Student Loan Application Guide for College Students

Applying for a student loan can seem overwhelming, but it doesn't have to be. In the US, over 44 million borrowers collectively owe more than $1.7 trillion in student loan debt.

To get started, you'll need to choose between federal and private student loans. Federal student loans offer more benefits, such as income-driven repayment plans and loan forgiveness options. Private student loans, on the other hand, often have more flexible repayment terms.

The Free Application for Federal Student Aid (FAFSA) is the first step in the student loan application process. You'll need to submit the FAFSA by the deadline to be considered for federal student loans.

Each year, the FAFSA must be resubmitted to determine your eligibility for federal student loans.

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You can complete the FAFSA online at the Federal Student Aid website. To save time, round up your account information before you start working on it.

The FAFSA asks questions about the student's and parents' income, investments, and other relevant matters. It will calculate your Student Aid Index (SAI), which is the amount of money the government believes you should be able to pay for college for the coming school year out of your financial resources.

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You must complete the FAFSA when you first apply for aid and each year after that if you hope to continue receiving aid. The financial aid offices at the colleges you apply to will use the information from your FAFSA to determine how much aid to make available to you.

A college's cost of attendance (COA) includes tuition, mandatory fees, room and board, and other expenses. These figures can be found on most colleges' websites.

You can complete the FAFSA online and it's free to do so. You'll need to create a Federal Student Aid ID, which you then use to access your application in the future.

You'll receive a Student Aid Report, which is a summary of your financial information and provides your Expected Family Contribution (EFC).

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You'll receive award letters from each college, detailing the financial aid they're offering. These letters can vary greatly from school to school.

Each college's aid package may include federal Pell Grants, paid work-study, and loans. Grants don't need to be repaid, except in rare instances, and are intended for students with exceptional financial need.

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To compare offers, look at the type and amount of loans each school offers. Subsidized loans, like grants, are meant for students with exceptional financial need, and the government will cover the interest while you're in school and for six months after graduation.

Direct subsidized loans have a limit of $3,500 for first-year undergraduates, and the total amount you can borrow is also limited throughout your college career.

Private student loans often have variable interest rates and lack flexible repayment options available for federal loans.

Here's a breakdown of the types of federal financial aid you may be eligible for:

By comparing these offers, you can make an informed decision about which college is the best fit for you and your financial situation.

The first step in applying for student loans is to fill out the government's Free Application for Federal Student Aid (FAFSA). You can complete the FAFSA online at the Federal Student Aid website.

It's essential to round up your account information before starting the application to save time. The FAFSA will calculate your Student Aid Index (SAI), which is the amount of money the government believes you should be able to pay for college out of your financial resources.

You must complete the FAFSA when you first apply for aid and each year after that if you hope to continue receiving aid. The financial aid offices at the colleges you apply to will use the information from your FAFSA to determine how much aid to make available to you.

You can file the FAFSA as early as October 1 of the year before you enter college, and it's a good idea to file as soon as possible to maximize your chances of getting the most aid. Some financial aid is awarded on a first-come, first-served basis.

Even if you don't think you'll qualify for need-based aid, it's still worth filling out the FAFSA because federal aid doesn't have an income cut-off. The FAFSA is also the key to federal work-study funds and some scholarships or grants offered directly from your school.

You'll need to file a FAFSA for every year you attend college, but once a year is enough – you don't have to apply every semester.

There are various types of financial aid available to help fund your college education. Scholarships, for example, are merit-based and do not need to be repaid, unlike loans. You can search for available scholarships at FastWeb and apply for a wide variety of scholarship types from many different sources.

Grants, on the other hand, are typically based on need rather than merit and do not need to be repaid. You can qualify for grants from the federal government, your school, or other places. Some examples of grants include the Pell Grant and the Federal Supplemental Education Opportunity Grant.

Work-study programs are another option, where you work at a part-time job related to your area of study and use the money you earn to pay for a portion of your tuition and expenses. By utilizing these forms of financial aid, you can minimize how much you need to borrow in student loans.

Here are some examples of financial aid sources:

To borrow money under federal loan programs, you'll need to complete and submit the Free Application for Federal Student Aid (FAFSA).

