As an independent, transparent marketplace for student loans, Credible helps borrowers understand all of their student loan options.
The day has finally come – you have been accepted to college and cannot wait to start working on your degree. The only thing that stands between you and your future is figuring out how you will pay for the hefty price tag that comes with a college education. Scholarships and savings are initially helpful, but they only go so far when the typical college degree costs over $30,000.
You may already know how much you will need from your financial aid letter, but understanding what your options are can help put your mind at ease. Here is what you really need to know about applying for student loans.
Fill Out the FASFA
Every student should fill out the FASFA, which stands for Free Application for Federal Student Aid. Even if you do not think you will be eligible for most financial aid, you might be surprised to find that you are eligible for reward money or federal loans. Even if you are not eligible for scholarships or loans due to financial need, you still might be offered a direct unsubsidized loan through your school. It is important to fill out the application as early as possible to maximize your funding. Also, try talking with your school’s financial aid department for a better idea on what type of loans you are eligible for.
Federal Versus Private Student Loans
One of the first steps to take to secure a student loan is to decide which type of loan would be better for you. Students can become eligible for a federal loan after submitting their FASFA. Federal loans are federally backed loans that are for students demonstrating a financial need. These federal options include Perkins loans and Subsidized loans. However, unsubsidized Stafford Loans are federal loans that do not need proof of financial need, but are limited to how much you can take out each year. Federal loans are also eligible for loan forgiveness through special programs after graduation.
Private student loans are available for individuals who need more money for college expenses. Typically a private student loan is received through a financial establishment, such as bank or a community lender. Interest rates can be higher with private loans, but variable rate private loans currently offer very low interest rates. Usually private student loans also require good credit and a cosigner. It is important to remember that private loans are not usually eligible for loan forgiveness programs or federal income-driven repayment plans.
Apply for a Private Loan
If a federal loan does not cover all of your college needs, then you will need to fill in the gaps with a private loan. You will need to estimate how much you will need to borrow for full college costs and have a cosigner available. Even if you have excellent credit, you may not qualify for a student loan without a cosigner due to a lack of steady income. Having a cosigner greatly increases your chances for acceptance. You will also want to have the following information ready when you apply for a private loan:
- Your school’s information, such as name, address, phone number, and your major
- Your social Security number
- Current address
- Gross income information for both you and cosigner
- Residence information, including whether you own or rent, and the monthly housing payment
- Requested loan amount
Knowing how to apply to student loans can help you get the funding you need for your degree. Remember to be smart about your student loan and to read and understand all of the terms and expectations before signing.
If you want to explore your private loan options or refinance your existing student debt, visit Credible.