How To Apply for Student Loans: Step-by-Step Guidelines
The practice of providing funding for education in Georgia is in demand due to the fact that many middle-income families do not have the necessary funds in full for education. Otherwise, becoming a student at a prestigious university is an almost unattainable goal. But before applying for student loans, it is important to understand how they work and how to use them wisely.
Table of Contents:
- Things to consider before you start
- Student loans eligibility in Georgia
- How to apply for federal student loans
- How to apply for private student loans
- Federal vs private student loans: which option should you apply for first?
- When do student loans get disbursed?
- Applying for student loans with bad credit
- Applying for a student loan with a co-signer
- How to compare offers from multiple lenders
- Other ways to finance your education
- Frequently Asked Questions (FAQ)
First of all, you’ll need to gather essential documents and personal information. The exact paperwork requirements will vary by lender, but preparing in advance can help the entire process be straightforward and hassle-free.
If you’re applying for government help as a dependent, you’ll probably need to add your parents’ information un the application form. The same applies if you’re using a cosigner for a private student loan.
Below are the common documents you and your parents/cosigners should prepare before applying:
- Credit score and history: Most federal student loans don’t involve a credit check, but private usually do. We recommend that you check your credit for free before applying for private loans to find out what interest rates you can expect.
- Personal information: You will be asked to specify your full name, home address, age, phone number and email address.
- Valid identification: Prepare documents that confirm your legal U.S. residency status, such as your Social Security number, a U.S. passport, or a U.S. civil-issued birth certificate. If you’re not a U.S. citizen, you’ll be required to provide your Alien Registration Number (or A-Number).
- Employment and income details: Pay stubs, tax returns, bank statements, a letter of employment. If you are unemployed, this information will be relevant for your parents or cosigners.
- Recent tax documents: Make sure to provide records of untaxed earnings (any income excluded from federal income taxation under the IRS code), such as federal financial aid, disability insurance payments, employer-provided insurance, health savings accounts (HSAs), life insurance payouts, etc.
- Bank and savings account statements: You may need to provide papers showing your valuable assets.
- Payment obligations: These are typically mortgage or rent expenses, car loans and other college loans.
- School information: Your school list can have up to 10 schools online or up to four schools on a PDF FAFSA form. For private student loans, you may need to list the certain accredited school that you want to attend, along with the approximate start and graduation dates, tuition fees and the amount you’d like to borrow.
When applying for private student loans, you must also complete the Department of Education’s Private Education Loan Applicant Self-Certification form to ensure that you understand your options for college financing. You can get this self-certification form from your school’s financial aid office, for example from the Office of Student Financial Aid (OSFA) at the University of Georgia.
Lender requirements depend on the type of student loan. Private and federal student loans have different eligibility criteria.
Federal student loan requirements
If you do not qualify for scholarships and grants, federal student loans could be a great alternative to pay for education. Below are the basic eligibility criteria:
- Be a U.S. citizen or permanent resident.
- Demonstrate financial need. In simple terms, “demonstrated financial need” is the difference between a school’s cost of attendance (COA) and the student’s expected family contribution (EFC). It is essentially how much financial assistance a family will need to cover the cost of attending a college.
- Have a Social Security number.
- Enroll in an eligible degree or certificate program. You must attend an accredited or recognized program.
- Maintain satisfactory academic progress (SAP). The requirements usually include maintaining a grade of C or better and passing enough classes to graduate within 150% of the normal timeframe.
- Register with Selective Service. Federal Law requires nearly all male US citizens and male immigrants, 18 through 25, register with Selective Service.
- Enroll at least half time for Federal Direct Loans. Students classified as half-time enrollment must be registered for at least six credits per semester (generally 2-3 classes).
- Fill out and sign the FAFSA. Your FAFSA information is used to to determine how much aid you are eligible to receive at that school.
- Have qualifications necessary for your program: A high school diploma, General Educational Development (GED), homeschool program, or equivalent is required.
Private student loans eligibility
There is no uniform set of private student loan requirements. Each private lender has its own eligibility criteria.
