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Applying for a student loan can be stressful — you have to supply a lot of documentation, and you need to keep track of application deadlines. But by getting organized and learning when to apply for student loans, you can make the process easier on yourself.
You can apply for federal student loans the year before starting school. Applying early will ensure that you don’t miss the federal deadline. But don’t panic if you miss it — you can apply for a private loan any time, and a grant or scholarship may still be available.
Credible makes it easy to compare private student loan rates from multiple lenders.
Federal student loan deadlines
You should always consider federal student loans first because they come with income-driven repayment plans, grace periods, and student loan forgiveness options.
To get a federal loan, the first step is completing and submitting the Free Application for Federal Student Aid, or FAFSA.
The FAFSA opens Oct. 1 for the following academic year, and the final deadline is June 30 every year. For the 2021-22 academic year, the opening date is Oct.1, 2021, and the federal deadline is June 30, 2022.
Since some federal aid is available on a first-come-first-serve basis, you should apply as early as possible.
In addition, each state has its own deadline for completing the FAFSA, and these may be earlier than the federal deadline. To see how long you have to apply for federal aid in your state, review this list of state deadlines.
The application deadline may also be different based on the college you want to attend. Contact your school’s financial aid office to make sure you don’t miss it.
How to apply for federal student loans
You can apply for federal student loans by taking the following steps.
Complete and submit the FAFSA. To complete this step, you have to provide personal information and financial documents, including your name, Social Security number, tax returns, bank statements, and W-2s. If you’re a dependent student, you’ll also be required to provide similar information for the person who claims you on their taxes.
Review your Student Aid Report. Afterward, you’ll be given a SAR, a report summarizing the information you provided in your application. It also includes your Expected Family Contribution. Your school uses this measurement to determine whether you qualify for need-based aid (like a Pell Grant), and how much.
Review your financial aid award letter. Based on your FAFSA, the schools you listed on your application will send you an award letter outlining what type of federal aid (loans, grants, etc.) you’re eligible to receive.
Accept a loan offer. Once you receive your financial aid offer, you can choose to accept all or a portion of any loan amount offered.
Sign your Master Promissory Note. Your MPN is a document that outlines your loan repayment terms, interest rate, and fees (if any). Read through it carefully — signing it means you agree to be legally responsible for repaying the loan.
Complete entrance counseling. To complete the process, you must complete a counseling session that covers the terms of your loan and your rights and responsibilities as a borrower.
What types of federal student loans are available?
When you apply for federal loans, you can choose from three types of loans. Each one has different eligibility requirements.
Direct Subsidized Loans — Undergraduate students who demonstrate financial need may qualify for this type of federal loan. While you’re in school, and for the first six months after you graduate, the U.S. Department of Education covers your loan interest.
Direct Unsubsidized Loans — This type of loan is available to undergraduate, graduate, and professional students. Unlike a Direct Subsidized Loan, your eligibility isn’t based on financial need, and you must pay the interest, which starts accruing immediately after your loan funds are issued.
Direct PLUS Loans — Direct PLUS Loans are for graduate and professional students, and parents who have dependent undergraduate children. To qualify, you must pass a credit check. If you don’t meet the credit requirements, you can apply with an endorser — someone who agrees to repay your loan if you’re unable to make payments.
Once you graduate, drop below half-time enrollment, or drop out, you’re also eligible for Direct Consolidation Loans. If you have multiple federal loans and you’re having trouble keeping up with several loan payments, taking out a Direct Consolidation Loan can help you combine all your qualifying federal loans into one loan with a single loan payment. Note that the interest rate you receive with a Direct Consolidation Loan will be an average of the rates on all your existing federal loans, so it may or may not be lower.
How much can I borrow in federal student loans?
The maximum amount you can borrow with a federal loan depends on what type of loan you’re applying for, whether you’re a student (undergraduate, graduate, or professional) or parent, and the school you attend.
Direct Subsidized Loans — $23,000 for all undergraduate students; $65,500 for graduate students
Direct Unsubsidized Loans — $31,000 for dependent undergraduate students; $57,000 for independent undergraduate students; $138,500 for graduate or professional students
Direct PLUS Loans — Your school’s cost of attendance minus any student aid you receive
Your school’s financial aid office will determine how much you can borrow in federal loans based on factors such as cost of attendance and any student aid you receive.
If you need to borrow more than the maximum federal loan amounts, you can compare private student loan rates with Credible.
What should I consider before taking out federal student loans?
Taking out a federal loan is a serious commitment that can impact your finances for a long time. Here are some things you should consider before using this financing option.
