After being accepted into college, it’s important to see what options you have for financing the cost of your education. While scholarships, grants, and federal work-study aid should always be accepted first, you may wind up considering student loans as well. Though the process may seem daunting, we’ve simplified it for you with a step-by-step guide. Keep reading to learn how to apply for student loans.
Types of Student Loans
There are two main types of student loans on the market: federal student loans and private student loans.
Federal student loans are offered by the federal government, while private student loans are offered by private organizations, businesses, and other autonomous entities.
Below is a list of some of the best student loan options. Rather than searching for lenders one-by-one, we recommend starting the process with an automated student loan search tool. After you complete the free Sparrow request, we’ll show you the rates and terms you’d pre-qualify for with 17+ premier lenders.
Generally, it is recommended that you borrow federal student loans before private student loans. This is because federal student loans have lower interest rates, more flexible repayment options, loan forgiveness, and stronger borrower protection plans, as opposed to private student loans.
What to Do Before You Apply for Student Loans
Picking up debt is a large responsibility. Before applying for student loans, be sure to exhaust all other possible financial aid options for students.
Student loans need to be paid back in full, along with any interest that accumulates during the life of the loan. This means that you pay for more than what you’ve borrowed, and failure to do so can negatively affect your financial standing.
This is why it is crucial to acquire as much unborrowed money as you can to defray the cost of tuition. There are four ways that you can pay for your educational costs that do not require you to borrow money: scholarships, grants, and work-study.
Scholarships
Scholarships are a form of financial aid that is free and does not need to be paid back. They are offered based on, but not limited to, academic merit, financial need, athletics, your field of study, and any extracurricular achievements.
Scholarships are offered all year round by countless organizations, businesses, states, schools, counties, districts — you name it.
To apply for scholarships, you will generally need the following materials:
- An essay answering a prompt that is decided by the organization offering the scholarship
- Your transcript
- Proof of academic attendance
Here are some of our favorite scholarship engines:
Grants
Grants are another form of financial aid that is free and doesn’t need to be paid back. Unlike scholarships, grants are offered on a need-based basis only. This means that you must demonstrate financial need to qualify for a grant.
Generally, grants are offered by the federal government, state governments, institutions, businesses, organizations, etc.
You can find grants with an easy search of the web or through the following search engines:
Work-Study
Work-study is a federal student aid program that provides undergraduate and graduate students with the opportunity to have a part-time job on campus that helps fund their education. It’s important to note that receiving work-study does not guarantee you a job at your institution, but rather, it provides you with the opportunity to obtain one in which funding has been set aside to pay for.
You will see whether or not you received work-study aid on your financial aid package after submitting your FAFSA, along with the amount of aid you are eligible to receive. Unlike scholarships and grants, you will need to work in exchange for the work-study funds you are eligible for.
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How to Apply for Federal Student Loans
As highlighted earlier, federal student loans should be your first option if you are looking to borrow student loans. Federal student loans typically have lower interest rates, stronger borrower protections, and more flexible repayment options.
Here’s how to apply for a federal student loan in three easy steps.
Step 1: Submit the FAFSA
The Free Application for Federal Student Aid (FAFSA) is an application that you must submit to receive financial aid from the federal government, your school, and in some cases, scholarships and grants.
The U.S. Department of Education uses your information on the FAFSA to calculate how much federal financial aid you are eligible for. In turn, colleges use this information to calculate your financial aid package. Some scholarships and grants require you to submit your FAFSA results to verify that you are in the eligible financial standing to be awarded.
The FAFSA opens on October 1st and closes on June 30th. It is strongly recommended that you submit your FAFSA as close to the opening date as possible because some financial aid is served on a first-come, first-served basis.
What Information Do I Need to Submit the FAFSA?
You need the following materials (most of which will need to come from your parents) before you submit the FAFSA:
- Your Social Security Number (never go off memory!)
- Your parent’s/parents’ Social Security Numbers
- Tax Information
-
- Tax Returns
- IRS W-2
- Parent(s) tax information
- Family income
- Records of untaxed income
-
- Child support
- Veteran benefits
- Information on any financial assets you have
- Cash in your checking and/or savings account
- Investments like stocks and bonds
- Business assets
- Mortgages
If you are completing the FAFSA without the support of your parents, or as an independent, don’t worry. There are other ways to complete the form.
Step 2: Evaluate Your Financial Aid Offer
Your financial aid offers will start trickling in after you receive word from the schools you’ve been accepted to. It’s time to evaluate your financial aid offers and determine which is the best one for you.
