How Do I Start Looking for Student Loans?

How do you start looking for student loans

Most students find that they need to utilize multiple funding sources to pay for their college tuition. Generally, it’s best to exhaust federal aid, scholarships, then federal student loans. If you still have costs to cover after all of that, it might be time to start looking for private student loans.

You have a couple of options including both federal student loans and private student loans. Understanding how each one works and the pros and cons of each can help you make informed decisions when looking for student loans.

Start With FAFSA To Access Federal Student Loans

Any search for college loans should start with submitting the FAFSA. FAFSA stands for Free Application for Federal Student Aid. Completing a FAFSA application serves as an automatic gateway to various other loans offered by the U.S. Department of Education.

The FAFSA asks for detailed information about your family’s personal and financial circumstances. Your financial aid package sent from the college, which include grants, scholarships, loans, and work-study, is calculated based on the information you provide on this form.

Types of Federal Student Loans

There are several different types of federal student loans. These are the most popular loan products:

Direct Subsidized Loans – Direct Subsidized Loans are intended to help students who can demonstrate financial need. With this type of loan, the U.S. Department of Education pays the interest on the loan while you are in school and during the grace period. After that time the borrower would pay any remaining interest and the principal balance. You’ll have to submit supporting documentation to avail of this no-interest federal student loan.
Direct Unsubsidized Loans – All students who fill out the FAFSA form are eligible for Direct Unsubsidized Loans unless they are over the borrowing limit. Your borrowing limit is calculated based on your family’s financial circumstances as submitted through the FAFSA. You are not required to demonstrate financial need to avail of this federal student loan, but you do need to be attending school at least part-time.
Direct PLUS Loans – Direct PLUS Loans are intended to help students who are working on an advanced degree and who are no longer eligible under the Direct Subsidized or Direct Unsubsidized loan program. To be eligible for this loan you must be enrolled in an advanced degree program at least part-time, and you must not have an adverse credit history.

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Pros And Cons of Federal Student Loans

Pros

You don’t need strong credit or a cosigner to get approved – in general there are lighter requirements to qualify.
Federal student loans come with more flexible repayment plans.
These loans come with more generous borrower protections.

Up to $2,500 in student loan interest may be deductible every year.

Cons:

There are loan limits so you may not be able to borrow the full amount you need to cover college costs.

If federal financial aid, savings, and grants and scholarships are not enough to cover your college costs and you need to borrow more, you could also explore private student loans.

Then, Explore Private Student Loans

Private student loans are offered by banks, credit unions, and other financial institutions.

Unlike federal student loans, there is no single application form for all private loans. Each lender has its own eligibility requirements, application formalities, and approval process. You will want to compare lenders to find one that gives you the best terms and submit an application to your chosen lender.

In most cases, you will need to have a good credit rating to get approved for a private student loan. If your credit score does not meet the lender’s minimum threshold, you may need to apply with a qualified cosigner. This could be a parent, relative, or any trusted individual who meets the lender’s requirements.

Pros And Cons of Private Student Loans

Pros

Private student loans typically have higher borrowing limits than federal student loans.
They could be an option if you don’t qualify for federal student loans.
You may qualify for lower interest rates if your cosigner has a high credit score.
Up to $2,500 in private student loan interest may be deductible every year.

Cons

May require a cosigner.
Interest rates are based on credit quality and other factors.
These loans don’t’ have the same repayment plan options that federal student loans do.

Keep in mind, every private lender sets their own terms and conditions, so it helps to spend time checking different lenders’ websites to see what each one offers. For example, Citizens offers Multi-Year Approval¹ which may allow you to fund all four years of college with one loan application. This could help make the application process easier for year two and beyond.

Things To Do Before You Start Looking for Student Loans

Before you start looking for student loans:

Take stock of your personal savings and family contributions. While this may not be enough to cover the total cost of college tuition, it will give you a good idea of how much financial aid you need to bridge the funding gap.
Explore scholarships and grants that you may be eligible for. Both are types of gift aid, which means you don’t have to repay any money that’s awarded to you (although there may be other obligations associated with them).
After you’ve exhausted your personal sources and scholarship and grant sources use a student loan calculator to estimate the the amount you will need to borrow by way of student loans.
Consider more affordable college options. Your choice of college is a major factor in determining how much student loan debt you take on every year until you graduate.

Final Thoughts on Finding Student Loans

If you do need to take out student loans (and most of us do), borrow only what you need. Don’t be tempted to borrow more than the minimum as a buffer ‘just in case’. Remember, whatever loans you take on must be repaid with interest and that can add up over time.

Not sure where to start looking for student loans? College Raptor can help. Student Loan Finder makes it easy compare lenders and interest rates to discover personalized loans and find the ideal student loan for you.

Rates (APR)	Eligibility
5.34%-15.96%* Variable 3.99%-15.61%* Fixed	Undergraduate and Graduate	VISIT CITIZENS
4.92% - 15.08% Variable 3.99% - 15.49% Fixed	Undergraduate and Graduate	VISIT SALLIE MAE
4.50% - 17.99% Variable 3.49% - 17.99% Fixed	Undergraduate and Graduate	VISIT CREDIBLE
6.00% - 13.75% Variable 3.99% - 13.75% Fixed	Undergraduate and Graduate	VISIT LENDKEY
5.50% - 14.56% Variable 3.69% - 14.41% Fixed	Undergraduate and Graduate	VISIT ASCENT
3.70% - 8.75% Fixed	Undergraduate and Graduate	VISIT ISL
4.99% - 16.85% Variable 3.47% - 16.49% Fixed	Undergraduate and Graduate	VISIT EARNEST
5.00% - 14.22% Variable 3.69% - 14.22% Fixed	Undergraduate and Graduate	VISIT ELFI

College Raptor is not a loan lender and does not assume responsibility for suggesting a loan to a user who may not be eligible for it. Rates, terms, conditions, eligibility, approval, and other considerations are the decisions of the lenders and may vary depending on which lender or marketplace the user selects. We urge users to carefully consider and review all loan options and terms before committing to taking out a loan.

How to Look for Student Loans