How to Apply for a Student Loan

How to Apply for a Student Loan

One of the first things that most students look into when it comes to college is how they are going to finance it. It is unfortunate that some decisions have to revolve around money, but that is just the way that it is.

Because of the rising cost of tuition in the past decade, finance and college is a huge burden and problem to deal with.

If you did not receive a large amount of aid from FAFSA, or you did not receive a lot of scholarships and grants, then you are going to have to take out student loans.

This is totally normal and most students do take out several student loans over the course of their college career.

The goal is to take out as small of an amount as possible.

The way that you can do this is to make sure that you apply for FAFSA.

  • Apply to all the scholarships that you can find
  • Check on grants to your high school and county
  • You should apply for all scholarships and grants through your actual college or university

After all of this is said and done, is when you are going to apply for student loans. 

This is going to be the first financial decision that is large that you were going to make in your lifetime.

If you have to get a loan for your very first semester of college, then you are probably 17 or 18 years old. You will need thousands of dollars in loans to pay for college.

This is a huge decision and something that you may not know much about. You can obviously ask your parents, family, and other students about how to pay for college.

It will also be important that you do your own research to make sure that you know what you’re getting yourself into financially.

You need to understand the rules you are going to need to follow for each loan or scholarship.

College is something that you need to get so you can get a great job.

If the career that you are wanting requires a college degree, then you are going to need a degree no matter how you get it financially.

If a loan is something that you need after everything else that you tried, then that is what you’ll have to do.

Never let money stand in the way of getting you to your dream career. I’m going to talk a little bit about student loans and the rules that you should know about them.

How do you qualify for student loans?

Student loans are a very common type of loan taken in the United States. The banks or lenders that you are getting these loans from are very aware that you may not have any credit.

With little credit many lenders may require a cosigner.

If you’re getting a loan through FAFSA, or any sort of federal loan, you will not need a cosigner.

There are only a few requirements that most student loans are going to require.

For federal student loans you need:

  • A valid Social Security number
  • Be a US citizen
  • Have a high school diploma or GED
  • You need to be enrolled in an eligible university or college

These requirements are the same through any private lender except that you also probably need an eligible cosigner. A cosigner is someone who will sign on the loan along with you.

Basically, what a cosigner does is take responsibility for the loan just as you will be doing. If you fail to pay on this loan, then your cosigner will be required to pay the loan back.

You will need to get a cosigner who has good credit and owns some sort of property. Most students have their parents cosign on loans.

Private lenders have no credit history or anything else to judge if you will pay it back that is why a cosigner is needed.

When looking at a credit score will need the cosigner to have a score of at least 670 or higher.

If you have maxed out your federal student loans the next step is you are going to have to get a private student loan. In this scenario, you will definitely have to have a great credit history in order to qualify.

This is why it is in your best interest to get a credit card as soon as possible and start building your credit when you are young.

You may need a cosigner so you can read what student loans can I get without a cosigner.

What are the best student loans to apply for?

The first student loans that you want to try to get our student loans through FAFSA. They offer two different kinds of direct Stafford loans. They offer subsidized and unsubsidized loans.

Both of these loans are for undergraduate students with financial need.

They are determined off of your expected family contribution, your family’s financial situation, property owned, savings account, stocks, and the cost of attendance at your specific college or university.

They also look into all of the other grants and scholarships that you may be getting from your high school, college, and elsewhere.

The loans that you want to try to get the most are the subsidized loans. Subsidized loans do not accrue interest while you were in school.

The only requirement is that you at least a half time student or you are in a deferment period. To be a full time student you have to be taking between 6 and 11 credit hours.

The reason that these loans are so great is that you will not be accruing interest while in school. The amount of money that you’re saving on this interest is a lot.

With both of the subsidized and unsubsidized loans, you are going to get a grace period after you graduate. This will allow you to find a job and have enough money to start paying off your student loans.

Basically what this means is that you will not have to start paying as soon as you graduate you will have around 6 to 8 months to start payments. 

As you can probably assume, this means that unsubsidized loans are loans where you will be accruing interest while you are in school.

These loans are still good loans to get if you have to, you will just have to pay a little bit more money in interest.

The reason that federal loans are the best opportunity for you is that they are the easiest to get and obtain.

The federal loans you do not need a cosigner.

Basically all that you have to do is fill out FAFSA form online and fill out any other paperwork through your university to get these loans.

Other than federal loans, some of the best private student loans include:

  • LendKey
  • MPower
  • PNC.

There are many different lenders you can work with to get student loans, and there are so many that have great offers.