Start by creating a spreadsheet with the following four columns:
- School Name
- Cost of Attendance → The total estimated cost of attending the school, including tuition, housing, meal plans, etc.
- Free Aid → Any scholarships and grants you’ve received, whether from the institution itself or external sources/organizations.
- Net Price Without Loans → The difference between the cost of attendance and the free aid you’ve received. This is how much you would need to pay out of pocket or borrow in student loans.
School
Cost of Attendance
Free Aid
Net Price without Loans
University A
$73,103
$46,051
$27,052
University B
$67,392
$23,249
$44,143
University C
$54,205
$18,674
$35,531
Creating a method to compare your aid offers is crucial as the actual cost to attend may be quite different from the initial cost of attendance after factoring in free aid. For example, in the above table, you can see how University A has the highest sticker price. Yet, with free aid, it winds up being the least expensive option.
Step 3: Accept the Loans
After identifying the school and financial aid offer that is best fit for you, go ahead and accept the financial aid package. Each school will have its own unique process for accepting financial aid. However, most will provide you with a login to an online portal in which you can click “accept” on the aid you’d like to receive.
Remember: Always accept your offer in the following order: scholarships/grants → work study → loans.
How to Apply for Private Student Loans
As a refresher, experts recommend that you exhaust your federal financial aid options before turning to private student loans. Generally, private student loans have higher interest rates, limited borrower protection plans, and less flexible repayment options.
Additionally, it’s often difficult for first-time borrowers (especially students) who have a limited credit history to qualify for a loan with good terms to begin with.
So, private loans should only be utilized to fill in the gaps that financial aid and federal loans do not cover. If you do opt to borrow one, here are the steps you should follow:
Step 1: Gather the Necessary Information
When applying for private loans, the information you will need will be similar to what is required for the FAFSA.
- Your Social Security Number
- The cosigner’s Social Security Number (You may not need this if you are not borrowing with a cosigner.)
- Tax Information
-
- Tax Returns
- IRS W-2
- Cosigner’s tax information
- Family Income
- Proof that you need additional aid (This is usually a form or a letter than can be obtained from your school’s financial aid office.)
- Information on any financial assets you have, such as:
-
- Cash in your checking and/or savings account
- Investments like stocks and bonds
- Business assets
- Mortgages
- A list of schools you are interested in attending
- A list of any grants or scholarships you’ve received and their amounts
Step 2: Know How Much You Need to Borrow
It’s time to calculate how much money you need to borrow. Refer back to your financial aid package. If you did not receive any scholarships or grants, determine what you can contribute out of pocket. Subtract that, plus what you received in federal student loans, from the overall cost of attendance. Doing so will show you how much you need to borrow in private student loans to cover the cost.
Private student loans can cover the entire cost of your tuition, but it is recommended to minimize the amount of money you borrow so you can defray the amount of interest that you accrue.
If you need assistance calculating the exact amount of money that you need to pay, contact your school’s financial aid office for clarification. It’s better to be safe than sorry.
Step 3: Complete the Sparrow Pre-qualification Form
Sparrow wants to help you find the perfect lender to finance your educational costs. Our platform helps borrowers just like you find and compare private student loans across 15+ private student loan lenders. You can also compare how different cosigners affect the loan to determine which option is best for you.
The Sparrow request is free and will not affect your credit score. When you’re ready to begin the private student loan process, complete the Sparrow form.
You can also reach out to your school’s financial aid office for assistance with finding a private student loan lender. You can ask your institution for a list of preferred lenders or speak with a financial aid worker whose job is to assist you with any financial matters.
Step 4: Compare Student Loan Rates
When you’re comparing student loans, here are some key factors that you should look out for:
Cosigner
Do you need a cosigner to qualify for the loan with you? Do you have a cosigner who is willing to sign the loan with you?
Does the loan have a cosigner release policy, and if so, what is it?
Interest Rate
What is the interest rate of the loan?
Do you have a variable interest rate (an interest rate that changes based on the economy) or a fixed interest rate (a set interest rate that stays the same)?
Repayment Plan
What is the repayment plan for the loan?
Does the loan offer a grace period (a period of time where you do not need to make loan payments) after you leave school, or will you be making payments during the school year?
Loan Origination
Does the loan have an origination fee (a fee that you need to pay to “create” the loan?)
Borrower Protection
Does the loan offer loan forbearance and deferment?
