The College Loan Process: Your Step-By-Step Guide to Applying for Federal and Private Student Loans

Federal and private student loans can both help you pay for college. But the similarities mostly end there. Interest rates, borrowing limits, and repayment plans are all different depending on the type of loan you have. And when it comes to the application process, federal loans will require you to fill out the Free Application for Federal Student Aid (FAFSA^®), while private loans do not, but involve a credit check.

If you’re eligible for grants, scholarships, or any other free financial aid, you should turn to those funding sources first. If you need to borrow, compare federal and private student loans to find the right fit for you. Not sure where to start? Here’s everything you need to know.

Start by filling out the FAFSA for financial aid

1. Begin the application process by filling out the FAFSA at studentaid.gov. The FAFSA can be submitted starting October 1st. While it’s technically not due until June, the earlier you complete it, the better. Some states have earlier deadlines, and in some situations, financial aid can be “first come, first served.”
2. Review your Student Aid Report (SAR). This document summarizes the information you submitted on the FAFSA and includes your estimated family contribution and your estimated eligibility for federal grants and loans. It typically arrives about a week or two after you submit your FAFSA online. When you receive it, double check that all the information is correct.
3. Compare your financial aid award letters and accept all or part of the aid offered. (The Award Letter Comparison Tool can help you evaluate these offers.)
4. If you accept federal loans, complete entrance counseling and sign your Master Promissory Note. (This is a legal document, in which you’re promising to pay back the loan.) Entrance counseling is required for undergraduate first-time borrowers, and helps you understand the terms and conditions of your loan, as well as your rights and responsibilities. You need to complete this for funds to be disbursed to your school.

If needed, apply for private student loans

After exhausting free money, family contributions, savings and federal student loans, you may still have costs to cover. Applying for private student loans may be an option to help bridge any gaps.

Research private loan options, such as Discover^® Student Loans. Once you choose one, complete and submit your application. As part of the application, you’ll undergo a credit check. Private student loans don’t have rigid timelines, and approval can be quick, but it may still take about a month before you get your school-certified funds. So give yourself enough time.

1. Add a cosigner to your application, if needed. A creditworthy cosigner may increase your chance for loan approval and may help get you a lower interest rate. Cosigners are typically parents or close family members (like grandparents), and could even be a friend.
2. If you accept a private student loan, you’ll need to sign your promissory note, which is a legal document in which you promise to pay back the loan. Then, complete the self-certification form. This is a document required by law, which notifies you of other financial aid sources and encourages you to pursue them first, and asks for some financial information, including the cost of attendance.
3. Accept the loan terms. After you accept, your school will certify the requested loan amount. This ensures you don’t borrow more than you need.

^{FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover® Student Loans.}