However, there are some common requirements you need to meet to be eligible, including:
- Be a U.S. citizen or permanent resident with a Social Security number.
- You’ll also typically need to be 18 years of age or older.
- Provide proof of income. Lenders will consider your income and debt-to-income ratio (all your monthly debt payments divided by your gross monthly income) to determine if you’re able to pay off what you borrow.
- Enroll in an eligible program. You must be a student who is enrolled in an eligible program.
- Use the borrowed funds for school expenses. You should plan to use the money only for education purposes — to a large extent because you’ll have to repay the debt in the future, including any extra money left over after paying tuition, fees, and other direct costs.
- Have a good credit history. Private loans invovle a credit check. You’ll usually need good to excellent credit to be eligible. For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. If you have bad, fair or no credit, you might need to use a reliable cosigner to boost your approval chances.
- Have a high school diploma or equivalent.
Federal student loans are made by the government, with terms and conditions that are set by law, and include many benefits (such as fixed interest rates, income-driven repayment plans and even access to loan forgiveness programs). Because of all these features, it’s typically best to take out as much in federal student loans as possible before considering other options.
These loans are distributed on a first-come, first-served basis. For this reason, you’d better apply as early as possible (most applications will open in early October).
Here are five steps you should take when applying for federal student loans:
Step 1: Fill out a free application for federal student aid (FAFSA)
You or your parents can register for the FAFSA online at studentaid.gov or via the MyStudentAid app. After that, the entire application can be filled out online and edited later when required.
You can use the IRS Data Retrieval Tool to input tax return information into the FAFSA form.
If you’d like to walk through the process step by step so you can feel confident that you’re filling out a FAFSA correctly, check out this step-by-step guide.
Step 2: Review your Student Aid Report
Once you’ve filled out your FAFSA, you’ll receive a Student Aid Report, a document from FSA that gives you some basic information about your eligibility for federal student aid and lists your answers to the questions on your FAFSA form. It usually takes take from 3 to 7 days to get this report.
In this report, you will see your Expected Family Contribution (EFC), which is an index number that colleges use to determine how much financial aid you’re eligible to receive.
It’s important to review this report for correctness and fix any errors in your application if necessary. Do it as quickly as possible as any errors in the application might affect your award.
Any school included in your FAFSA may select you for verification, and you’ll be required to provide additional documents. There is nothing to worry about — some schools might do this at random, while others require it for every candidate.
The most important thing is to provide all the necessary documents in a timely manner. If you miss the deadline, you’re no longer eligible to submit that year’s FAFSA form.
Step 3: Complete a College Scholarship Service (CSS) profile
There’s a less popular form that might help you get access to various grants and scholarships for students. It’s called the CSS Profile. It is an application for college aid required by about 300 colleges, universities and scholarship organizations.You can fill this form out to find out if schools on your wishlist offer support to supplement the aid you receive from the government.
Unlike the FAFSA, this service is not free. Students pay $25 to submit the CSS Profile to one institution, and $16 for each subsequent college they add to the list (although there are fee waivers that are generally given to students who demonstrate financial need).
The CSS Profile provides access to a large source of funding that may not be available through the FAFSA alone.
Step 4: Review your financial award letter
After you submit your FAFSA, you’ll receive a financial aid award letter from the schools you listed on the application form. The timing of these letters varies from school to school – from 3 to 10 days. However, if your admissions acceptance from a college has already arrived and there is still no financial aid award letter, contact the college’s office of financial assistance aid to learn the status.
This letter spells out the details of your financial aid package, such as grants and scholarships you’re eligible for, federal student loan amounts (unsubsidized and subsidized), f work-study eligibility. A subsidized loan is preferential since it doesn’t accrue interest while you’re in school.
Students can’t borrow an unlimited amount in federal student loans. An average undergraduate’s annual limit is $5,500 for subsidized loans and $12,500 for unsubsidized ones. The maximum annual amount you can borrow is determined by your grade level and dependency status.
