Applying for a college loan starts with filling out the Free Application for Federal Student Aid, known as the FAFSA, at fafsa.gov. Federal loans offer lower interest rates and more flexible repayment options than private alternatives, so they should be your first step regardless of your financial situation. If federal loans don’t cover your full cost of attendance, you can then apply for private student loans through banks, credit unions, or online lenders.
Start With the FAFSA
The FAFSA is a single form that determines your eligibility for federal student loans, grants, and work-study programs. It’s free to file, and you submit it online at fafsa.gov. For the 2026-27 school year, the federal deadline is June 30, 2027, but many states and individual colleges set their own earlier deadlines for financial aid. File as early as possible to maximize what you’re offered.
Here’s the process step by step:
- Create a StudentAid.gov account. You’ll need your Social Security number to set one up. This gives you an FSA ID, which serves as your electronic signature. Any contributors to your application (typically a parent, if you’re a dependent student) will need their own accounts too.
- Gather your documents. Have your federal income tax return available, along with records of any assets: current balances in checking, savings, and investment accounts, plus the net worth of any businesses or income-producing farms. If you or a contributor received child support, you’ll need those records as well. Most tax information gets imported directly from the IRS once you give consent on the form, but having your return on hand helps you verify everything.
- Fill out and submit the form. You can list up to 20 schools on the online FAFSA. Each school you list will receive your financial information and use it to build your aid package.
- Check your status. After submitting, log back into fafsa.gov or contact the Federal Student Aid Information Center to confirm your application was processed. You’ll receive a summary report of the information you entered. Review it carefully and correct any errors before the due date.
What Federal Loans You Can Get
Once your FAFSA is processed, each school on your list will send you a financial aid offer that may include Direct Subsidized Loans, Direct Unsubsidized Loans, or both. The difference matters: with subsidized loans, the government pays the interest while you’re enrolled at least half-time, so no interest accrues during school. With unsubsidized loans, interest starts adding up immediately.
For loans first disbursed between July 1, 2025, and June 30, 2026, the fixed interest rate for undergraduate students is 6.39% on both subsidized and unsubsidized loans. Graduate and professional students pay 7.94% on unsubsidized loans (they aren’t eligible for subsidized loans).
How Much You Can Borrow
Federal loan limits depend on your year in school and whether you’re a dependent or independent student. Dependent undergraduates (most students coming straight from high school) can borrow up to $5,500 in their first year, $6,500 in their second year, and $7,500 per year from the third year onward. Of those totals, only a portion can be subsidized: $3,500 the first year, $4,500 the second, and $5,500 from the third year on.
Independent undergraduates, including those whose parents can’t obtain a Direct PLUS Loan, get higher limits: $9,500 the first year, $10,500 the second, and $12,500 from the third year forward. The subsidized portion stays the same as for dependent students; the extra borrowing capacity comes entirely from unsubsidized loans. Graduate and professional students can borrow up to $20,500 per year in unsubsidized loans.
If these amounts fall short of your tuition and living costs, your school’s financial aid office can explain any remaining gap and whether you qualify for other federal options like PLUS Loans (for parents of undergraduates or for graduate students).
Applying for Private Student Loans
Private loans are offered by banks, credit unions, and online lenders. Unlike federal loans, they aren’t based on your FAFSA results. Instead, lenders evaluate your credit score, income, and debt. Most require a credit score of at least 640, though some lenders set the bar at 650 or 680.
If you’re an 18-year-old with little or no credit history, you’ll almost certainly need a cosigner. A cosigner is someone, usually a parent or other family member, who agrees to repay the loan if you can’t. A cosigner with strong credit can also help you qualify for a lower interest rate. Keep in mind that the cosigner is legally responsible for the debt, and it shows up on their credit report.
To apply, you’ll typically submit an online application directly through the lender’s website. You’ll need your personal identification, proof of enrollment or an acceptance letter, income information (yours and your cosigner’s, if applicable), and details about the school and the amount you want to borrow. Most lenders let you check estimated rates with a soft credit inquiry, which doesn’t affect your credit score, before you formally apply.
How to Decide What to Borrow
Your school’s financial aid offer will show the full cost of attendance, including tuition, fees, room, board, books, and personal expenses, minus any grants and scholarships you’ve received. The remaining gap is what you’d need to cover through loans, savings, work income, or family contributions.
Accept subsidized federal loans first, since they cost the least over time. Then consider unsubsidized federal loans. Turn to private loans only after you’ve used your federal options, because private loans typically carry variable or higher fixed rates, offer fewer repayment plans, and lack the borrower protections built into federal programs like income-driven repayment.
Borrow only what you need. Every dollar you take out today is a dollar plus interest you’ll repay after graduation. A good rule of thumb: try to keep your total student loan debt below what you expect to earn in your first year of working after school. If your projected starting salary is $45,000, aim to graduate with no more than $45,000 in total loans.
What Happens After You’re Approved
For federal loans, you’ll need to complete entrance counseling and sign a Master Promissory Note (MPN) at studentaid.gov before any money is disbursed. Entrance counseling walks you through your rights and responsibilities as a borrower. The MPN is your legal agreement to repay. Both take about 30 minutes online.
Loan funds are sent directly to your school and applied to your tuition, fees, and on-campus housing. If the loan amount exceeds those charges, the school issues the remaining balance to you, usually by direct deposit or check, to cover other education expenses like books and off-campus rent. Disbursements typically happen at the start of each semester or payment period.
For private loans, the process is similar. Once approved, the lender sends funds to your school, and any excess is refunded to you. Private lenders may require you to certify enrollment each semester before releasing the next disbursement.