For many of today’s students, loans are an essential, if confusing, part of getting a college education. The average cost of a single year of study at a four-year college or university is $25,409, according to the National Center for Education Statistics (NCES). The total cost of earning your undergraduate degree could very well approach six figures. For most students, especially those fresh out of high school or returning to school after switching careers or starting families, this cost is unaffordable.

Often, waiting until you have the money saved up just isn’t an option. Today’s education costs are more than twice what they were in 1985, the earliest year for which the NCES has data recorded. Salaries for the average American haven’t risen nearly as fast as tuition rates have. It’s difficult enough to find a job that pays a living wage without having a degree, much less a job that will allow you to save $100,000 for college. In the meantime, the tuition rates keep rising. There’s also an opportunity cost. By not being able to work in your desired field, you’re missing out not just on a higher salary, but also on valuable work experience.

Due to the high cost of college, tens of millions of Americans have turned to loans to fund their education. Nearly 70 percent of students graduating with a bachelor’s degree used student loans to pay at least in part for their education, according to U.S. News & World Report.

Remember, loans are a source of funding that you must pay back. Although you can use the loan now to pay for college, it’s not free money. After you leave school, you will have to repay the lender – with interest.

If you’re wondering how to get a student loan, you’re in good company. Read on to learn more about obtaining the federal and private student loans that can help you afford a college education. 

Federal Student Loans

The first type of student loan you should consider is a federal student loan. That’s because these loans, funded by the United States government, offer several advantages over private loans.

The Benefits of Federal Loans

Federal student loans often have significantly lower interest rates than loans backed by private companies. This means that, when it’s time to pay back the money that you borrowed for school, you won’t pay as much. Additionally, federal student loans have a fixed interest rate, Federal Student Aid reported.

The percentage of interest you must pay will stay the same over time – and, more importantly, it won’t increase. That’s not always the case with private loans, some of which include interest rates that fluctuate to as high as 18 percent. Often, the interest you pay on federal student loans is tax deductible, but it may not be with some private loans. If you want to pay your federal student loan off early, you can – without incurring prepayment fees.

There are other benefits of federal student loans, too. You won’t have to start paying back these loans as long as you’re still in school and studying at least half-time. Typically, you can get these loans without undergoing a credit check or having a co-signer. You may have the option to choose a repayment plan that works for you or to postpone or defer payments for some time if you’re unable to repay the loan.


The first step to getting a federal student loan is to complete the Free Application for Federal Student Aid (FAFSA). This application is used to determine your eligibility for student aid from the federal government. Filling out the FAFSA is essential for students seeking any kind of government financial aid. You must submit the FAFSA if you want a federal student loan, grant or even a work-study opportunity. Often, you need to complete the FAFSA even to secure non-government forms of aid, like merit-based scholarships awarded by your school.

How do you go about completing the FAFSA? You can choose from three options:

  • Submit your form online by visiting Federal Student Aid 
  • Download a PDF version of the FAFSA (here) to fill out on the screen or by hand and mail it in to the federal government for processing.
  • Request a printed version of the form by phone at 1-800-4-FED-AID (1-800-433-3243) or 334-523-2691 and mail in the completed form.

As you fill out the FAFSA, you will need to complete several steps. If you plan to submit the document online, you will need to make an FSA ID. You can use this ID to electronically sign the application. You must gather together some important documents, like your social security number and I.D., as well as financial information such as federal income tax returns and financial account balances. Part of the process includes listing any schools you are considering attending.

Another thing you must do is find out if you are considered a dependent student. Dependent students have to provide information about their parents’ finances. Applicants who are classified as independent students need to share only their own financial information.

This whole process may sound like a lot of work. However, on average, students spend less than 25 minutes filling out the FAFSA, Federal Student Aid reported.

It’s always a good idea to fill out the FAFSA as early as possible. The federal government typically requires students to complete the form by June 30th of the year during which you plan to enroll in college for the fall semester. Individual states sometimes have shorter deadlines. Some of the federal student aid available is offered on a first come, first served basis, according to U.S. News & World Report. Once that money is gone, it’s gone. Waiting too long to complete the FAFSA could cost you aid money.

After you complete the FAFSA, it takes some time to process the application. Federal and state agencies and the financial aid offices of your listed schools all receive your information. Three days to three weeks after you submit the application, the U.S. Department of Education’s office of Federal Student Aid will send you a document called a Student Aid Report.