Your financial award letter will also describe any additional support you qualify for, such as grants, scholarships or work-study programs. If the letter only contains an offer for student loans, you were not eligible for free aid.
Keep in mind that you don’t have to accept all the aid offered in your award letter. Grants and scholarships are a form of gift aid that don’t have to be repaid, but student loans are to be paid back. Focus on paying your tuition, housing and books first. Then try to find part-time work to cover other living expenses if you want to avoid excessive debt.
If you received financial award letters from several colleges, you can use the Award Letter Comparison Tool to help choose the best offer.
Step 5: Write an appeal letter if needed
If you think you didn’t get enough financial aid, you can appeal. For this, you can write a letter outlining why in your opinion you deserve more funds. The school’s financial aid administrator can make a professional judgment on a case-by-case basis. A professional judgment considers your unique circumstances in a way the FAFSA does not.
You will need to provide proper documents explaining the reason why you need more aid money, for example, a parent losing a job or reduction of income, unexpected medical expenses, or death of a parent. In these cases, you may be able to get your financial aid package reconsidered.
Make sure to gather all appropriate documentation to support your appeal. Only your school’s financial aid administrator can judge this appeal. If your request for reconsideration is denied, you can’t make another appeal.
Private student loans give students more opportunities to get money to pay for school with or without a cosigner, but they come with certain downsides.
Some downsides of private student loans include a good credit requirement, no access to income-driven repayment or forgiveness, interest rates based on creditworthiness, cosigner requirement, no federal subsidy,
While these features don’t necessarily should stop you from asking for financial aid, you’ll need to know them before you apply for a college loan from a private lender.
Note: you’d better consider federal options initially. Approximately 55% of students borrow from banks and other private lenders before they’ve exhausted all of their available federal options.
Below are five steps to take when applying for private student loans:
Step 1: Determine how much you need to borrow
Private lenders usually let you borrow the entire annual cost of attendance. Your cost of attendance is the total amount of expenses that enable you to attend school each academic year. However, it’s recommended to borrow only what you really need – this will help avoid overpayment in the long run.
First, you’ll need to consider all types of financial aid: federal student loans, various scholarships and grants, federal work-study, money from your 529 college savings account and any financial help from your parents or guardians, such as parent student loans.
Next, calculate how much extra you’ll need for tuition and fees, food, transportation, books and supplies, housing/rent and entertainment. Pay attention to some budgeting tips to help save you more money.
Once you’ve used all other financing options, you can consider applying with private financial institutions to get any remaining sum for essential college expenses.
Step 2: Check your eligibility
You’ll usually need to provide documents that prove financial need. However, you will typically need a good/excellent credit score and a DTI below 50% to qualify.
Since most students have poor or no credit history, you’ll likely need a cosigner who has a solid credit history, employment history and consistent income. The higher the cosigner’s credit score, the lower your interest rate might be. Moreover, this may help you get access to more favorable loan terms.
A cosigner is a person (usually a family member or a close friend) who guarantees that they will be legally responsible for repaying a debt if the borrower cannot pay. Being a cosigner is a huge responsibility, and it can be a big risk to your credit score too. If you miss a payment, it can damage both parties’ credit.
For this reason, it’s recommended to opt for automatic payments, which often include extra discounts. Additionally, try to find student loans that don’t require a cosigner so you can borrow money yourself.
If you can’t find a person who agrees to be responsible for your debt, do not despair – some lenders offer student loans for bad credit and no cosigner, but do not forget that they usually come with higher interest rates.
Many recognized lenders allow you to prequalify, which can give you an informal evaluation of whether you meet minimum lender requirements and how much you may borrow. Pre-qualification won’t hurt your credit score but can help save you time later when you’re in the middle of the search process.
Step 3: Explore private student lenders
If you’re searching for the best private student loans lender for your unique needs, you can start by getting quotes from marketplace lending which uses online platforms to connect borrowers with top lenders willing to offer loans.
LendKey, Purefy, Sparrow Student Loans, Credible and Earnest are some of the ways to look for low interest rates for student loans.
