it may not be your first choice, applying for student loans can be essential for paying for college. In fact, more than two-thirds of 2019 college students graduated with a balance of $29,900 in student loan debt, according to our latest report. After exploring grant and scholarship options, you may be ready to apply for student loans. But first, you need to understand the process. Here’s what you need to know about how to apply for student loans.

Start by filling out the FAFSA 

Before applying for student loans, you’ll want to see if you qualify for federal student aid. You can do that by filling out the Free Application for Federal Student Aid—a.k.a. the FAFSA. The form is available every October, and you’ll have to resubmit it every year to requalify. 

Some of the information you will need includes: 

  • Social Security number or Alien Registration number
  • Your parents’ Social Security number(s) (dependents only)
  • Driver’s license
  • Federal tax returns, including non-taxable income
  • Your parents’ federal tax return(s) (dependents only)
  • Paperwork for all bank and investment account balances
  • Paperwork for your parents’ balances (dependents only)
  • Social Security number or Alien Registration number
  • List of up to 10 schools to receive your FAFSA results

You can review a sample FAFSA here before submitting a copy online. To speed up the process, you can use the IRS Data Retrieval Tool—which automatically fills in your tax information.  

How to apply for federal student loans

After filling out the FAFSA, you’ll receive a Student Aid Summary. This report covers your eligibility for federal student aid—along with your FAFSA answers. Schools use the Student Aid Summary to see if you’re eligible for federal student aid, so you’ll need to make sure the information is correct.

Next, you’ll start to receive financial aid award letters. Each school will offer a different financial aid package. These packages depend on the cost of tuition and how much FAFSA says you can afford to pay. These packages may include free aid, like scholarships and grants, federal student loans, work-study options, or a mix of everything.

Your financial aid package may include three types of federal student loans—Direct Subsidized, Direct Unsubsidized, or Direct PLUS loans. Direct Subsidized and Direct Unsubsidized loans are need-based. But parents and graduate students can qualify for Direct PLUS loans at any income level.      

How to apply for private student loans

After exhausting your federal student aid options, you may still need money to pay for school. Private student loans are one way to fill in the gap. You can apply for private student loans and private parent loans through private lenders, which are outside of the government.

Private lenders are looking for creditworthy borrowers. This means the lender will review your income, credit history, debt-to-income ratio, and length of employment. Most students—including 90% of undergraduates and two-thirds of graduate students—will need a cosigner to qualify. Also, you won’t need the FAFSA to apply for private student loans.

But before applying for private student loans, you should consider the risks. These loans don’t offer the same perks of protections as federal loans. The government won’t pay for your interest while you’re still in school—unlike federal Direct Subsidized Loans. And once you graduate from school, you won’t have access to federal income-driven repayment plans. 

If you can’t make your student loan payments, you may not have the option to postpone or lower payments through deferment or forbearance. Your private student loans won’t have an option for student loan forgiveness, either. This includes Public Service Loan Forgiveness and Teacher Loan Forgiveness, which are both federal programs. Federal loans also offer more generous deferment options in times of unemployment or economic hardship. 


How to choose private student loans

Shop around to compare lenders. Here are some items you should consider when choosing a private student loan:

  • Interest rate
  • Loan term (i.e. how long do you have to repay it)
  • Fees
  • Options for deferments or pausing payments
  • Reputation and reviews
  • Cosigner release (which can release your cosigner from the student loan down the road) Additional perks and benefits

Many private student loan lenders offer different types of perks. Here are some examples:

  • Sallie Mae offers free tutoring services to borrowers, cosigner release if you meet qualifications, flexible repayment terms up to 15 years and options to request to temporarily pause payments in times of financial difficulty. 
  • College Ave offers flexible loan terms up to 15 years, possible extensions for grace period or forbearance options, a cosigner release and parent loans get to control spending.
  • LendKey offers a chance to put loans in forbearance during economic hardship, cosigner release, and a 0.25% interest rate reduction if you enroll in automatic payments. 
  • Discover doesn’t charge any fees and gives a one-time cash reward for good grades (above a 3.0 grade point average). 

Credible is a great tool where you could compare multiple private lenders at once for free.

Be proactive with student loans

Applying for student loans is a major decision—and one you shouldn’t rush through. Before starting the process, jot down the key deadlines. If you begin early enough, you can avoid scrambling to finish everything on time. The most important deadlines are for FAFSA. If you miss them, you won’t be eligible for federal student aid, including federal student loans, for a year.   

When you need more money, you may consider applying for private student loans. But you need to understand the risks—as well as the long-term impact—it may have on your finances. You should always weigh the pros and cons before signing the dotted line. 

At, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.



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