Before you complete your private loan application, make sure that you have gone through the financial aid process and explored all of your options. In order to qualify for financial aid, you need to fill out the FAFSA (Free Application for Federal Student Aid) each year. Once you complete the FAFSA, you should receive an Award Letter from your school detailing the financial aid you qualify for. Here are the types of financial aid you might see on your Award Letter:
You may have been awarded a scholarship from your school for academics, athletics, financial need or any number of other reasons. This is free money you don’t have to pay back. You should also start a scholarship search on your own. Ask your financial aid office if there are scholarships that fit your background, major or hobbies, or start a scholarship search online. Even if you are in need of money right away for the current school year, it’s always good to apply for scholarships that can be applied to future school costs.
Get more information on finding college scholarships.
Once you complete your FAFSA, you are eligible to receive college grants from the federal and state government, if you qualify. College grants are generally need-based awards. The Federal Pell Grant is one of the most common grants for undergraduate students with demonstrated financial need.
Get more information on college grants.
Before you take out a private student loan, you should always maximize the use of the Federal Stafford Loan. The Stafford Loan is a low-cost borrowing option for students, backed by the U.S. government. You must complete the FAFSA every year in order to receive Stafford Loan funds. The maximum amount you can borrow under the Stafford Loan program is based on your year in school:
Get more information on Federal Stafford Loan interest rates and benefits.
There are two types of Federal PLUS Loans. The Parent PLUS Loan is a federal loan available to your parents, and made in their name. Your parents can borrow up to your cost of attendance, minus any financial aid you already received. If your parents are not interested in obtaining a loan that they will need to repay themselves, you might ask them to co-sign on your private student loan instead.
The Grad PLUS Loan is available to graduate and professional students.
Get more information on Federal PLUS Loan interest rates and benefits.
Once you have maximized free money for college (scholarships, grants) and low-cost federal student loans, you may need to take out a private student loan to cover the remainder of your college costs.