You can also contact your college to find out if it has a preferred lender list – a list of at private lenders that have met criteria set by the college. Make sure you look for the right option for your education level, as there are private graduate student loans and undergraduate student loans.
Once you’ve got quotes from multiple lenders, you can compare the following factors:
- Interest rate and APR.
- Collateral requirement.
- Credit score requirement.
- Loan term.
- Monthly payment.
- The total amount.
- Origination and prepayment fees.
Your purpose is to find the most affordable borrowing that is suitable for your individual needs and budget. You can use a student loan repayment calculator to estimate your monthly payments with various interest rates and terms.
Step 4: Time your applications
There’s no specific deadline to apply for private student loans. You can submit your application any time during the year, which is convenient if you have unexpected college expenses in the middle of the year.
However, there are some examples of when it’s necessary to pay attention to timing:
- Apply before you need the money. You’d better apply roughly two months before you need the funds. It can take several weeks or even several months before you receive the money. If you already know your college costs will exceed federal loan limits, it’s desirable to apply well before your tuition is due. This gives you more time to compare as many lenders as possible so you can find the right option for your needs.
- Avoid multiple hard credit checks. The formal application will likely result in a hard pull of your credit history, which may hurt your credit score. You can minimize credit score damage by submitting all applications within 30 days of each other. Credit bureaus call this “rate shopping.” If you find a loan within 30 days, the inquiries won’t hurt your credit score while you’re comparing rates.
- Reapply next year. You’ll need to renew your application every year. If you want to avoid the inconvenience of reapplying each year, explore lenders who offer multi-year student loans that help you fund all your years of school with one application. You’ll still have to satisfy credit requirements for additional years of borrowing, but it allows for a more straightforward process.
Step 5: Fill out an application form
Every lender has a different process on how to get student loans. As soon as you choose the most suitable lender, go to their website and find the instructions. Provide all the necessary documents and agree to the company’s terms and conditions.
The approval process can take anywhere from 3 to 5 days, although some providers may make a lending decision within 10-15 minutes. You typically have to respond to credit approval within 30 days. If you apply for multiple options, it’s recommended to wait to see which lender offers the lowest rate.
The final rate you are eligible for might differ from what was initially quoted, so you should read the agreement carefully (especially the fine print) before accepting the offer.
You will then have to wait for your college to verify some details and certify that it matches their records. The disbursement timeline will depend on the lender, but you should expect to receive the money within 3 weeks to several months.
Federal student loans offer more flexibility in terms of repayment options and loan forgiveness and often come with lower interest rates than private student loans. Because private student loans often require an established credit record or a cosigner, undergraduate students with poor or no credit history may need to use a cosigner to boost their odds of being approved.
In a general sense, federal loans should be preferred over private student loans. But, if you have used all kinds of federal aid, private student loans can be a great option if you need more help paying for your education
College financial aid disbursement timing depends on the type of student loan you ask for.
- Federal student loans are usually disbursed at the beginning of each semester. If there are any funds left over after paying for your tuition and fees, your school’s financial aid office or bursar’s office will refund the money to you in a separate disbursement — typically within two weeks of receiving your loan funds.
- Private student loans are usually disbursed to your school after you’re approved – within a few weeks, depending on the provider and your college’s certification process. Like with federal loans, any funds left over after paying for your tuition and fees will be refunded to you.
It’s possible to get a student loan with poor credit, but depending on your individual situation, it could be more challenging. Most types of federal student loans don’t come with a credit check, so if you comply with the general eligibility criteria you should get approval. All federal student loan rates are set by Congress, according to the Federal Student Aid Office, so every person who is eligible receives the same fixed interest rate—though stay informed that interest rates vary depending on the type of borrowing you apply for.
However, if you do not qualify for federal loans or you’ve exhausted all types of federal aid, private student loans can help you get extra money needed for your college expenses. Private lenders usually perform a credit check, so it will be more difficult to get approval if you have bad credit or no credit at all.
