Applying for a student loan generally works one of two ways. Students interested in borrowing a federal student loan can apply by filling out and submitting the Free Application for Federal Student Aid (FAFSA®) as early as the October before the school year. The federal deadline for filling out the FAFSA is typically June of the school year, though states and individual colleges may have their own deadlines.
Private student loans run independently of the federal loan program. Students are able to apply for a private student loan at any time during the school year.
Understanding The Difference Between Private and Federal Student Loans
There are a few important differences between federal and private student loans that it’s important to understand.
For federal student loans, The U.S. Department of Education runs the William D. Ford Federal Direct Loan Program. The program has four types of loans to consider:
• Direct Subsidized Loans: for undergraduates who demonstrate financial need.
• Direct Unsubsidized Loans: for undergraduate, graduate, and professional students. Eligibility is not based on financial need.
• Direct PLUS Loans: made only to graduate or professional students, or to the parents of dependent undergraduate students. No financial need is required for Direct PLUS Loans, but a credit check is. If you’re applying yourself and your credit isn’t great, you may need to meet some additional requirements.
• Direct Consolidation Loans: these allow you to consolidate all of your federal student loans into one single loan, which is managed by a single loan servicer.
Private student loans are offered through private lenders. As a part of the application process, lenders will generally evaluate a borrower’s personal financial information and history, including their credit score, among other factors. Private loans don’t have to follow the same government regulations as federal loans, and they don’t offer the same borrower benefits or protections — like income-driven repayment plans or Public Service Loan Forgiveness. For this reason, private loans are generally considered an option only after other sources of funding have been exhausted.
💡 Quick Tip: SoFi offers low fixed- or variable-interest rates. So you can get a private student loan that fits your budget.
How to Apply for a Federal Student Loan
The first step in applying for a federal student loan is to complete and submit a form called the Free Application for Federal Student Aid (FAFSA®). As mentioned, the FAFSA is typically available starting in October of the year before school starts. The FAFSA will remain open until June 30th of the academic year. So for example, for the 2023-2024 school year, the FAFSA application opened on October 1, 2022, and will close on June 30, 2024.
While there is a large window to fill out the FAFSA, there may be college or state deadlines that fall before the federal deadline. Additionally, some aid is awarded on a first-come first-served basis, so it can be beneficial to fill out the FAFSA as early as possible.
Once the FAFSA is submitted, your school will review and determine your financial aid offer, which may include federal student loans, scholarships, grants, and work-study.
Before you receive any federal student loan that you apply for, you’ll be required to complete entrance counseling , which is designed to help you understand your obligation to repay the loan. You’ll also be asked to sign a Master Promissory Note, which says you officially agree to the terms of the loan.
How To Apply For Private Student Loans
You may want to consider a private student loan after you’ve explored your options for financial aid, grants, scholarships, and federal student loans. Private lenders typically have their own qualification criteria, but you may be eligible to apply for a private student loan if you’re an undergraduate or graduate student, pursuing a certificate, a student of the dental, medical, or other health professions, studying to take the bar exam, or relocating for medical or dental residencies.
Parents may also be eligible to take out private loans to pay for their child’s education.
Private student loans can usually be used for any type of expenses related to your education, including tuition, room and board, fees, books, supplies, equipment, computers and electronics related to your schoolwork, transportation, and personal needs at school.
This list details some of the information you may need when applying for a private school loan. Note that applications will vary by lender so you may not need everything here:
• The applicant’s name, address, phone number and email address
• Date of birth
• Social security number
• Employer’s name
• Proof of income (a recent pay stub)
• Bank account balances
• Monthly housing payment (rent/mortgage)
• School name
• Estimated cost of attendance
• Your current student status (freshman, full time, for example)
• Other financial aid you’ve received so far
• Anticipated graduation date
• References
• Student loan cosigner and cosigner’s information, if applicable
Private student loan lenders may let you submit your loan application online, and some may even be able to give you an answer the same day. Of course, underwriting timeframes and documentation requirements can vary greatly by lender.
Private student loans are granted based on your income, credit history, and credit score, among other factors. That means the lender looks at your history of borrowing money and paying it back. This history also determines your loan’s interest rate.
If your credit history is unestablished or less than stellar, applicants may consider adding a cosigner to the loan: that person will be responsible for paying it if you are unable to do so.
Interest rates on private student loans can be fixed-rate or variable interest rate. Fixed rates do not change over the life of the loan. Variable interest rates could increase or decrease due to the financial index that determines the variable rate, or other factors as determined by your lender. Your total monthly payment could vary based on the loan’s current interest rate.
Know that not all private student loans are exactly alike. If you’re interested in borrowing a private student loan, consider shopping around and researching your options. The Consumer Financial Protection Bureau and the U.S. Department of Education are two student loan resources that may be useful.
💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate
Beyond Student Loans: Other Ways to Pay for College
Students can explore other options to pay for college, including scholarships, work-study, grants, and more.
Scholarships and Grants
Scholarships and grants are types of aid that don’t need to be repaid. Grants are generally awarded based on financial need and may be awarded by your school, the government, or another organization such as a nonprofit.
Scholarships may be awarded based on financial need or merit.
Work-Study
The federal work-study program offers part-time employment to undergraduate students who demonstrate financial need. Eligibility for work-study is determined by the FAFSA. Some schools may match students to a work-study job, while other schools may require that students apply for positions.
Part-Time Job
Working part-time can be another way to earn extra cash to pay for college expenses. Students could look into jobs such as tutoring, babysitting, or working at a local business in their college town.
The Takeaway
To get a federal student loan, students fill out the FAFSA in order to see which type and how much aid they may be eligible for. The application process for private student loans may vary by lender. Private student loans can help students pay for college if they don’t get enough federal aid.
Students can also explore other options to help pay for college, such as scholarships and grants and work-study or another part-time job.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
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SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
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