Getting a Student Loan: Wise Borrowing Tips to Keep Costs Low

Applying to colleges is stressful enough. But once you’re in, the next challenge is figuring out how to pay for it. If you have a strong academic record or are a standout athlete, you may be eligible for scholarships to help cover the costs. However, the majority of college students in the United States end up taking out student loans. While the federal government provides many of these loans, private lenders can also provide student loans. Fill out the FAFSA (Free Application for Federal Student Aid) first, and then proceed from there. Compare interest rates and terms carefully, and remember that you’ll be responsible for repaying your student loans as soon as you graduate.

Method 1: Requesting Federal Assistance

1. Determine whether you are eligible for federal student aid. Check the federal student aid website for eligibility requirements, or speak with a counsellor in your school’s financial aid office. While there are some exceptions, you must generally:

Show that you have a financial need (for most forms of federal aid)

You must be a US citizen or a lawful permanent resident.

You must have a valid Social Security number.

If you were born with the sex of a man, you must register with Selective Service.

Be enrolled or accepted for enrollment in a degree or certification programme that qualifies.

2. To manage your federal aid online, create an FSA ID. Create an account on the Federal Student Aid website at to fill out the FAFSA online and complete other tasks related to your federal aid. Although you can create your account while filling out the application, it is easier to do so ahead of time.

If you create an account before filling out the FAFSA, much of your information will be automatically entered. This saves time and reduces the possibility of an error, which could cause your financial aid to be delayed.

3. You can start filling out the FAFSA online as early as January. Once you’ve decided where you’ll be attending college, you can apply for federal financial aid as early as January, before the school year begins. The form is available online at When you’re ready to fill out the form, make sure you have the following information on hand:

Your Social Security number (or, if you are not a US citizen, your Alien Registration number)

If your parents claim you as a dependent on their taxes, you will need to provide your Social Security number.

Your previous year’s federal tax return

Untaxed income records, such as child support payments

Data on banking and investment accounts, as well as other assets

4. If you are a dependent, request financial information from your parents. If your parents claim you as a dependent on their taxes (ask if you’re unsure), they must provide tax information and sign the form. They’ll also need to create an FSA ID if they’re signing electronically.

Your parents will be required to provide the same financial information that you did, including information from their previous year’s tax return, untaxed income, and assets.

Your parents will be unable to create an FSA ID if they do not have a Social Security number. You must print and mail the signature page from the website. The mobile app does not have a print option.

5. List the colleges or career schools to which you want your information sent. You must send your information to at least one school to which you have been accepted. If you’ve been accepted to several schools but haven’t made a decision yet, you can list up to ten.

For state financial aid purposes, some states require schools to be listed in a specific order. To find out what your state’s requirements are, go to

6. Fill out the FAFSA and send it to the Department of Education (DOE). After completing the FAFSA, you can submit it online or via the mobile app. If you are a dependent student, your application will not be processed until your parents provide financial information and sign the application.

Check your information twice before submitting it. Any mistakes could cause your financial aid decision to be delayed.

Your application will take longer to process if you print a PDF of it and mail it in.

7. Determine the cost of your education for the academic year. While you wait for a response from the DOE, create a budget for your education and living expenses for the school year. Your school’s financial aid office will most likely have an estimate you can use as a starting point, though your personal expenses may vary depending on your situation.

Assume your tuition and fees are $10,000 per semester. You live on campus, which means you pay $5,000 per semester for a dorm room and $1,000 per semester for a meal plan. This equates to a total of $16,000 per semester or $32,000 per year for tuition, room, and board.

Estimate the costs of books and supplies, as well as any other expenses you may have, in addition to tuition and room and board. If you work while attending school, include that income in your budget to cover some of your bills and expenses.

8. Examine your financial aid offer with the financial aid office at your school. You will receive a Student Aid Report once your application has been processed (SAR). This report includes an amount determined by the federal government that you and your family should be able to pay for your education. Then you’ll have a list of the different types and amounts of financial aid available to you.

A counsellor in your school’s financial aid office can assist you in understanding the various types of financial aid that have been offered to you as well as how funds will be disbursed.

Compare the assistance you’ve been offered to the total expenses you’ve calculated to get a sense of where you stand.

9. Accept only the assistance you require. Depending on your circumstances, your financial aid package may include a combination of grants and loans. Accept any grants first, followed by subsidised loans that do not accrue interest while you are in school. If you still have unmet needs, accept any unsubsidized loans that are offered to you.

Unsubsidized loans, unlike subsidised loans, accrue interest while you are in school, even if you are not required to make payments during that time. This means that the amount you owe grows while you are in school.

While student loans are generally considered a “good” debt because they are an investment in your future, even a good debt must be repaid. Borrow only what you need, not the maximum amount available.

10. To receive your loan funds, you must first complete entrance counselling. The FSA website allows you to take the entrance counselling online. It essentially explains how interest is calculated on your loans, when you are responsible for repaying them, and what the penalties are for nonpayment.

If you receive loans, the funds will not be released until you have completed the entrance counselling.

If you are having difficulty completing the entrance counselling, please contact a counsellor in your school’s financial aid office. They’ll assist you in getting everything in order.