Most private lenders have a credit score requirement of at least 670, but to get favorable rates you’ll likely need a score of over 700. If you are not eligible on your own, you might search for a co-signer to improve your chances of approval. A co-signer takes full responsibility for paying off a loan, along with the primary borrower.
Some lenders in Georgia offer loans specifically for borrowers with bad credit. Instead of your credit score and history, these providers rely on factors like your education, grade point average (GPA), debt-to-income ratio, and estimated future earnings to find out if you are eligible to apply.
However, bad credit options are likely to come with higher interest rates. Read the agreement carefully and make a realistic estimate of your payment capacity and accept the offer only if you are sure that you can afford it. Even if you can get accepted, you don’t want to get into a debt trap.
A co-signer is a person who agrees to be legally responsible to pay a debt if the borrower does not pay off a loan as agreed. Their strong credit and consistent income can make it easier for the primary borrower to get approved and qualify for better interest rates. However, keep in mind the risks of co-signing a student loan: a cosigner is legally responsible for the debt if the primary borrower defaults. You and your co-signer could suffer credit score damage and ruin your relationship.
Many providers have the option for co-signer release – it is the process of having a cosigner removed from an existing loan, which means the cosigner is no longer responsible for the debt. For this, you need to meet the requirements for on-time payments, income and credit score.
How to get student loans without a cosigner if I have bad or no credit?
If you could not find a cosigner, you’d better get finding funding through federal student loans since they do not involve a credit check. The only exception is Direct PLUS Loans, which you can get even if you have a low FICO credit score, so long as you don’t have an adverse credit history.
When it comes to private student loans, the lender decides whether or not you can get approved without a cosigner. Some providers have more flexible requirements, while others offer options designed for borrowers without cosigners. These products may rely on your academic performance or future earning capacity to assess your creditworthiness and determine rates.
Each lender has its own terms and conditions, so you’d better shop around at multiple different providers to find the best student loans for you.
When shopping for loans, compare the following factors:
- Variable vs fixed rate student loans: While federal loans have fixed interest rates that do not change over the life of the loan, private student loans can come with fixed or variable rates. Variable rates can fluctuate over time. Borrowers who prefer predictable payments tend to prefer fixed rates, which won’t change in cost.
- Loan terms: Private loans are usually paid off within 5 to 20 years. Shorter terms typically come with lower interest rates. Long-term loans can mean lower, more affordable monthly payments, but a longer term means accumulating more interest charges over time. ·
- Repayment options: Private student loans may not have a grace period (a stretch of time after you’ve graduated or left school when you’re not required to make payments). Grace periods usually last six months after you graduate or drop below half-time enrollment. Find out how much you’ll owe during the entire term, and at what point you must pay both interest and principal.
- Hardship options: Some providers offer forbearance if you have a financial hardship or medical emergency. Forbearance is when your lender allows you to pause or reduce your payments for a limited time while you build back your finances. Check each provider’s terms and find out how many months you can take a break from payments over the course of the lending term.
- Co-signer release: If you apply with a co-signer, some providers will allow you to apply for co-signer release after some months of on-time payments. This is the process of having a cosigner removed from an existing loan, which means the cosigner is no longer responsible for the debt. This can protect your cosigner’s credit so that it doesn’t suffer if you can’t make payments as agreed with the lender.
- Perks: Some lenders offer additional benefits, such as educational and career counseling or a reduction in your principal balance for finishing college on time.
- Discounts: Some providers offer interest rate discounts. The two popular ways to get a discount are to automate your payments or snag a loyalty discount.
Yes, federal and private student loans are great options for receiving financial aid by college students. But there are other tools! Do not forget that you may qualify for federal aid and some other financial support.
- Scholarships. A scholarship is a form of financial aid awarded to students to further education. It doesn’t have to be paid back. Scholarships are typically merit-based and awarded to students based on their academic achievements, extracurricular activities and field of study. Scholarships are usually awarded by either private organizations or directly by a student’s intended college.
