How to Apply for a Student Loan

Types of Student Loans

There are several loan programs offered by the U.S. Department of Education. Most students receive either Federal Family Education Loans (FFEL) or Direct Loans, both of which include Stafford Loans for students and PLUS loans for parents and graduate students [source: U.S. Department of Education]. The difference is that FFELs are processed by a lender and Direct Loans come directly from the Department of Education.

In planning for college, many students are anxious to know the dollar amount that they can borrow under each loan program. This is difficult to know in advance since the amount and type of your loan is determined by your financial need and the cost of attending your school of choice. In general, most students receive either a subsidized or unsubsidized Stafford Loan or both. For subsidized loans, the government pays your interest while you are in school. For unsubsidized loans, you are responsible for paying the interest that accrues during your time in school, though you may choose to let it accumulate and capitalize into the loan principal [source: Stafford Loans].


There are also loans for students in specific fields, such as teaching or primary care medicine. The catch is that you may be required to work in that field or a particular region for the life of the loan. There are also Perkins Loans and other loans that are received directly from the school you are attending. Like Stafford and PLUS loans, eligibility for Perkins Loans is determined by your Free Application for Federal Student Aid (FAFSA) [source: Perkins Loans].

Also, there are many private lending organizations -- such as banks and credit card companies -- that loan money to students under terms similar to government student loan programs. However, these are not need-based loans. In other words, students and/or parents who borrow must show good credit histories and, in some cases, apply with a co-signer. The good news is that these programs usually offer low interest rates and no repayment obligation as long as you're in school at least half-time.

Now that you know a bit about the types of student loans available, the next step is to prepare your application. Read on to find out what you will need to complete your FAFSA as well as important considerations when choosing your student loan.