Where And How To Apply For Student Loans
Most students, 42.2 million as of late 2024, borrow money to pay for college. As of 2025, the average federal student loan debt per borrower is estimated at $38,375, contributing to a staggering $1.77 trillion in total student loan debt across the United States.
Paying for college is one of many students and families' biggest financial challenges. While the idea of borrowing money for education may feel overwhelming, understanding where to apply and how the process works can help you make smart, informed choices. Here’s a guide on where and how to apply for student loans.
Understand the Types of Student Loans
Before you apply, understand the two main types of student loans: federal and private.
Federal Student Loans
The U.S. Department of Education funds these and generally offers lower interest rates, more flexible repayment options, and protections like deferment and income-driven repayment plans. Always start with federal loans. They don't require a credit history or a co-signer, and they offer more protections for borrowers, like income-driven repayment and loan forgiveness, than private student loans offer.
Private Student Loans
These are offered by banks, credit unions, and other private lenders. They’re typically used to fill in gaps when federal loans and other aid don’t cover the full cost of attendance. Private loans usually require a credit check and may need a co-signer.
Before you borrow, think ahead to how you’ll repay the debt. Use a student loan calculator to estimate monthly payments for 5-10 years. Borrow only what you need. Don’t take on an amount or interest rate you can’t expect to handle right after you graduate.
Apply for Federal Student Loans First
Most students should start with federal loans. They offer better terms and benefits, especially for undergraduates.
How to apply:
Fill Out the FAFSA
To apply for federal student loans, you need to complete the Free Application for Federal Student Aid (FAFSA). This form determines your eligibility for loans and grants, scholarships, and work-study programs.Visit FAFSA.gov
You’ll need your Social Security number, federal tax info, and school codes
Some states and schools have deadlines, so apply as early as possible (October 1 is when it opens each year)
Review your student aid report (SAR)
After submitting the FAFSA, you’ll receive a Student Aid Report summarizing your information. Review it for accuracy. You’ll be notified of what you can borrow in the financial aid award letter from any school that accepts you.Accept your financial aid package
Your school will send you a financial aid award letter. This includes grants, scholarships, work-study, and loan offers. If loans are included, you can choose how much to borrow.Complete entrance counseling and sign a master promissory note (MPN)
Before receiving federal loan funds, first-time borrowers must complete online entrance counseling and sign an MPN, agreeing to repay the loan.
Max out federal student loans before you apply for private loans, and only borrow what you need and can repay.
Consider Private Student Loans If Needed
Consider private student loans to cover remaining costs after grants, scholarships, work-study, and federal loans. They're a great option if you have good credit or a co-signer (like a parent or guardian) who does.
Where to apply:
There are several reputable private lenders, including:
Many schools also have preferred lender lists, but you can shop around to compare rates and terms.
Make sure you research different lenders and compare their interest rates, repayment terms, and consequences for defaulting on a loan. While federal undergraduate student loans currently have a fixed interest rate of 6.53%, private student loans may have variable interest rates that are much higher.
How to apply:
Check your credit
Private lenders base their decisions on credit history. If your credit score is low or you have little credit, you may need a co-signer (often a parent or guardian).Compare offers
Look at interest rates (fixed vs. variable), fees, repayment terms, and borrower protections. Use tools like Credible or NerdWallet to compare multiple lenders.Fill out the application
You’ll usually need to provide:Personal and financial info
School details and cost of attendance
Co-signer information, if applicable
Loan certification by your school
After approval, your school certifies the loan amount. Funds are typically disbursed directly to your school.
Student loans for parents and graduates
Parents and graduate students can qualify for select federal and private student loan options. These loans often have flexible repayment terms tailored to meet the unique financial needs of each borrower.
How parents can get student loans
Parents looking for loans to help pay for their child’s education have federal and private loan options. Each loan requires a credit check. There are three primary options to consider:
Direct PLUS loans: Direct PLUS loans are the only federal student loan parents can take. Submit a FAFSA with your child and complete a parent direct PLUS loan application to borrow.
Co-signed private student loan: Co-signing a loan with your child will make you equal borrowers. It’s best if you have good credit, a steady income and are willing to take on the responsibility of paying the debt if your child can’t.
Private college loans for parents: Certain private lenders may offer private college loans for parents to borrow rather than co-sign on a student loan. The debt is your sole responsibility.
Borrow only What you Need
Independent undergraduate students can borrow up to $57,500 in federal student loans, while dependent undergraduate students are limited to $31,000. Private loan borrowers can borrow up to the cost of attendance: tuition, fees, room, books, commuting, and personal expenses, minus financial aid you don’t have to repay.
You don't have to borrow the maximum. Borrow the amount that keeps your student loan payments around 10% of your projected after-tax monthly income. Use the U.S. Department of Labor’s Occupation Outlook Handbook to calculate your projected earnings. Then, plug those earnings into a student loan affordability calculator to estimate your monthly payments.
Tips for Applying for Student Loans
Navigating the loan application process can be complex, but keeping a few key principles in mind can help you borrow wisely and avoid unnecessary debt.
Make cost a factor when choosing a college. Compare tuition, room & board expenses, and annual fees for each school you consider. Check job placement statistics and average starting salaries for potential schools to see if graduates have trouble repaying loans after graduation. College is a consumer decision. Like any large purchase, make sure what you’re buying is worth what you pay.
Know all your options. There are several types of student loans out there. Compare the terms and interest rates on every loan before agreeing on which to use and how much to borrow.
Start with subsidized loans. The subsidy covers the interest on the loan while you’re in school. Unsubsidized federal loans aren’t based on need, and interest starts to accrue immediately.
Understand the repayment terms. Federal loans offer more flexible repayment plans, but private lenders vary. Make sure you’re comfortable with all of the terms before signing.
Keep track of your loans. Use tools like the National Student Loan Data System (NSLDS) to monitor your federal loans.Plan ahead for repayment. Make sure you know when your first payment will be due, what your interest rate will be, and how to contact your lender if you have questions.
By staying organized and making intentional borrowing decisions, you’ll set yourself up for a more manageable repayment journey after graduation.
Remember, you’ll pay Interest
Whether you borrow federal or private loans, you’ll owe more than the amount you initially borrowed because of interest.
Interest accrues daily on your loan and will be added to the total amount you owe when repayment begins. The fixed federal undergraduate loan interest rate is 6.53%, but it changes annually. Private lenders typically use your or your co-signer’s credit history to determine your rate.
Federal loans also require a loan fee — a percentage of the total loan amount. The current loan fee for federal direct student loans for undergraduates is 1.057%.
Borrow wisely
Student loans can make college more affordable, but it's crucial to approach them with a plan. Start with the FAFSA to explore federal aid, and only turn to private loans if necessary. Borrow responsibly, ask questions, and don’t be afraid to reach out to your school’s financial aid office for help. With the right information and approach, you can make smart decisions about financing your education.
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