- Grants. Grants are usually awarded on the basis of need and typically do not have to be paid back. You can get grants from the federal government, your state , our college and private organizations. There are four types of federal grants in 2022: Pell Grants, Federal Supplemental Educational Opportunity Grants, Iraq and Afghanistan Service Grants, and Teacher Education Assistance for College and Higher Education (TEACH) Grants.
- Work-study program. The federal work-study program provides funds for part-time employment to help needy students finance the costs of postsecondary education. If you want to participate in this program, you can mention your desire when filling out the FAFSA. If you are not eligible for the federal work-study program, you may consider finding a part-time job.
- Payday loans. Payday loans are convenient and provide fast cash to cover emergency college expenses. Some of these expenses are as follows: tuition or school fees, housing/rent, books and supplies, transportation, emergency medical bills, and entertainment. It is a type of short-term unsecured credit borrowers can apply for around the clock and even with bad credit. Two things make a payday loan attractive: relaxed eligible criteria and fast payouts. The available amounts are often small. It can be as low as $100 but can also reach up to $1,000. To get approved for a payday loan, a student has to meet certain requirements: be at least 18 years of age, have proof of income, have an active checking account and have some kind of identity verification. Payday loans don’t involve paperwork. If you have an emergency, this option can help you out very quickly. But you can only use this service if you are sure you will be able to repay the debt within a few weeks. To avoid a debt trap, it is important to know how to use payday loans correctly.
- Ask for college gifts. Need help to pay for education? Friends and family can help you with this through the Gift of College platform. This is a gift registry that makes it easy to accept 529 plan contributions or student loan payments from family and friends.
- Apply for a college job. Many students work to offset the costs of college. These part-time jobs for college students can fit into your busy school and social schedules. Getting a job while in school can help offset your college expenses and give you some much-needed spending money. Some of the best part-time jobs for college students are academic tutor, freelance web designer or programmer, editor or blogger, fitness instructor, massage therapist, babysitter, bank teller, and mystery shopper.
- Consider parent student loans. It is a type of federal or private student loan that’s designed specifically for parents who are helping a child pay for college. — including student loans for parents with bad credit. Here are the best parent student loans.
- Research college degrees with the highest starting salaries. Here are the highest-paying degrees: engineering, military technologies, computer and information sciences, transportation sciences and technologies, construction services, engineering technologies, physical sciences, mathematics and statistics, architecture, biology and life sciences, social sciences, business, medical and health sciences and services, history, nuclear, industrial radiology and biological technologies.
These alternative funding sources, along with low interest student loans, can help make it possible to finish a college degree and at the same time avoid excessive debt. Basically, we recommend that you minimize any loans and try to get as much in scholarships, grants and federal aid as possible.
How does a student loan work?
A student loan is money borrowed from the government or a private lender in order to pay for college and its related costs, including tuition, fees, books and living expenses. The loan has to be paid off later, along with interest.
What are the 4 types of federal student loans?
There are currently four types of federal student loans available:
- Direct subsidized loans.
- Direct unsubsidized loans.
- Direct consolidation loans.
- Direct PLUS loans.
How much can I borrow in student loans?
If you are an undergraduate student, you can borrow up to $12,500 annually and $57,500 total in federal student loans, depending on what year you are in college and your dependency status.
What are interest rates on student loans?
The 2022 interest rates for all new federal direct undergraduate student loans are 4.99%. Unsubsidized direct graduate student loan rates are 6.54%. Rates for PLUS loans are 7.54%.
Is there an age minimum to get a student loan?
This depends on the type of loan you apply for.
- Federal student loans: There’s no minimum age requirement.
- Private student loans: Most private lenders require borrowers to be at least 18 to qualify.
Can I get interest free student loans?
Yes, you can still pay for college with no money. There are nonprofit organizations that offer interest free student loans to cover school expenses. Some of these might be of interest: Bill Roskob Foundation, Evalee C. Schwarz Charitable Trust, and Military Officers Association of America. You can also try to waive your costs, serve your country or choose a school that pays you to attend.
Tags: education, finance, student loan, students