How to get a student loan

Student loans come from the federal government or private lenders, and the path you take depends on which type you need. Federal loans require you to complete the FAFSA (Free Application for Federal Student Aid), which opens October 1 each year for the following academic year. Private loans skip the FAFSA and go straight to the lender's application, but they typically require a credit check and often a cosigner. Most students start with federal loans because they offer fixed interest rates, income-based repayment options, and forgiveness programs that private loans do not.

The actual steps differ between federal and private, but both involve paperwork, a waiting period for approval, and then funds disbursed to your school. Your school's financial aid office coordinates federal loans and can answer questions about timing and what documents you need. Private lenders handle their own approval and send money directly to you or your school depending on the lender's policy.

Key Takeaways

  • Federal student loans require completing the FAFSA, which opens October 1 and determines how much you can borrow based on financial need.
  • Private student loans skip the FAFSA but require a credit check and often a cosigner, and typically have higher interest rates than federal loans.
  • Your school's financial aid office handles federal loan paperwork and can tell you exactly what documents and deadlines apply to you.
  • Federal loans offer fixed rates and repayment flexibility that private loans do not, making them the first choice for most borrowers.
  • Funds typically arrive at your school within weeks of approval, and your school applies them to tuition before sending any remainder to you.

Federal student loans: the FAFSA and what comes next

The FAFSA is a single form that determines your federal loan amount, and it is the gateway to all federal aid. You fill it out at fafsa.gov starting October 1 each year, and it asks for your income, assets, family size, and other financial details. The form takes 15 to 30 minutes if you have your tax return and Social Security number handy. After you submit, the Department of Education processes it and sends a Student Aid Report (SAR) to you and your school, usually within three to five business days.

Your school's financial aid office uses the SAR to calculate how much federal aid you can receive. They then send you an award letter showing the loans, grants, and work-study they are offering you. You do not have to accept everything on that letter — you can decline loans or ask to borrow less. Once you accept, your school handles the paperwork with the Department of Education, and funds arrive at your school's bursar office within one to three weeks.

Federal loans come in several types: Subsidized Stafford loans (the government pays interest while you are in school), Unsubsidized Stafford loans (interest accrues from day one), and PLUS loans (for parents or graduate students with stronger credit requirements). Your school's financial aid office will explain which types you are offered and why.

Private student loans: credit check and cosigner requirements

Private loans come from banks, credit unions, and online lenders, and each has its own application and approval process. You apply directly to the lender through their website or by phone, and they pull your credit report immediately. If your credit score is low or you have no credit history, most private lenders require a cosigner — typically a parent or relative with established credit. The cosigner is legally responsible for the loan if you do not pay, so lenders take this seriously and may deny the application if the cosigner's credit is weak.

Private loan interest rates are not fixed by law like federal rates are; they vary by lender and by your creditworthiness. A borrower with excellent credit might get 5 percent, while another with fair credit might pay 10 percent or more. You can shop around — most lenders let you check your rate without a hard credit pull, which means you can compare offers from three or four lenders without damaging your credit score. Once you choose a lender and accept their offer, approval typically takes three to seven business days, and funds arrive at your school or to you within one to two weeks after that.

What documents you will need

For federal loans through the FAFSA, you need your Social Security number, date of birth, and either your most recent tax return or your parents' tax return if they claim you as a dependent. You also need to know your Expected Family Contribution (EFC), which the FAFSA calculates for you. If you are a dependent student, your parents will need to provide their information as well. Have these documents ready before you start the FAFSA so you do not have to stop and search for them.

For private loans, you need a government-issued ID, your Social Security number, and proof of income (usually a recent pay stub or tax return). If you have a cosigner, they will need to provide the same documents. Some lenders also ask for proof of school enrollment, which your school can provide in a few minutes. Private lenders move faster than federal loans, so having these documents ready before you apply makes a real difference in approval time.

How much you can borrow and repayment basics

Federal loan limits depend on whether you are a dependent or independent student and what year of school you are in. First-year dependent students can borrow up to $5,500 in federal loans (as of 2024), though this amount increases in later years. Independent students and graduate students can borrow more. Your school's financial aid office can tell you the exact limit for your situation. These limits exist to prevent overborrowing, and they reset each academic year.

Private lenders typically let you borrow up to the full cost of attendance at your school, minus any other aid you have received. This means you could borrow more from a private lender than from federal loans, but that does not mean you should — private loans have higher interest rates and fewer repayment options. Most financial advisors recommend borrowing the maximum federal amount first, then turning to private loans only if you need more.

Federal loans offer several repayment plans: Standard (10 years), Income-Driven (payments based on your income), and Graduated (payments start low and increase). You choose your plan after you graduate or drop below half-time enrollment. Private loans typically have one repayment plan set by the lender, though some offer options for deferment or forbearance if you face hardship. Federal loans also have forgiveness programs for certain professions and circumstances; private loans do not.

Timeline: when to apply and when money arrives

The FAFSA opens October 1 for the academic year starting the following fall. If you are starting school in fall 2024, you would fill out the 2024-2025 FAFSA beginning October 1, 2023. Most schools have a priority deadline in January or February, and applying by then ensures you get the maximum aid available. You can apply after the priority deadline, but some aid may be gone. The FAFSA remains open until June 30, so you can apply late if needed, though you may receive less aid.

After you submit the FAFSA, your school receives your information within days and sends you an award letter within one to two weeks. Once you accept the loans on that letter, your school coordinates with the Department of Education, and funds arrive at your school's bursar office within one to three weeks. Your school then applies the money to your tuition bill and sends any remainder to you by check or direct deposit.

Private loans move faster because there is no federal processing step. You can apply, be approved, and have funds arrive at your school within one to two weeks total. However, private lenders may require proof of enrollment or other documents before they disburse, which can add a few days. Plan to apply for private loans at least three weeks before you need the money to account for processing time.

Frequently Asked Questions

Do I have to borrow the full amount my school offers me?

No. Your award letter shows the maximum you can borrow, but you can accept less or decline loans entirely. Many students accept only what they need and skip private loans altogether. Your school's financial aid office can help you figure out how much you actually need based on your costs and other aid you have received.

What happens if I do not complete the FAFSA?

You will not be able to receive federal loans, federal grants, or work-study. You can still borrow from private lenders, but they typically charge higher interest rates and do not offer income-based repayment or forgiveness. Completing the FAFSA takes 15 to 30 minutes and is worth doing even if you think you will not may have access to for aid.

Can I borrow from both federal and private lenders?

Yes. Most students who need more than the federal limit borrow the maximum federal amount first, then take out a private loan for the remainder. This approach gives you the benefit of federal protections and repayment flexibility for part of your debt, while keeping private borrowing to a minimum.

What if my parents refuse to cosign a private loan?

Some private lenders offer loans without a cosigner, though interest rates are typically higher. You can also explore federal Parent PLUS loans, which allow parents to borrow on your behalf, or wait until you have work history and credit of your own. Your school's financial aid office can discuss these alternatives with you.

When do I start paying back student loans?

Federal loans enter a grace period after you graduate or drop below half-time enrollment, typically lasting six months. Private loans vary by lender — some have a grace period, others require payments while you are still in school. Check your loan documents to see when your lender expects payments to begin.