Consider your loan priorities as you sift through options: do you prefer a loan with a short repayment plan and a low interest rate, or a loan with cosigner release terms? Is loan forbearance or deferment a must-have, or do you think you can manage without it?
Speak with your parents, your school’s financial aid office, and adults that you trust so you can make the best decision for yourself. You should be thoroughly aware of all the loan terms and have a plan for repaying the loan.
Think long-term and consider where you’ll be one year, five years, or ten years ahead with the loan.
Step 5: Select the Rate You Like the Best and Submit A Formal Application
After you’ve identified the private student loan that best fits your needs, submit a formal application for the loan.
If you are submitting multiple formal applications for private student loans, submit your applications within 30 days of each other. By doing this, you will not incur a hard inquiry for each loan that you apply for. Rather, it will be viewed as “rate shopping,” and you will only receive the impact of one hard inquiry.
If you are approved for the loan, the loan amount will be disbursed directly to your school.
Applying for Student Loans FAQs
Do all students qualify for student loans?
No, not all students qualify for student loans. Both federal and private loans have a baseline of requirements that borrowers must meet to be eligible to apply for the loan, such as attending an accredited university, meeting the age requirement, being a U.S. citizen in certain cases, etc.
Even if you do meet the baseline requirements, this does not mean that you qualify for all federal and private loans. With private student loans, most students do not qualify on their own and usually require a cosigner to help strengthen their loan application for private student loans.
Be sure to use Sparrow to check whether you pre-qualify before submitting a formal request and incurring a hard credit check.
How long does it take for a student loan to be approved?
Generally, getting a federal student loan can take from a few weeks to a few months to go from application to disbursement.
Private student loans can be approved in as little as a few hours to two weeks. Typically it will take around 1-2 weeks to receive the funds after approval, though it may be longer depending on the lender, the type of loan you choose, and your school.
When do you need to apply for student loans?
The Free Application for Federal Student Loan (FAFSA) opens on October 1st and closes on June 30th. You must submit the FAFSA to be eligible for federal financial aid, including student loans, grants, work-study, and scholarships. Submit your FAFSA as close to the opening date as possible.
After accepting all federal financial aid, you should apply for private student loans as early as possible. It often takes several weeks for a loan to be approved. You will want to be approved for the loan and receive the loan amount before the funds are due on your school so that you don’t rack up any late payment fees.
Do student loans go to your bank account?
No. Student loan funds are typically sent straight to your school to cover tuition. The school then gives the rest of your loan money directly to you, the student, for other expenses related to getting your degree, such as housing. Your school sets the disbursement date (when you actually receive the money), which is usually around the beginning of the semester. Regardless of when you applied for the loan, your school’s disbursement date will be the same.
However, it’s best to apply early so that you can avoid any unexpected confusion or delays. We suggest giving yourself at least 30 days to be safe, but be sure to contact your financial aid office to learn more about accessing your funds.
Can you be denied a student loan?
Yes, you can be denied both federal student loans and private student loans.
You can be denied for federal student loans based on financial eligibility requirements, having defaulted on a previous federal loan, incarceration, and other reasons. Address the reason why you were denied, and apply again the following year.
For private student loans, you usually are denied for a low credit score, a weak credit history, or an insufficient cosigner. Consider applying again after raising your credit score and/or with a cosigner with a stronger credit score.
Student loan rates from our partners
Ascent
Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 12/1/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.
Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 12/1/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.
LendKey
1 – Terms and Conditions Apply
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
2 – Cosigner Release
Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.
3 – Autopay Rate Reduction
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.
4 – AutoPay Discount & Lowest Interest Rate
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.
1 – Terms and Conditions Apply
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
2 – Cosigner Release
Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.
3 – Autopay Rate Reduction
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.
4 – AutoPay Discount & Lowest Interest Rate
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.
Earnest
Student Loan Origination (Private Student Loan) Interest Rate Disclosure:
Student Loan Origination (Private Student Loan) Interest Rate Disclosure:
College Ave
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1) All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
(2) As certified by your school and less any other financial aid you might receive. Minimum $1,000.
(3) This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 12/2/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1) All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
(2) As certified by your school and less any other financial aid you might receive. Minimum $1,000.
(3) This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 12/2/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
Closing Thoughts From the Nest
Applying for student loans can be a long process, so get started as early as you can. Remember to maximize scholarships, grants, work-study, and federal financial aid as much as you can before applying for any private student loans.
If you need any assistance finding private student loans, consider using Sparrow’s online search tool to compare loan offers from 15+ lenders.