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This article first appeared on the Credible blog.
If scholarships and grants don’t fully cover your college costs, student loans could help you take care of your remaining expenses. Many students rely on loans to pay for school — in fact, as of 2021, 43.2 million U.S. adults have student loans, according to EducationData.org.
However, if you need to borrow for school, it’s important to understand the requirements for federal and private student loans first.
You can compare student loan refinance rates from top lenders in minutes with Credible.
How to apply for a student loan
If you’re ready to apply for a student loan, follow these three steps:
1. Fill out and submit the FAFSA
If you need to pay for college, your first step should be completing the Free Application for Federal Student Aid (FAFSA). Your school will use your FAFSA results to determine what federal student loans and other federal financial aid you qualify for.
Tip: Be sure to submit the FAFSA before the deadline so you don’t miss out on any aid you’re entitled to. For the 2022-2023 academic year, you have until June 30, 2023. Also keep in mind that some aid is given on a first-come, first-served basis — so it’s a good idea to complete the FAFSA as early as possible, especially if you have high financial need.
2. Apply for scholarships and grants
Unlike student loans, college scholarships and grants don’t have to be repaid — which makes them a great way to pay for school. There’s no limit to how many scholarships and grants you can get, so it’s a good idea to apply for as many as you can.
Some organizations that might offer scholarships and grants include:
- Nonprofit organizations
- Local and national businesses
- Professional associations in your field
Additionally, you can use sites like Fastweb and Scholarships.com to easily search for scholarships that you might qualify for. You might also be eligible for school-based scholarships depending on your FAFSA results.
3. Take out federal student loans
If you need to borrow for school, it’s usually best to take out federal student loans first. This is because these loans come with federal benefits and protections — such as access to income-driven repayment plans and student loan forgiveness programs.
Here are the three main types of federal student loans that you might be eligible for:
- Direct Subsidized Loans: These are available to undergraduate students with financial need. The government will cover the interest on subsidized loans while you’re in school.
- Direct Unsubsidized Loans: These loans are available to both undergraduate and graduate students regardless of financial need. Unlike with subsidized loans, you’re responsible for all the interest that accrues on unsubsidized loans.
- Direct PLUS Loans: There are two categories of PLUS Loan — Grad PLUS Loans that can be used by graduate students and Parent PLUS Loans that can be used by parents who want to cover their child’s education costs. Unlike Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans require a credit check. They also typically come with higher interest rates.
Tip: After you submit the FAFSA, your school will send you a financial aid award letter detailing which federal student loans and other federal financial aid that you qualify for. You can then decide what aid you’d like to accept.
4. Consider private student loans
After you’ve exhausted your scholarship, grant, and federal student loan options, private student loans could help fill any financial gaps left over. While these loans don’t come with federal protections, they do provide some benefits of their own — for example, you can apply at any time, and you might be able to borrow more than you’d get with a federal loan.
With Credible, you can compare student loan refinance rates from multiple lenders in minutes.
Federal vs. private student loan requirements
While federal and private student loans can both help you cover your college expenses, they each come with their own requirements. Here’s what you should keep in mind as you consider your student loan options:
Federal student loan requirements
If you’ve maxed out your scholarship and grant options (or don’t qualify), federal student loans could be a good alternative to pay for college.
Here are the main requirements for federal student loans:
- Demonstrate financial need. Financial need is calculated when you complete the FAFSA and is required to qualify for Direct Subsidized Loans. However, you might be able to qualify for Direct Unsubsidized or PLUS Loans regardless of financial need.
- Be a U.S. citizen or eligible noncitizen. Some legal U.S. residents without citizenship might still qualify.
- Have a Social Security number. Outside of residents from a few U.S. territories, you must have a valid Social Security number.
- Enroll in an eligible degree or certificate program. You can’t use federal student loans unless you’re attending an accredited or recognized program.
- Make satisfactory academic progress. Each school sets its own academic standards. If you don’t maintain the minimum grades your school requires, you risk getting cut off from federal aid programs.
- Register with Selective Service. Men between ages 18 and 25 must sign up for the draft through Selective Service.
- Enroll at least half time for Federal Direct Loans. For most student loan programs, you must sign up for at least a half-time course load.
- Complete and sign the FAFSA. Your FAFSA information is used to calculate your financial need, which is the difference between what your family is expected to contribute and your estimated cost of attendance.
