If you're considering student loans to help pay for your education, you're not alone. But the more money you borrow now, the more you’ll have to spend on monthly payments after you graduate.
If you are going to school next year, make sure youand submit it as soon as it opens on October 1. Then minimize the amount you need to borrow by cutting costs, applying for grants and scholarships, and considering other options like working part-time or setting up a tuition installment plan.
1. Learn about different loan types
Most students have two main options for student loans: federal (government) loans or private loans from banks, credit unions, and other lenders. You should research all your options for federal loans, also known as Direct loans, before shopping around for private loans.
The types of loans are:
Depending on where you live and other factors, you may have other options. Some states provide low-cost education loans for residents. There are also nonprofits and other organizations that offer low-or zero-interest student loans, often within a specific city or state.
2. Explore your federal options first
For most student borrowers, federal Direct loans are the better option. They almost always cost less and are easier to repay. (This may not be the case if you are a parent or graduate student considering federal PLUS loans, though.)
Here are some advantages of federal Direct loans:
There are some downsides to federal student loans:
Steps to getting a federal student loan
3. If you still need a private loan, shop around to find the best deal
First, make sure you need a private student loan. We urge you to be cautious because private loans are generally more expensive than federal loans and offer little flexibility if you have trouble making payments later on. Your private loan interest rate and monthly payment could change with little warning, and you will have fewer options for when and how much you repay.
However, private loans may be a reasonable option for some borrowers, especially if you have strong credit history. Private lenders may allow you to borrow larger amounts, depending on your need and credit history. If you shop around and can show ability to repay, you may be able to find low interest rates relative to certain federal loans.
Steps to getting a private student loan:
Learn about whether an ISA is the right decision for you.
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A Federal student loan, also known as a government loan, allows students and parents/guardians to borrow money for college directly from the federal government.
After exploring federal loans, a private student loan can help if you still need more money to cover college expenses.
See our private student loans
There are several types of federal student loans, including:
These federal student loans are available through the Federal Direct Loan Program. Since federal loans offer different benefits than private student loans, you should always explore them first.
Learn more about the three types of federal student loans:
Federal student loan benefits
Applying for federal student loans is free. All you need to do is complete the Free Application for Federal Student Aid (FAFSA®). In addition to determining eligibility for federal student loans, the FAFSA also determines whether you may qualify for other federal student aid like grants and work-study. You need to submit the FAFSA every year you’re enrolled in college to receive federal student aid.
The easiest and fastest way to file the FAFSA and check your eligibility for federal student loans is online. Your application will be processed within 3-5 days. You can also mail in a paper application, but processing it will take about 7-10 days.
Submitting the FAFSA is totally free. If you’re asked to pay, that means you’re in the wrong place.
After you submit the FAFSA, the government will send you a Student Aid Report (SAR), which gives you basic information about your eligibility for federal student aid.
The colleges you included on your FAFSA will have access to this information, and they'll use it to determine the amount of federal student loans, grants, and work-study you may qualify for.
The colleges you’re accepted to will send you a financial aid offer detailing the financial aid you are eligible to receive—including federal student loans, grants, and work-study.
The amount of federal aid you receive from each school can vary, just as the cost of attending each school varies.
Graduate students may qualify for aid from these federal student aid programs:
To find out if the school you’re interested in participates in the federal student aid programs, there’s a college search tool, hosted by the National Center for Education Statistics.