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It is increasingly common for people to use student loans to pay for their education. In 2020, 55% of students who graduated with a four-year degree graduated with student loan debt, according to a College Board Survey.
If you think of use student loans to pay for education, it is important to understand how they work and what their requirements are before applying. Keep reading to learn how to apply for a student loan, requirements for different types of loans, and when you should apply to ensure your funding is lined up on time.
Credible allows you compare private student loan rates from multiple lenders, all in one place.
If you’re considering using federal student loans to help pay for your college education, here’s how to get started.
1. Complete the FAFSA
The Free Federal Student Aid Application (FAFSA) is the form you will use to apply for federal student loans, as well as other types of federal aid. On this application, you will provide information about your family’s financial situation. The information you provide is used to determine what assistance and to what extent you are entitled.
To complete the FAFSA, you will need:
- Your social security number or tax identification number
- Your federal tax returns and W-2 forms
- Your bank statement and investment records
- Your untaxed income statements
If you are an independent student, you will only need to provide this information for yourself. But if you are a dependent student, which is the case for most undergraduate students, you will also need to provide this information to your parents.
2. Decide which federal loans to accept
Once you have completed your FAFSA, you will receive a message from your school’s financial aid office about student loans for which you are eligible. The amount you are eligible for is based on two important factors: the expected contribution from your family and the cost of attending the college you are heading to.
Depending on your situation, you can choose from several types of loans. If you are offered subsidized loans, you need to use them first. They’re only available to undergraduate students with financial need, but the U.S. Department of Education pays interest accrued while you’re in school at least half-time, during adjournment periods ( suspended payments) and up to six months after you graduate.
Even if you do not qualify for subsidized loans, you will still qualify for unsubsidized loans. Unlike subsidized loans, you are responsible for interest accrued during your studies, but you do not have to demonstrate financial need to qualify. Unsubsidized loans are available for undergraduate and graduate students.
3. Consider taking out private student loans
Depending on your situation, federal student loans might be enough to fund your college education. But there is a limit the amount you can borrow.
For subsidized loans, dependent students can borrow up to $5,500 for their first year of study. For the second year, the limit increases to $6,500. For the third year and beyond, dependent students can borrow up to $7,500 per year.
There is also an overall limit – dependent undergraduate borrowers cannot qualify for more than $31,000 in federal student loans.
If your education costs more than you can borrow in federal loans, you may need to turn to private loans to make up the difference. These loans have higher limits and, depending on your credit score, you can usually borrow up to 100% of your participation fee.
If you need private student loans, visit Credible for compare private student loan rates from various lenders in minutes.
The requirements for applying for a student loan vary depending on whether you are applying for a federal or private loan.
Federal Student Loan Requirements
To qualify for federal student loans, you will need to meet the following conditions:
- Be a US citizen or eligible non-citizen
- Have a valid social security number
- Enroll or be accepted into a qualifying program
- Be enrolled full-time or part-time
- Maintain satisfactory academic progress
- Complete the FAFSA
- Have a high school diploma or equivalent
Private Student Loan Requirements
The requirements for private loans are not so cut and dry, since each lender can set their own. But here are some requirements you’ll likely encounter with most private lenders:
Generally speaking, you should complete the FAFSA as soon as possible. Application opens October 1 for the following school year, with the deadline for completion at the end of June. Some types of financial aid are limited, so applying early will increase your chances of getting them. Also, if you don’t apply in time to receive your aid before the start of the school year, you may need to find other funding arrangements in the meantime.
Here are the FAFSA deadlines for the 2022-23 academic year:
- The FAFSA must be submitted by 11:59 p.m. Central Time on June 30, 2023.
- Corrections or updates must be submitted by 11:59 p.m. Central Time on September 10, 2023.
In addition to federal deadlines, your college may have its own deadline. Each state also has its own FAFSA deadlines, which you can check on the StudentAid.gov website.
When it comes to applying for private student loans, there is no official deadline. But you will want to apply in time to receive your aid before your tuition is due.
Depending on your lender and your credit situation, you could be approved for your private student loan and receive your money quickly. But in other situations, it can take weeks or even months to get your funds. For this reason, it is best to apply at least two months before you need the money.
With Credible, you can compare private student loan rates without affecting your credit.