Student Loan Application Requirements: What You Should Know – Fox Business | Vette Leader

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The requirements for applying for a student loan vary between federal and private loans. Here’s what you need to know to qualify. (Shutterstock)

It is becoming increasingly common to use student loans to pay for school. In 2020, according to a CollegeBoard survey.

If you think about it Using student loans to pay for school, it is important to understand how they work and requirements before applying. Read on to learn how to apply for student loans, the eligibility requirements for different types of loans, and when to apply to ensure you plan your funding on time.

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How to apply for a student loan

If you’re planning to use federal student loans to pay for college, here’s how to get started.

1. Complete the FAFSA

The Free Application for Federal Student Aid (FAFSA) is the form you use to apply for federal student loans and other types of federal aid. In this application you provide information about the financial situation of your family. The information you provide will be used to determine what assistance – and how much of it – you are entitled to.

To complete the FAFSA you will need:

  • Your social security number or tax identification number
  • Your federal income tax returns and W-2 forms
  • Your bank statement and your investment documents
  • Your records of untaxed income

If you are an independent student, you only need to provide this information for yourself. But if you are a dependent student, which is most undergraduate students, you must also provide this information to your parents.

2. Decide which federal loans you want to accept

Once you complete your FAFSA, you will receive a message from your school’s Financial Aid office about which student loans you qualify for. The amount you qualify for is based on two important factors: the expected contribution from your family and the cost of attending the college you attend.

Depending on the situation, you have several types of credit to choose from. If you are offered subsidized loans, you should use those first. They are only available to undergraduate students with financial difficulties, but the US Department of Education will pay interest accrued while you are in school at least half the time, during periods of deferral (suspended payments), and up to six months then graduate.

Even if you don’t qualify for subsidized loans, you are still eligible for unsubsidized loans. Unlike subsidized loans, you are responsible for accrued interest while you are in school, but you do not need to demonstrate financial need to qualify. Unsubsidized loans are available to undergraduate and graduate students.

3. Consider taking out private student loans

Depending on your situation, federal student loans may be enough to fund your college education. But there is limit how much you can borrow.

For subsidized loans, dependent students can borrow up to $5,500 for their first year of high school. For the second year, the limit increases to $6,500. For third year and beyond, dependent students can borrow up to $7,500 per year.

There is also an overall limit — dependent undergraduate borrowers cannot qualify for more than $31,000 total in government student loans.

If your education costs more than you can borrow on federal loans, you may need to turn to private loans to make up the difference. These loans have higher limits, and depending on your credit rating, you can generally borrow up to 100% of your participation cost.

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Federal vs. private student loan requirements

The requirements for applying for student loans depend on whether you are applying for federal or private loans.

Federal requirements for student loans

To qualify for federal student loans, you must meet the following requirements:

  • Be a US citizen or qualifying non-citizen
  • Have a valid social security number
  • Enroll in an Eligible Program or be accepted into an Eligible Program
  • Be enrolled full-time or part-time
  • Ensure satisfactory academic progress
  • Complete the FAFSA
  • You have a high school diploma or equivalent

Requirements for private student loans

Personal loan requirements are not quite as blanket, as each lender can set their own. But here are a handful of requirements you’re likely to encounter with most private lenders:

When to apply for a student loan

In general, you should complete the FAFSA as early as possible. Application begins October 1st for the following school year, with the deadline for completion at the end of June. Certain types of financial aid have limited availability, so applying early will increase your chances of receiving it. If you do not apply for the grant in good time before the start of the school year, you may have to find other financing arrangements in the meantime.

Here are the FAFSA deadlines for the 2022-23 academic year:

  • The FAFSA must be filed by 11:59 p.m. Central Time on June 30, 2023.
  • Corrections or updates must be submitted by 11:59 p.m. Central Time on September 10, 2023.

In addition to federal deadlines, your college may have its own deadline. Each state also has its own FAFSA deadlines, which you can check on the StudentAid.gov website.

There is no official deadline when applying for private student loans. However, you should apply in good time to receive your aid before your tuition is due.

Depending on your lender and your credit situation, you may be approved for your personal student loan and receive your money quickly. But in other situations, it can take weeks – or even months – to get your money. Because of this, it’s best to apply at least a few months before you need the money.

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