Accepting Your Student Aid

One piece of information found in the Student Aid Report is a calculation called the Expected Family Contribution. This figure is an assessment of how much a student’s family can afford to pay toward a single year of the student’s education. Federal and state agencies and colleges use this number to determine how much need-based financial aid a student will receive. The Expected Family Contribution doesn’t take into account some factors, like debt, that can affect how much a family can realistically afford to pay.

Once the colleges listed on your FAFSA see your Expected Family Contribution, they can figure out how much need-based and merit-based aid you would receive. Each school will send you a document, either electronically or by mail, called an award letter. This letter contains your financial aid offer if you attend that school. The offers you receive can differ from one school to another. Factors that affect your aid offer include the cost of attaining an education at the school and the need-based and merit-based aid available.

Even when you are eligible for aid, you don’t automatically get funding. You have to choose to accept the aid offered. Typically, you award letter will tell you how to go about accepting your financial aid package. Students who accept federal student loans must sign a document called a promissory note. This document outlines the terms and conditions of your loan. To make sure you understand what your responsibilities are as a borrower, you will also need to go through an informational entrance counseling session. 

Private Student Loans

Unlike federal student loans, private loans are backed by private corporations. For some of these private lenders, like Sallie Mae and College Ave, education loans are the company’s primary business. Other corporations that offer private student loans are large banks such as Citizens Bank, Discover and Wells Fargo.

Choosing a Private Education Loan

Why would you want a private loan when federal student loans offer so many benefits? Federal funding is limited. Often, students don’t get enough money in the form of grants, scholarships, work-study funding and federal aid to fully pay for their education. For many families, the Expected Family Contribution figure is shockingly high, according to U.S. News & World Report. To close the gap between the aid they are awarded and the cost of their education, students may turn to private lenders. 

Loan terms and conditions, repayment options and interest rates vary from one lender to another. It is important to compare your options when seeking private student loans. While private lenders are likely to offer students more money than the federal government would, they often have higher interest rates and fewer repayment options. Students and parents who are seeking private education loans should always shop around to find the best option. Choosing the wrong loan could cost thousands of additional dollars.

Applying for Private Student Loans

To get a private student loan, you have to go through an application process. This process includes a credit check. If you have bad credit or no credit, then the loans offered to you will have high interest rates. You may have trouble getting a loan at all. It’s common for students who are just finishing high school to have little or no established credit yet.

Undergraduate students often need a cosigner – an individual with established credit who has a history of responsible borrowing – to help them attain a loan. A cosigner is legally responsible for paying the debt if you default on your student loan repayments. When you have someone cosign a loan for you, you are asking them to make a big commitment.

Because these loans are funded by private companies and not the government, there are no universal applications like the FAFSA that you complete in order to receive your loan. You will have to follow whatever the lender’s application requirements are. These requirements may include filling out the necessary forms and providing any documentation requested. Often, the documents you sign and any entrance counseling you receive are up to your lender.

There are a couple of things you should keep in mind once you receive your private education loan. You may be expected to begin paying on your loan even before you finish school. You may have little say in terms of how much you can afford to pay at that time. You have fewer protections when you borrow from a private lender, so make sure you understand all of the terms of your loan. You should know what your responsibilities are before you accept any private loan offers.

Alternatives to Student Loans

While loans are necessary for many students, they should never be your first choice when seeking college funding. The interest you pay on student loans can add up to thousands of dollars, especially if you have a high interest rate or you pay your loans back slowly over many years.

Before you accept any student loans, find out if you qualify for any of the following types of aid:

  • Grants, need-based funding that you don’t have to pay back.
  • Work-study offers, in which the government awards funding that the student earns through a part-time job, often on campus. You work for the money that you receive from the federal work-study program, and you never have to pay it back.
  • Scholarships, merit-based funding that you don’t have to pay back. Scholarships can come from many sources, from government agencies to colleges and even third-party organizations.

Filling out the FAFSA will automatically determine your eligibility for any federal and state grants and work-study funds. Because this aid is need-based, there’s not much you can do to get more of this type of funding. However, you can apply for as many third-party scholarships as you wish.

Most students use a combination of financial aid types to help them afford an education. No matter what your family’s income bracket is or how much scholarship money you expect to receive, it’s important that you understand how to get student loans – because there’s a good chance that you might need them.