The FAFSA is a crucial step in determining your eligibility for federal loans, and it requires you to answer questions about your income, investments, and other relevant matters.

You'll need to provide information about your student's and parents' income and investments, which will be used to calculate the Student Aid Index (SAI).

The FAFSA uses the SAI to determine how much assistance you're eligible to receive, making it an essential part of the borrowing process.

By submitting the FAFSA, you'll be able to access federal loan programs and start the process of borrowing money for your education.

Private student loans can help fill the gap in funding for school expenses beyond what's available from the federal government.

Private student loans are offered by banks or financial institutions, and interest rates can vary from lender to lender.

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You'll likely need a cosigner to qualify for a private loan as an undergraduate student, and it's usually a parent or relative with a stable income and good credit.

Having a cosigner decreases the risk to the lender, making it more likely you'll get approved for a loan.

Private student loans often require you to start making payments while you're still in school, depending on the loan repayment plan you choose.

You can now separate joint consolidation loans, a move that opens up eligibility for certain federal student loan forgiveness programs. This is a game-changer for borrowers who thought they'd missed the deadline.

Starting on September 30, 2024, Direct Joint Consolidation Loan borrowers can request a separation by submitting a Combined Application to Separate a Joint Consolidation Loan and Direct Consolidation Loan Promissory Note. This application is available to all DL and FFEL borrowers as a downloadable paper application.

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Separating the loans will give borrowers a one-time IDR account adjustment, and they'll also be credited with any earned progress toward Public Service Loan Forgiveness (PSLF) forgiveness if they meet all other PSLF requirements. This is a huge benefit for those who've been working towards PSLF.

Federal Family Education Loan (FFEL) Program Joint Consolidation Loan borrowers who take the necessary steps to separate their loans will receive the benefit of the one-time IDR account adjustment even if the application doesn't become available until after the adjustment occurs in 2024. The adjustment will be applied retroactively for both borrowers when both apply to separate their joint consolidation loan.

Borrowers who properly certified their qualifying public service employment will also receive student loan forgiveness credit through PSLF. This is a great opportunity for those who've been working in public service but thought they'd missed the deadline.

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Student loan repayment can be a daunting task, but understanding the process beforehand can make a huge difference. You'll want to grasp the loan repayment terms, including the Master Promissory Note for federal student loans, which confirms your agreement to pay back the loan, interest, and fees.

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Borrowers who don't repay their student loans may face severe consequences, such as wage garnishment, suspension of professional licenses, and a lower credit score. However, federal borrowers may be eligible for flexible payment plans or forbearance during unemployment.

Private student loans have different rules, and you may not have the option to postpone or lower payments through deferment or forbearance. You also won't have the option for forgiveness through programs like Public Service Loan Forgiveness.

To avoid scrambling to finish everything on time, make sure you're aware of key deadlines, such as filing the FAFSA. Missing this deadline can result in not being eligible for federal student aid, including federal student loans, for a year.

Here are some important facts to keep in mind about student loan repayment:

When applying for a student loan, you have two primary options: federal and private loans. Federal loans are issued directly by the U.S. government, while private loans come from private financial institutions.

Federal loans typically offer lower interest rates and more favorable terms than private loans. They also provide flexible repayment plans and loan forgiveness options. This makes federal loans the better choice for most students.

To be eligible for federal student loans, you need to be an undergraduate student, graduate student, or the parent of an undergraduate student. The borrowing limits for federal loans vary depending on your dependency status and year in college.

Here are the borrowing limits for federal student loans:

$9,500 – $12,500 per year for independent studentsAlso known as the Federal Stafford Loan. Not dependent on financial need.

Depending student aggregate limit of $31,000.Independent student aggregate limit of $57,500.Federal Direct Loan – unsubsidizedGraduate student$20,500 per yearAggregate loan limit of $138,500. The graduate aggregate limit includes all federal loans received for undergraduate study.Federal Direct PLUSGraduate and professional students, or parents of undergradsEqual to cost of attendance, minus other aid. No aggregate loan limits.Federal unsubsidized loans have a much lower origination fee than Grad PLUS, but the maximum borrowing limit for graduate school is $138,500.

As you can see, the borrowing limits vary depending on your student status and the type of loan you're applying for. It's essential to understand these limits and choose the loan that best suits your needs.

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