You should check out your local county because the small private lenders who hand out scholarships and grants, may also offer loan opportunities.

This is a great opportunity to have your community help you out, and hopefully, you can give back to them in the future.

When should I apply for a student loan?

Your best bet is to apply for student loans as soon as you possibly can. As soon as you know that you are accepted into a college or university you can apply for student loans.

For federal FAFSA based loans, you are actually able to apply anytime before June 30 of the following year.

However, the earlier the better. Your best chance is always to apply as early as you possibly can.

Most federal loans are accepted and handed out to students, but there is always a chance that you would not be chosen to receive the loan.

When looking at private loans, you definitely want to apply early.

Private lenders are going to have a more stringent approval process. You should apply for private student loans anytime that you feel you are financially able to do so.

Some misunderstanding that students have, is that you have to apply for financial aid every single year.

You’re going to have to fill out the FAFSA application every single year, because there may be changes in your current financial situation.

You also have to fill out all loan applications every single year. Even if you plan on getting a loan out for four years from the same private lender, you’re going to have to apply for this loan every single year.

The reasoning for this is that many things can happen within a year including your credit history, and your finances may change.

They still want to make sure that you were going to be capable of paying back this loan no matter what has happened in the last year.

If you are looking for a timeline, you can start applying the summer before your senior year of high school.

Many college applications will have timelines for seniors including anything about financial aid, scholarships, and grants.

You can check out out high school senior guide for dates and to do list.

What is the maximum student loan amount for lifetime?

There is a maximum to the amount of student loans that you are able to take out in your lifetime.

They usually depend on what type of student you are an undergraduate student, a graduate student, or a professional student.

The sources of financial aid are allowed to limit the amount that you can take out per year. They also limit the overall amount that you can borrow from them in your lifetime.

For federal loans, graduate students can take out a total of $138,500. This is combined with their undergraduate borrowings as well. Out of this $138,500, only $65,500 maybe subsidize.

If you are an undergraduate he was registered as dependent, then you can only take out $31,000 combined. Out of the $31,000 you may only take out $23,000 in subsidized loans.

This amount can definitely vary from private lender to lender. It will probably depend on how much overall money they have to give out to students, and how much money they have left.

How quickly can you get a student loan?

If you are getting a federal student loan it will take around one to three weeks to get accepted for the loan.

A private student loan takes around 2 to 10 weeks to get accepted for the loan.

But there is much more to the story. There is a waiting period before you actually get the money from the loan. This waiting period can differ depending on what kind of loan you have and if it is federal or not.

What this means is it takes one to three weeks to get accepted for the loan.

If you wait till the last minute, then you may not have the money that you need in order to pay your tuition and other fees by the deadline.

This is why it is important that apply for loans as early as you possibly can.

Talk to your lender to see how much time you have before you actually receive the money. You will need to check in on the payment terms and how a deferral works.

Different colleges and universities have different rules about paying using loans. Many colleges may not allow you to take classes until your tuition is paid. There are some schools that may charge you late fees.

You could end up paying hundreds of dollars in late fees by not applying for your loan soon enough.

Can you live off student loans?

In short, yes you can live off of student loans. This is because the U.S. Department of education decided that you are allowed to use student loans for housing, and living expenses.

You’re only allowed to use it for these types of expenses while you were still in school. You must be at least a part-time student.

When you do take out a federal student loan, you are agreeing to borrow this money specifically for expenses that pertain to college.

Yes, you can end up using the excess money to “live off of”. No matter what you use it for you will still have to pay the money back.

If it makes more sense for you to work a job using the money to live off of, then you can take out fewer student loans.

You should always be doing what is best for you and your financial situation at the time and in the future.

Remember, that you are eventually going to have to pay off all these loans.

The loans you take out if you do not pay on your loan it will affect you, your credit history, and your financial situation forever.

You should only be taking out the amount that you absolutely need.

When do I need to start paying student loan back? How does paying loan back work?

Most student loans are going to have a six-month grace period. This gives you six months to find a job. This should allow you to save enough money to make the monthly payment on your student loan.

It is great that they offer this opportunity because many graduates do not have a full-time job straight out of college.

The six-month grace period will also apply to you if you dropped out of college. This will also apply if you are below a half-time student status.

Your average monthly payment is definitely going to depend on the amount of loans that you have taken out.

Let’s say that you have around $25,000 taken out in student loans. Your interest is around 6.8% and you’re on a 10-year repayment plan.

Doing the math we have you paying around $280 a month. However, in general, the average student loan monthly payment is around $350.

Overall, there are many good and bad things about student loans. Make sure that you do your research and do what is best for you financially.

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