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How do you apply for student loans?

The application process for federal student loans and private student loans is different.

Federal loans

To apply for a federal student loan you’ll need to file the Free Application for Federal Student Aid (FAFSA). The information on the FAFSA will determine how much you’ll be able to borrow. Your college will send you a financial aid offer, which will include details on how to accept your loan. You will then need to sign a Master Promissory Note (MPN).

Private loans

To apply for a private loan you don’t need to file a FAFSA. You’ll need to apply for a loan with an individual lender. The lender will check your credit score and will often require a creditworthy cosigner.

If you have decided a private loan is right for you, check out our list of the best private loans to compare lenders. 

See also: Complete Guide to Applying for Student Loans

How much can you borrow?

Because you will have to pay back the money that you borrow with your student loans, only borrow what you really need. The amount that you can borrow depends on the type of loan. For federal loans, your college will determine the amount of money that you can borrow, but there are some limits:

Direct loans are also subject to aggregate loan limits, meaning there’s a maximum on the total amount that you can have in outstanding loans.

The borrowing limit for Federal Direct PLUS loans is generally the remainder of the cost of college not covered by Federal Direct Stafford loans and any other financial aid.

Private loans: The maximum amount you can borrow from a private lender varies. Most lenders don’t let you borrow more than your college’s cost of attendance minus other financial aid.




When do you pay back your loans?

Federal Direct Stafford loans require that you begin loan repayment six months after you graduate, leave school, or drop below half-time enrollment. Although Federal Direct PLUS loans previously entered repayment within 60 days of full disbursement, since 2008 borrowers have been able to defer repayment until six months after the student graduates or drops below half-time enrollment.

Private loan repayment depends on the terms set by the lender. You may find that your lender requires you to make loan payments while still in school, though there may be options to defer (postpone) making loan payments. Interest continues to accrue during an in-school deferment and grace period.

If you don’t have the money to pay for college, student loans are a great option to help you finance your education. But it’s important to understand how loans work so there aren’t any surprises when it’s time to begin loan repayment.

A good place to start:

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Saving For College is an unbiased, independent resource for parents and financial professionals, providing them with information and tools to understand the benefits of 529 college savings plans and how to meet the challenge of increasing college costs.