Getting a loan from the federal government is the best choice for the majority of college students who need to borrow money. You may want to consider private student loans if you are a graduate student or a parent trying to help your child get through school.
Understanding how to get a student loan is important for every student. In this article, we will show you how to get a student loan.
How to Get a Student Loan
Learning how to get a loan can be difficult for many people. The type of loan depends on your situation. The steps to get both federal and private student loans are:
Federal Student Loan
Federal student loans are offered through your school as financial aid. Federal loans are funded by the U.S. Department of Education and offer better benefits than private school loans.
Federal loans have access to income-driven repayment plans and student loan forgiveness programs. Additionally, you will have deferment and forbearance options.
Steps to apply for federal student loans are:
1. Fill out the FAFSA: The FAFSA is known as the Free Application for Federal Student Aid. You may share financial information about yourself and your family. This information will help your school’s financial aid office determine how much aid you qualify for. The aid is in the form of scholarships, student loans, work-study programs, and grants. The FAFSA is available for all students on October 1, but the closing date can vary from state to state.
2. Review your financial aid award letters: If you are a fresher, you may apply to multiple colleges. If that is the case, you may get aid award letters from colleges to which you have applied before. Review and compare every aid offer and choose which school to attend.
3. Reply to your aid offer: You will get the details on how to respond to your aid award on your award letter. Keep in mind that the offer’s student loan part is the maximum you qualify for, but that doesn’t mean you have to accept the full amount. You may also qualify for subsidized student loans, which offer a low interest rate.
4. Sign the loan agreement: Once you are clear about which loan is best for you, accept the loan offer and complete the process by signing it electronically.
5. Complete entrance counselling: If you are receiving a direct loan for the first time, you have to attend a 30-minute online entrance counselling session that is conducted by the Department of Education.
Considerations for Federal Student Loans
You can fill out the FAFSA with bad credit or no credit history because most federal student loans don’t require a credit check. If you’re a graduate or professional student, then you’ll need a credit check. Even then, the government will only look at serious issues such as declaring bankruptcy and defaulting on a loan.
The interest rate, repayment duration, and loan fee are standardized for federal student loans, which means anyone who qualifies for a federal student loan will get the same terms for a specific type of federal loan.
The interest rate of undergraduate loans, such as subsidized and unsubsidized, is fixed at 4.99%.
Private Student Loan
Private loans are generally less valuable than federal loans because they don’t offer forgiveness programs. Private student loans have a high interest rate and fewer benefits than federal student loans.
But if you have reached your yearly and aggregate federal loan limits, or if you are a graduate student or parent, they might be worth considering, especially if you have excellent credit. Here’s how to apply for a private student loan:
1. Check your credit: Most private student loan companies require a credit score of 600 or higher. You can check your credit score for free online, and you will know where your credit stands. If your credit score is very low, then you can consider using a cosigner, which can be a family member or close friend. Keep in mind that your cosigner should have a high credit score.
2. Get prequalified with multiple lenders: Prequalification will give you an idea of whether you will qualify for a loan or not. Many private student loan companies offer a prequalification process without affecting your credit. You will get an estimate of the interest rate and term for the loan you applied for.
3. Choose a lender and apply: Once you choose a lender that offers the best terms, you can apply online on the lender’s website. The lender will require information such as your school, your degree program, and the amount of money you need to borrow. If you have a cosigner, you also need to provide personal information about the cosigner.
4. Review and accept the loan offer: When your loan is approved, the lender will provide you with a loan based on your credit. The terms and interest rate may not be the same as those you received during prequalification. If you agree with the loan terms and sign the loan contract, the lender will provide money to your school directly.
Considerations for Private Student Loans
The terms and options of a loan can vary notably depending on the lender. If you don’t have or don’t want a family member or friend to cosign your loan, there are workers who are willing to work with independent students. But your interest rate can be higher if you don’t have a good credit score.
After considering interest rates and repayment terms, look up cosigner release policies, customer support, and other features that are important to you.
Alternatives to Student Loans
Student loans are a good way to get through school; reducing the amount that you want to borrow can make a big difference for your financial journey. Here are some ways to pay for college without taking out a loan:
Scholarships: Check out the school or college website to see if there are any scholarships available based on athletic, academic, or other reasons that you’re eligible for. Additionally, search for private scholarships on websites like Fastweb and Scholarships.com.
Part-time work: You can find on-campus or off-campus part-time jobs if your schedule allows it. It will help you pay your tuition fees and other expenses. Even if you work a few hours a week, it can help you save thousands of dollars in your college career.
Grants: Grants are a good idea for students who have financial need, so filling out the FAFSA can be beneficial for you. You can find grants through databases of private scholarships.
Keep in mind that choosing a less expensive school and finding ways to keep your costs down while you’re in college can help you avoid relying on student loans.
Build Credit for Future Borrowing Needs
College is the best time to learn how to get a student loan and build your credit history. It can help you get financing after graduation to buy a car or a home.
While student loans can help you build credit, they will not affect it until you start making payments. You can build credit by using student credit loans. If you pay your bill on time and keep your balance low, you can save on interest charges.
Monitoring your credit score can help you track issues as they arise when you work to build credit.
Frequently Asked Questions
What makes you qualify for a student loan?
The basic requirements for a student loan are that you have financial need, be enrolled in an eligible degree program at your school or college, and be a U.S. citizen or eligible noncitizen.
Is it hard to get a student loan?
No, getting a student loan is not a difficult task. If you learn how to get a student loan, it will be a straightforward process for you. You can apply for a student loan through a private lender or the federal government, and the funds will be transferred to your school.
Can I get a student loan on my own?
Yes, you can get a student loan with a parent. Private student loans require a cosigner, and the cosigner can be a close friend or someone you trust. But keep in mind that your cosigner should have a good or high credit score; a cosigner’s low credit score won’t help you qualify for a personal loan.
Do I qualify for student loan money?
If you are a regular student in an eligible degree or certificate program and are qualified for that education, and your academic record is clear, you may be able to qualify for student loan money.