It's never too late to start thinking about how you or your child will go about paying for their education. The price of college tuition doesn't seem to be going down anytime soon, after all.
There are different sorts of loans that are worth looking into and different ways of finding and applying for them. There's also no shortage of thought you should be giving to this prior to applying.
Still, depending on a student's circumstances and grades, getting a student loan can be simpler than you may realize. Just be fully prepared for the amount of debt your future self will have to pay and be aware of the possible ways you can lessen that amount.
Here are the steps needed for getting loans for your upcoming college education.
How to Get a Student Loan
There are several sorts of loans you'll need to consider and different ways to go about getting them, but that's actually far from the first step of the student loan process.
Where do you actually start when considering loans? Frankly, the first step is a cold hard look at your financial situation.
1. Strongly Consider the Long-Term Ramifications of Your Decision
It cannot be stressed enough what a big decision taking on student loans is. You almost certainly know that already, but it bears repeating. Depending on the number of student loans - private loans in particular - you have to take out for at least four years of education, you could be saddling yourself with decades of loan payments. And that's before factoring in interest.
So a stark reality check is in need. Student loan debt in the U.S. is over $1.5 trillion, and the most expensive universities don't look to be lowering their tuition in the near (or distant) future. And so you will need to examine your family's finances. Is there a dependable income for the foreseeable future to take on a lot of debt?
The specific situation of the student comes into play as well. What are their grades like? What years of education are they seeking loans for? Have they been saving up their own money from a part-time job? And how does the family income impact the loans you could get?
The answers to these questions could lead to plenty of available funds and less need for loans, but it may also limit the number of federal loans you can get, leading to a need for private loans. This can impact not only the loan situation but potentially the decision of a school. If you need to take on a lot of private loans to get into a more expensive private school, it may be time to look into a closer public university.
You should also, if you can, calculate loan amortization for both the loans you'll get and the interest that comes with it over extended periods of time.
2. Apply for Grants and Scholarships to Lessen Loan Dependency
If you're eligible for grants and scholarships, they can go a long way toward reducing your dependency on loans for education.
There are grants and scholarships for all manner of the aspiring student. There are grants that will help pay some of your student debt if you maintain a certain GPA throughout your education, if you major in a specific field, or earn a certain income. Similarly, there are scholarships out there for various college programs and majors, as well as ones created specifically for women or students of color, that may help pay a percentage of your tuition.
Do your research, and do it early so you're aware of the deadlines for applications to the scholarships you're most interested in and apply to you.
3. Fill Out and Submit FAFSA
Some of these grants, such as the Pell Grant, are given out (if you're eligible) after filling out and submitting the Free Application for Federal Student Aid, better known as FAFSA. The FAFSA is a requirement if you're to get any federal financial aid for your education, and the current deadline for the 2018-19 school year is June 30, 2019. The deadline for the following school year is June 30, 2020.
Filling out the FAFSA requires providing extensive financial and tax history of you and your family, in the process determining the general income and tax bracket you are working with. Using this information, they can determine how much of the available funds they can and will put toward your federal student loans.
The FAFSA in particular should be prioritized in a timely manner. The earlier you submit it, the more funds are available to you. If you're in need of more financial aid than others, getting it submitted early gives you a better chance of a sizable amount.
Even if you've already enrolled in college and completed a year, the FAFSA has to be renewed each year. However, while the initial FAFSA submission can be time-consuming and cumbersome, the renewal is much faster. As long as you have your log-in info ready, you just have to confirm all of the previous year's information is correct/fix it with any new updates and add in new tax information.
4. Examine Your Federal Loan Options
If you've submitted your FAFSA in a timely manner and have shown yourself to be in need of any financial assistance for education, you will likely be offered some sort of federal loan.
These government loans should be the first sort of loan you seek out. They are far better types of loans than private loans due to one large advantage: generally, federal loans have lower interest rates than private loans. Interest on loans is one of the biggest reasons that repayment can take college graduates so long.
Of course, there are limits to how much you will be given via federal loans. But with these, take what you can get.
5. Take Subsidized and Unsubsidized Loans Available to You
There are different types of federal loans, with the two largest distinctions being between subsidized and unsubsidized loans.
Direct subsidized loans are offered to those whose FAFSA determined they need financial help paying for college; the school you attend will determine the amount that you can borrow, permitting it doesn't exceed your financial need. With a subsidized loan, the Department of Education will also pay the interest on it during certain periods provided you are meeting certain criteria (during school if you're there at least part-time, the first six months after graduation, during an approved period of deferment). They're only available to undergraduate students.
Direct unsubsidized loans, though, are for undergraduate and graduate students alike and don't necessitate a specific financial need for you to have them offered to you. However, you have to pay all of the interest on them yourself, and interest will still accrue if you've had to pause your payments. Similar to subsidized loans, though, your school determines the amount you're entitled to.
The maximum amount of subsidized and unsubsidized loans you can be offered is determined by whether you're a dependent or independent student and what year of school you are in.
6. Apply for Private Loans if Necessary
The hope when seeking financial aid for college is that you won't ultimately have to borrow too much. Ideally, you've saved quite a bit for this moment and can complement that with grants and scholarships, keeping your dependence on student loans to a minimum.
However, as tuition continues to skyrocket that's not always realistic for aspiring students. It's possible you may still need to take out some private loans to round out tuition costs. Private loans may be harder to get. Your credit score, among other things, will be factored into the decision of if you can get a loan and how much you will be offered.
Be very careful when it comes to private loans. Perform a thorough research on private lenders to make sure they are trustworthy. Compare the interest rates you're being offered to the average interest rates of a loan. And try not to become too reliant on these private loans for your education if you can.