- Have qualifications needed for your program: A high school diploma, GED, homeschool program, or equivalent is required.
Tip: If you don’t qualify for a federal student loan, consider searching for more scholarships and grants or applying for a private student loan instead.
Private student loan requirements
Unlike federal loans, there isn’t just one set of private student loan requirements. Instead, each lender has its own rules.
However, there are some common requirements to qualify for private student loans that you’ll likely come across, including:
- Enroll in an eligible program. You can’t use private student loans if you aren’t a student, and you must be enrolled in an eligible program.
- Meet demographic requirements. Most lenders require you to be a U.S. citizen or legal resident with a Social Security number. You’ll also generally need to be at least 18 years old and hold a high school diploma or equivalent.
- Use the loan for education purposes. While lenders won’t watch where you spend every dollar, you should plan to use your loans only for school expenses — mainly because you’ll have to pay everything back in the future, including any extra funds left over after paying tuition, fees, and other direct costs.
- Have a good credit history. Unlike most federal loans, private loans require a credit check. You’ll typically need good to excellent credit to qualify — a good credit score is usually considered to be 700 or higher. If you have poor or fair credit (or even no credit), you might need to apply with a creditworthy cosigner to increase your approval odds.
- Have verifiable income. Lenders will review your income and debt-to-income ratio to determine if you’re able to repay what you borrow.
Tip: Most of these requirements are firm. But in some cases, you might be able to get around a lender’s minimum credit score or income requirement if you can find a cosigner with good credit. Because most undergraduate students haven’t yet established a good credit history, over 93% of student loans are taken out with a cosigner. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own. Just remember your cosigner will share responsibility for the loan — which means they’ll be on the hook if you can’t make your payments.
When to apply for student loans
If you’re eligible for student loans, it’s important to apply well in advance of when you’ll need the funds. Here when you should generally plan to apply for student loans:
- Federal student loans: You’ll need to complete the FAFSA to apply for student loans, which means you’ll have to meet the FAFSA deadline. For the 2022-2023 academic year, you have until June 30, 2023, to fill out the FAFSA. Keep in mind that some financial aid is given on a first-come, first-serve basis — so it’s a good idea to submit the FAFSA as early as possible, especially if you have high financial need.
- Private student loans: Unlike federal student loans, private loans don’t have an application deadline. But even if you’re approved, it could take around three weeks from the time you submit your application until you get your funds — and sometimes up to two or three months if there are any delays. Because of this, it’s wise to apply for a private student loan as soon as you know you’ll need one so you’ll have plenty of time.
If you decide to take out a private student loan, remember to shop around and consider as many lenders as you can. This way, you can find the right loan for your situation.
This is easy with Credible: You can compare your prequalified rates from multiple lenders in minutes — without affecting your credit.
Frequently asked questions
Here are the answers to a few commonly asked questions about getting student loans:
How long does it take to get a student loan disbursement?
This depends on the type of student loan you apply for.
- Federal student loans are typically disbursed at the start of each term. If there are any funds left over after paying for your tuition and fees, they’ll be refunded to you — usually within a couple of weeks of receiving your loan funds.
- Private student loans are usually disbursed within a few weeks of your application being approved, depending on the lender and your school’s certification process. Like with federal loans, any funds left over after paying for your tuition and fees will be refunded to you.
Is there an age minimum to get a student loan?
This depends on the type of loan you want to get.
- Federal student loans: There’s no minimum age requirement for federal loans. However, you must have the qualifications needed for your program — meaning a high school diploma, GED, homeschool program, or equivalent.
- Private student loans: Most private lenders require borrowers to be at least 18 to take out a loan.
What is a student loan cosigner?
A student loan cosigner can be anyone with good credit — such as a parent, another relative, or trusted friend — who is willing to share responsibility for a private student loan with you. Having a creditworthy cosigner could help you get approved for a loan if you have poor or no credit.
Even if you don’t need a cosigner to qualify, having one might get you a lower interest rate than you’d get alone. However, remember that because your cosigner is equally responsible for the loan, they’ll be liable if you don’t make your payments.
About the author: Dori Zinn is a student loan authority and a contributor to Credible. Her work has appeared in Huffington Post, Bankate, Inc, Quartz, and more.