How to Apply for Student Loans

Start by submitting the FAFSA to get federal aid before turning to private student loans.

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Updated · 2 min read
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Nerdy takeaways
  • Complete the FAFSA to see what financial aid you are eligible for.

  • Go for federal loans first, which have historically lower rates, before seeking private student loans.

  • Federal loans are funded by the government; private loans are funded by lenders like banks and credit unions.

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The process of applying for a student loan may involve different types of student loans. The two types of student loans you’ll want to consider are federal and private.

Federal student loans, offered by the federal government, usually come with lower interest rates and borrower protections — like income-driven repayment plans and student loan forgiveness programs.

Private loans, offered by financial institutions, don't have these same benefits. So it's usually best to turn to private loans only after you've borrowed as much as you can in federal loans. However, private student loans can be a good option for students who've borrowed the maximum amount of federal loans and still need money for college.

Here are the steps to take to apply for student loans.

1. Fill out the FAFSA

Before you apply for student loans, make sure you've exhausted other financial aid like grants and work-study programs by submitting the Free Application for Federal Student Aid, or FAFSA. The FAFSA is the only way to access free money for school that you don't have to pay back.

Complete the FAFSA as early as possible to see what federal aid you're eligible for. The FAFSA typically opens on October 1 for the following academic year, and you can submit it up until June 30. (This year, the 2025-26 FAFSA fully opens in December 2024.)

2. Review your FAFSA Submission Summary

After submitting the FAFSA, you'll receive a FAFSA Submission Summary that lists potential eligibility for federal loans and your Student Aid Index, which is a formula-based number that schools use to determine how much financial support you may need. There are a few types of federal student loans:

  • Direct subsidized loans are for undergraduates with a financial need. If you qualify, you won’t be responsible for any interest that accrues while you’re in school.

  • Direct unsubsidized loans are available to both undergraduate and graduate borrowers, but they do accrue interest while you’re in school. The interest is capitalized (added to your balance) at the end of your grace period.

  • Grad PLUS loans are for graduate and professional students. These loans let you borrow up to the cost of attendance, but an adverse credit history may make you ineligible for a grad PLUS loan.

  • Parent PLUS loans are for parents with dependent undergraduate students. Like the grad PLUS loan, an adverse credit history may jeopardize eligibility. Parents can borrow as much as they need to cover their student’s college costs.

3. Determine how much money to borrow

You can take out multiple types of federal loans if you qualify, but there are limits on how much you can get in student loans based on your loan type, your year in school and whether you’re a dependent or independent student.

There are also limits to how much you can borrow throughout your entire higher education. Note that the total limits for graduate borrowers include any loans borrowed as an undergraduate.

4. Supplement with private student loans

Unlike most federal student loans, private student loans require a full underwriting process. Lenders look for borrowers who have good credit (scores above 689) and enough income to cover new student loan payments plus other debt payments. If you don’t meet those requirements, you may need a co-signer to qualify for a private student loan.

Banks, credit unions, online companies and state-based agencies all offer private student loans. With so many options, it’s important to compare interest rates, fees and borrower protections before you choose a lender.

Parents and graduate students with good credit — or undergrads who have a co-signer with good credit — may also be able to get a better interest rate with a private student loan than a federal one.

Nonetheless, federal loans still offer more benefits for borrowers, like flexible repayment options. Some private lenders offer benefits, but they’re typically not as generous as federal loans.

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