Applying for student loans

Applying for student loans

If you are preparing for college you may have tossed around the idea of applying for student loans. A student loan is borrowed money to be used specifically to pay for college tuition, fees, and other related expenses. Student loans come in a large variety of forms from federal to private funding.

Depending on the type of loan, the application process may or may not be a lengthy one. From a federal perspective, applying for student loans entails filling out a Free Application for Federal Student Aid (FAFSA). The FAFSA collects a great deal of information about the potential borrower and the borrower’s parents (or legal guardians). When completed and submitted directly after the first of the year, the FAFSA is generally processed quickly. The end result is a Student Aid Report used by the student’s school to determine what types of student loans he or she qualifies for.

Applying for student loans in the private sector is a little less grueling. The application is almost always shorter in length and the process time is minimal. In some cases, students can get an instant credit decision when filing for a private student loan online. 

While the federally-backed student loan takes longer to secure, borrowers may consider looking into these types of loans before turning to private student loans. Private loans tend to have higher interest rates. Plus, they require a solid credit history – something graduating high school students may not have at such an early stage in life. However, after seeking federal student aid assistance, a private student loan may be needed to make ends meet between college expenses and funding. If this is the case, the student can usually get a co-signer – such as a parent or relative – to sign on the loan for a more competitive interest rate.