Method 2: Obtaining Private Loans

1. Determine the cost that is not covered by federal aid. Subtract the amount of federal financial aid you’ve been offered from the total cost of your educational programme for the year after you’ve received it. If you and your family do not have enough money to cover the remaining expenses, private loans may be an option to consider.

Examine your educational expenses to see if there is anything you can cut before applying for private loans. For example, staying at home with your parents and commuting to school may be less expensive than living in a dorm.

If you intend to work while attending school, create a budget and determine how much of your earnings can be applied to educational expenses.

2. Obtain a certification form from the financial aid office at your school. Most private lenders require a form from your school certifying that you have additional need not met by federal loans. Simply notify a counsellor in your school’s financial aid office that you require a certification form for private loans.

Before completing the certification form on your behalf, the financial aid counsellor will most likely review your federal aid and expense calculations. If the expenses you calculated differ significantly from the school’s estimate, they will almost certainly ask you to explain the discrepancy.

3. Request that your parents cosign so that you can get a lower interest rate. If you haven’t established a solid credit history and a high credit score on your own, lenders will usually require you to have a cosigner in order to obtain private student loans. Even if you have a good credit history, adding a cosigner often results in lower interest rates than you could get on your own.

Most students ask their parents to cosign on their student loans because it is a significant responsibility.

If your parents don’t have good credit, you could ask another family member instead. However, cosigning on the loan makes your cosigner responsible as well, so don’t be offended if you ask someone and they refuse.

4. Loans from various lenders should be compared. The sheer number of lenders offering private student loans can be bewildering. Start with banks or lenders with whom you or your parents already have a relationship, and then expand from there. Loans at lower interest rates may also be made available by state-sponsored organisations.

Inquire about private loan options with a counsellor in your school’s financial aid office. They can assist you in locating the best private loan for your needs.

Check to see if you meet the eligibility requirements of the private lender as well. If you are eligible for federal loans, you are usually also eligible for private loans. Some private loans, however, are only available for specific educational programmes.

5. Complete private loan applications. The application process for private loans differs depending on the lender. Most, however, have an online application similar to the FAFSA you completed for federal aid.

If you have a cosigner, they must provide financial information as well as sign the application.

Unlike the federal application, you must typically wait until you are enrolled in school before applying for private loans. To evaluate your application, private lenders must know the name of the school you attend.

6. Accept your preferred loan. Typically, the funds are disbursed to your school after you (and any cosigners) sign the paperwork to accept the loan. If there is any money left over after paying your tuition and fees, your school will cut you a check for that amount.

If you have any questions about how your financial aid will be distributed, speak with a counsellor in your school’s financial aid office.

Method 3: Borrowing Money for School in a Responsible Manner

1. Create a budget for your college costs. Begin with any income you have during the school year, and then make a list of your monthly expenses. Amounts for discretionary spending, such as food, restaurants, sporting events, and entertainment, should be added.

It’s unrealistic to expect you to go to college and never spend money on anything other than your education — of course, you’ll go out and have fun with your friends. You should, however, maintain control over your finances so that you know where your money is going.

If you work part-time while in school, put some of your earnings toward your discretionary expenses.

2. Avoid borrowing more money than you need for education. You might be able to get a financial aid package that includes a significant rebate each semester. However, if the majority of your package consists of loans, you will be required to repay that money when you graduate. Concentrate on obtaining the financial assistance you require to cover your tuition and fees, as well as any necessary living expenses that you cannot pay for yourself.

If at all possible, get a job that allows you to work part-time while attending school. This will help you cover your living expenses while also leaving some money for fun.

If you need more money during the school year for any reason, you can usually get it if you haven’t already maxed out.

If your programme does not allow you to work during the school year, work during breaks and over the summer. Save as much of your income as you can to cover your living expenses while attending school.

3. Examine starting salaries in your chosen field of study. The career services office at your school can provide you with information on what you can expect to earn on average if you graduate with a degree in your major. If you have a specific job in mind, you can look up the numbers yourself on the Bureau of Labor Statistics’ website or the US Department of Labor’s Occupational Outlook Handbook (also available online).

Knowing what kind of income you can expect after graduation will give you an idea of how much of your income will be taken up by student loan payments.

Don’t take any salary estimates you come across as a guarantee. To budget wisely, assume you’ll be earning less than the average salary for at least the first few years after graduation.

4. Keep track of how much money you borrow each year. Unsubsidized federal loans and private loans accrue interest while you are in school, increasing the amount you owe. Use the payment estimate tools on the federal student aid website to figure out how much you owe and how much you’ll have to pay each month.

You’ll have other living expenses to cover once you graduate and enter the workforce. In general, you should keep your student loan payments to a small percentage of your take-home pay.

Throughout college, keep an eye out for scholarship opportunities. Some scholarships, for example, are only available to students in specific departments or to juniors and seniors. The more scholarship money you can obtain, the less money you will have to borrow.

5. If possible, make payments while you are still in school. Unsubsidized federal loans and private loans both accrue interest while you are still in school, even if you are not required to make payments until you graduate. If you begin making payments before you graduate, you will be able to control the amount of money you will owe.

Because you technically don’t have to pay anything, these don’t have to be large sums. Even a monthly payment of $20 would be beneficial.

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