Only borrow what you need. While it may be tempting to borrow more than you need, consider the long-term consequences. When you finish school, repaying a larger loan amount means having less money to contribute to other important financial goals, like retirement.
Be sure to understand your loan terms. Before you take out a loan, make sure you understand important terms, such as how you can use your funds, what your interest rate is, any late fees, and how to cancel all or part of your loan before your funds are sent to your school. To familiarize yourself with federal loan terms, read a sample promissory note.
Keep track of your repayment schedule. Depending on the type of federal loan you apply for, being enrolled at least half-time automatically qualifies you for a six-month grace period. During this time, you don’t have to repay your loans. When this grace period ends, your repayment period will begin.
Make payments on time. When your repayment period begins, pay your student loan bill on time to avoid late charges. If your loan becomes 90 days past due, your loan servicer will report it to the three major credit bureaus: Equifax, Experian, and TransUnion. This can have serious consequences on your credit.
What if I miss the federal student loan deadline?
If you miss the federal student loan deadline, you might worry that you won’t be able to pay for school. But that may not be the case. It simply means you’ll have to explore alternative options to cover your tuition or education-related expenses.
For example, you could ask your school’s financial aid office if there are scholarships, grants, or work-study programs available. Plus, you can apply for private student loans at any time.
Private student loan deadlines
Before you consider private loans, exhaust your federal student loan options. Once you’ve done that, you can apply for private loans to help bridge the gap if you don’t have enough in federal student loans to cover your education costs. When you apply, you’ll likely need a cosigner if you don’t meet a lender’s minimum credit score and income requirements.
Unlike federal loans, private lenders don’t have an application deadline, so you can apply any time you wish. But since it takes time for a lender to issue your loan funds, it’s a good idea to apply as early as possible. Although the application can be completed in minutes, the loan certification process can take up to 10 days. Once you’re certified, a lender can take up to two months to send your funds directly to your school.
How to apply for private student loans
Before you select a loan from a private lender, it’s important to shop around and compare loan options to find the best deal. Here are some steps you should take when applying for a private loan.
Gather required documents and information. When you apply for private student loans, you’ll be asked to provide your personal and school information, which may include tax returns, W-2s, and pay stubs. If you apply with a cosigner, they’ll likely have to provide the same information.
Get a cosigner (if needed). If you don’t meet a lender’s minimum income or credit score requirements, consider applying with a cosigner who has good credit and a stable income. Attaching a cosigner to the loan may also help you qualify for a lower interest rate.
Apply with a lender. Once you find a lender with a loan option that matches your borrowing needs, complete a loan application.
Wait for your loan decision. After you submit your application, a lender will spend some time reviewing it, and will contact your school to certify that you’re eligible to receive a private student loan.
Review and sign the promissory note. If you’re approved, a lender will send you a promissory note that includes important information about your loan, such as your interest rate, repayment options, and any restrictions on the funds. Review it carefully before signing.
Receive funding. After you sign your loan agreement, the lender will send your funds directly to your school.
If you’re ready to shop around for private student loans, check out Credible to compare rates from various lenders.
How much can I borrow in private student loans?
The maximum amount you can borrow with a private student loan varies based on the lender you apply with and your credit health. That said, some lenders offer higher loan maximums than federal student loans.
What should I consider before taking out private student loans?
Before taking out a private loan, consider the drawbacks.
No student loan forgiveness option — With private loans, there’s no forgiveness program that allows you to waive all or a portion of your student debt after making a certain number of payments. This means you’ll have to repay the full amount you borrow.
No income-driven repayment plans — Since private lenders don’t offer income-based repayment options, you can’t decrease your monthly payments if your income drops.
May not come with forbearance or deferment options — Unlike federal loans, your options for temporarily pausing your monthly private student loan payments vary according to the lender. If you want the ability to pause payments if you hit a rough patch financially, contact the lender before applying to find out what options are available.
No interest subsidy option — When you take out a private student loan, interest starts accumulating on the loan after your loan funds are sent to your school, and your interest isn’t subsidized.
Cosigner may be required — If you don’t meet a lender’s eligibility requirements on your own, you’ll have to find a cosigner to help you qualify. This can be a difficult task, given that the person who cosigns will be responsible for repaying your loan if you’re unable to pay it.
No matter when you apply for student loans, you have options. Don’t stress if you missed the federal deadlines — there are alternatives to help you pay for school.
About the author: Jerry Brown is a personal finance writer and owner of the Peerless Money Mentor blog. He has written for major publications such as Forbes Advisor, Business Insider, and Rocket Mortgage. Jerry was also nominated for the Plutus Award for Best Social Media for Personal Finance. He has a bachelor’s in business administration and a bachelor’s in business management from the University of New Orleans.
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