For the past seven years, Kat has been helping people make the best financial decisions for their unique situations, whether they're looking for the right insurance policies or trying to pay down debt. Kat has expertise in insurance and student loans.
Kat Tretina Personal Finance WriterFor the past seven years, Kat has been helping people make the best financial decisions for their unique situations, whether they're looking for the right insurance policies or trying to pay down debt. Kat has expertise in insurance and student loans.
Written By Kat Tretina Personal Finance WriterFor the past seven years, Kat has been helping people make the best financial decisions for their unique situations, whether they're looking for the right insurance policies or trying to pay down debt. Kat has expertise in insurance and student loans.
Kat Tretina Personal Finance WriterFor the past seven years, Kat has been helping people make the best financial decisions for their unique situations, whether they're looking for the right insurance policies or trying to pay down debt. Kat has expertise in insurance and student loans.
Personal Finance WriterUpdated: Oct 10, 2022, 7:01pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Getty
Takes Up To 3 Minutes
If you’re like the majority of college students, you’ll need to borrow money to pay for school. As of 2021, 58% of adults under age 30 who attended college incurred some debt for their education, according to the Federal Reserve.
There are two different types of student loans—federal and private—which can make applying for them a multi-part process. You can apply for federal loans by completing the Free Application for Federal Student Aid (FAFSA). You must apply separately to each lender you’re considering working with if you’re interested in private loans.
Filling out the FAFSA qualifies you not only for student loans, but for other types of federal financial aid. Depending on your financial need, you may qualify for federal grants, such as the Pell Grant, that can help cover your education costs without needing to be repaid.
If you need to borrow money, federal loans typically have lower interest rates and more flexible repayment options than private loans, so borrow up to the maximum allowed in federal loans before turning to private loans. Here’s how to do it.
Know that there are forms of financial aid other than student loans, which may also be a better match for you.
Using these forms of financial aid—or a combination of all three—can lower your cost of attendance and reduce how much you need to take out in student loans.
The FAFSA is available starting on Oct. 1 for the following school year. That means that for the 2023-24 school year, the FAFSA became available on Oct. 1, 2022.
To make sure you get all of the financial aid you’re entitled to, it’s crucial to submit the FAFSA as early in the year as possible. Some types of aid, including federal work-study, is allocated to students on a first-come, first-served basis. You can fill out the FAFSA online.
To complete the FAFSA, you must create a Federal Student Aid (FSA) ID and password. You’ll also need to have the following information handy:
After you submit the FAFSA, you’ll receive a Student Aid Report (SAR), a summary of the data you submitted. The SAR will include your Expected Family Contribution (EFC) on the upper right-hand corner. Schools use your EFC to calculate how much your family can afford to spend on college costs, and therefore how much financial aid you’ll receive.
The FAFSA federal deadline for the 2023-2024 school year is 11:59 p.m. Central Time on June 30, 2024. But states and universities often have earlier deadlines. Check your state’s deadline, and contact your school’s financial aid office to find out when you need to submit the FAFSA.
The federal government issues loans under the William D. Ford Federal Direct Loan Program. Most federal loans don’t require a credit check, and there aren’t any minimum income requirements, making them a good choice for many borrowers.
There are three types of student loans for college students:
If you qualify for them, direct subsidized loans are your best option. They are only available to undergraduate students with financial need. While you’re in school at least half-time, for six months after you graduate and during any deferment period, the government will pay the interest that accrues on your loan, saving you money.
There are limits on how much you can borrow each year in subsidized student loans:
For the 2022-2023 academic year, subsidized student loans have a fixed interest rate of 4.99%. These loans also come with a disbursement or origination fee of about 1.1%.
Direct unsubsidized loans are available to undergraduate and graduate students regardless of financial need. You’re responsible for paying for all of the interest that accrues on the loan, even while you’re in school and during your grace period.
The annual borrowing limits are dependent on your year in school, and whether you’re considered a dependent or independent student. You’re considered independent for purposes of the FAFSA if you’re over 24 years old, married, a graduate or professional student, a veteran, in the military or meet other requirements.
