It’s reported that 43.2 million borrowers have debt from taking out federal student loans. Although grants and applying for scholarships can work to offset the cost of school, it’s not always possible to attend higher education without incurring student loan debt. In fact, the average amount of loan debt — among undergraduate students — is $38,290.
If you need to apply for student loans, it’s important to do so as soon as possible. Since colleges and universities usually require that you pay your tuition before the semester starts, you need to have your finances squared well before the start of class. This article explains when to apply for student loans and which are best for your educational needs.
When Should You Apply for Student Loans?
As a general rule of thumb, the best time to apply for student loans is as soon as you start preparing to pay for college. This might be when you complete your FAFSA. FAFSA typically opens up on October 1 for applications (for the following school year), so apply as soon as possible, as some loans may be contingent on the information in this application.
For example, if you want to apply for federal student loans, you need to complete the FAFSA first. Keep in mind that any student aid you qualify for is given out to those who apply first, so make sure to complete your information as soon as possible. This is especially true if you rely on financial aid to attend school.
Private student loans are different from federal student loans in that there’s no deadline to apply for them. However, the bank, credit union, or other lender you apply through may have their own set of requirements for applying, so check with them to see how long the application process takes. Then time this with your school’s tuition guidelines and when they expect payment. However, expect that once you submit your application for a private loan, it can take two to three months to receive the money you applied for, with delays pending, so plan accordingly.
Although private loans are a viable option for anyone attending college or university, always shop around to see what interest rates and repayment options are available from multiple lenders.
Do You Need to Complete the FAFSA for Student Loans?
That depends. Yes, you have to complete the FAFSA if you’re applying for federal student loans. If you apply for a private student loan, however, you don’t need to complete the FAFSA.
Keep in mind that the FAFSA allows you to qualify for financial aid, grants, and scholarships, so it’s worth completing. When applying for private student loans, you’ll need to provide credit information, your income, and other information for you and your co-signer, should you need one to take out a loan. But it’s free to complete the FAFSA, so it’s recommended that all students do so.
But is financial aid the same as student loans? No. Financial aid is either money earned through a Federal Work-Study Program or money given as a gift aid. It doesn’t have to be repaid. Student loans, however, have to be repaid within a certain time frame, with interest.
What are the Student Loan Requirements?
Student loan requirements vary based on the type of loan you apply for. If financial aid, grants, and scholarships don’t cover the cost of your tuition, then taking out a federal student loan is a way to help pay for college.
You have to show proof of your financial need. When you complete your FAFSA, this need is calculated and the type of loan you qualify for is determined. This might be a Direct Subsidized or Unsubsidized Loan.
You also need to be a U.S. citizen or an eligible noncitizen. There are instances where U.S. residents who aren’t citizens are still able to secure federal student loans. Have your Social Security number available, as you also need to provide this.
Students looking to take out federal student loans need to be enrolled in a certificate program or an eligible degree program. It must be recognized and accredited. There may also be GPA requirements for federal aid programs, so be sure to have all the details.
Federal Direct Loans require a minimum of half-time enrollments. Ensure you have all the requirements for your program — a high school diploma, GED, or proof of a homeschool program.
What About Private Loans?
For private student loans, you need to be enrolled in an eligible program, just like with federal student loans. Additionally, you may need to be a U.S. citizen (or a legal resident) aged at least 18 and have a valid Social Security number. You also need to have a high-school diploma, GED, or completed a homeschool program.
Additionally, private student loans often require a good credit score and credit history, since credit checks are required. With federal student loans, credit checks aren’t required. This is why you may need a co-signer with a good credit score.
You also need to verify your income, especially since lenders focus on your debt-to-income ratio when considering you for a private student loan. They need to see proof thay you can repay your loan.
Different Types of Federal Student Loans
There are three types of federal student loans you can apply for. There are Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans.
Direct Subsidized Loans are for undergraduate students who demonstrate a financial need. While you’re in school, the government takes care of the interest on these loans.
Direct Unsubsidized Loans are for undergraduate and graduate students, even if they don’t demonstrate a financial need. They are responsible for all the interest on these loans.
Direct PLUS Loans have Grad PLUS Loans for graduate students and Parent PLUS Loans that are for parents looking to help pay for their child’s tuition. These loans require a credit check and usually have higher interest rates than their counterparts.
When Do I Apply for Student Loans?
If you’re wondering when do you apply for student loans, then College Funding Professionals can help. We’ll walk you through the entire experience, offering information and answering any questions as they arise. Our experts are well-versed in student loan applications, so you’ll have knowledgeable resources available to you through the entire college application process.
Contact us today to learn more about how we can help you with your journey through higher education. Join our free online Facebook Group to gain access to the best college planning advice anywhere.
