If you’re an undergraduate, always start with federal loans. They don’t require a credit history or a co-signer and they offer more generous protections for borrowers, such as income-driven repayment and loan forgiveness, than private student loans do.
» MORE: Your guide to financial aid
Before you borrow, think ahead to how you’ll repay debt. Put a dollar figure on it by using a student loan payment calculator. This is the bill you’ll be paying every month for 10 years or longer. Borrow only what you need, and don’t take on an amount or an interest rate you can’t expect to handle right after graduation.
Here’s how you can get federal and private student loans.
How to get a federal student loan
Start by submitting the FAFSA
Submit a Free Application for Federal Student Aid, or FAFSA, to find out how much financial aid you may qualify for, such as grants, scholarships and work-study, that won’t have to be repaid. It takes about 30 minutes to complete. Each school you apply to will use the FAFSA to determine your financial aid; the gap between aid and cost of attendance is what you have to cover.
Borrow subsidized loans before unsubsidized
The FAFSA serves as your application for federal student loans as well. You’ll be notified of what you can borrow in the financial aid award letter from any school that accepts you. There are two types of federal loans: subsidized and unsubsidized.
Subsidized federal loans go to undergraduate students with a financial need. The subsidy covers the interest on the loan while you’re in school. Unsubsidized federal loans aren’t based on need, and interest starts to accrue immediately.
How to get a private student loan
Consider private student loans to cover any remaining costs after grants, scholarships, work-study and federal loans. They’re a viable option if you have good credit or a co-signer who does.
Where to get a private student loan
Banks, credit unions and online lenders all offer student loans. Shop around with multiple lenders, weighing repayment flexibility and forbearance options as well as the interest rates offered.
How to get approved for a private student loan
Most private lenders will require borrowers to have good credit and an income that can support loan payments while meeting other debts (in other words, a low debt-to-income ratio). If you don’t meet those qualifications, you’ll need a co-signer who can.
Private lenders don’t technically list a co-signer as a requirement, but you’ll have difficulty getting a private loan without one. More than 90% of all new undergraduate private student loans had a co-signer for the 2018-19 academic year, according to a 2018 report by MeasureOne.
If you don’t have a co-signer, a few private lenders gear loans toward independent students, but you’ll pay more.
» COMPARE: Student loans without a co-signer
• Direct PLUS loans: Direct PLUS loans are the only federal student loan that parents can take. You’ll need to submit a FAFSA with your child and complete a parent direct PLUS loan application to borrow.
• Co-signed private student loan: Co-signing a loan with your child will make you equal borrowers. It’s best if you have good credit, a steady income and are willing to take on the responsibility of paying the debt if your child can’t.
• Private college loans for parents: Certain private lenders may offer private college loans for parents to borrow rather than co-signing on a student loan. The debt is your sole responsibility.
• Federal direct unsubsidized loans. Graduate students can borrow up to $20,500 each year. To apply, submit the FAFSA. There is no credit check involved.
• Federal direct PLUS loans. Graduate students can borrow up to the cost of attendance minus any other financial aid. Your credit is considered. To apply, submit the FAFSA and complete a graduate student direct PLUS loan application.
• Private student loans. Apply directly with a bank, credit union or online lender. Your credit history affects the interest rate and repayment terms. Some private lenders may have specific loans for graduate students depending on field of study. You typically can borrow up to the cost of attendance minus any other financial aid.
» MORE: Compare graduate loans