The student loan process: Your guide to applying for federal and private loans

Planning to take out student loans? You’re not alone. Federal and private student loans can both help you pay for college. According to the Education Data Initiative, 30% of undergraduate students and 66% of graduate students borrow federal student loans, and 13% of students borrow from private student loan lenders like banks.

If you intend to apply for student loans, it’s important to understand the application process and stay organized so you don’t miss any important steps or deadlines. Not sure where to start the loan process? Here’s what you need to know.

How to apply for federal student loans

1. Fill out the FAFSA

The first step to applying for financial aid is to fill out the FAFSA at studentaid.gov. It is used by colleges, states, and the government to offer financial aid. Pay close attention to the school deadlines since those vary and make sure to submit by their preferred dates. The FAFSA becomes available on October 1, and in some situations, financial aid can be “first come, first served” so it’s important to apply as soon as possible. Most students qualify for some financial aid so make sure you don’t let any myths keep you from applying.

2. Read your Student Aid Report (SAR) carefully

Within a week after you submit the FAFSA online, you’ll receive your SAR via email. This document summarizes the information you submitted on the FAFSA and includes your Estimated Family Contribution (EFC) and your estimated eligibility for federal grants and loans. It will give you an idea of what kind of financial aid you might expect when you receive your college acceptance letters. When you receive the SAR, double-check that all the information is correct. If you find a mistake, you will need to submit a correction.

3. Evaluate your financial aid options

When you receive college acceptances, you’ll also get financial aid award letters, which detail the financial aid each school is offering. The award letter will include grants and scholarships you qualify for along with federal loans. Compare your financial aid award letters side by side with an Award Letter Comparison Tool to help you understand your true cost of attendance after grants and scholarships.

Once you make your college choice, you will need to accept all or some of your financial aid award. If you’re eligible for grants, scholarships, or any other free financial aid, you should accept them first before you take out any student loans.

4. Accept or apply for your federal student loans

If you are an undergraduate student, you can accept the federal loans listed on your award letter online. You’ll need to complete entrance counseling, which is required for all first-time borrowers. Entrance counseling helps you understand the terms and conditions of your loan, as well as your rights and responsibilities. You need to complete it before funds will be disbursed to your school. Once you’ve done that, sign your Master Promissory Note, which is a legal document that outlines your promise to pay back the loan, including interest and fees.

For parents and graduate or professional students, you will need to apply for a Direct PLUS Loans and undergo a credit check. If approved for a PLUS loan, you will be required to sign a your Master Promissory Note, agreeing to the terms of the loan.

How to apply for private student loans

1. Research private student loans

After maximizing sources of free money such as grants and scholarships, family contributions and savings, and accepting any federal student loans, you may still have costs to cover. In addition to any federal loans you are offered, research and compare private student loans and lenders. We encourage you to borrow responsibly and maximize grants, scholarships, and other free financial aid before taking student loans. If you need to borrow, compare federal and private student loans and choose the loans that best fit your needs.

2. Complete your application

Once you choose a private student loan, apply. While private student loans don’t have rigid timelines, it may take about a month before you get your school-certified funds. So, give yourself enough time. You’ll want to apply at least 45 to 60 days before you need the student loan to allow for processing time.

3. Add a cosigner to your application, if needed

As part of the loan application, you’ll undergo a credit check. If you don’t have an established credit history or have a low credit score, adding a creditworthy cosigner may increase your chance for loan approval and may help you get a lower interest rate. Cosigners are typically parents or close family members (like grandparents) and could even be a friend.

4. Complete the required paperwork

If you accept a private student loan, you’ll need to sign your promissory note, a legal document in which you promise to pay back the loan. You’ll also need to complete the self-certification form. This form is a document also required by law that notifies you of additional financial aid sources and encourages you to pursue them first. It will also ask for some additional information, including the cost of attendance.

5. Accept your loan terms

Once your paperwork is completed and you accept your loan terms, your school will then schedule your disbursements.

From start to finish, finding and securing the right student loans for you can seem like a long journey. But as long as you stay on top of deadlines and requirements, the application process can be smooth.

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