Deciding how you are going to pay for college is never as exciting as completing the initial applications or sifting through acceptance letters, but needless to say, it’s still an  important of  the college process.  After other forms of funding have been paid out, loans are used to “cover the gap” and provide the extra funding you need to finance your education, but it’s important to remember these 4 Steps To Take Before Applying For Student Loans.

Step #1 – Fill Out A FAFSA

FAFSA stands for Free Application for Federal Student Aid, which basically offers  government money for students to attend school – none of which need to be paid back! Needless to say, the less money you need to borrow on your student loan, the better. This only applies to US citizens and permanent residents. If you are an international student on a F-1, J-1 or M-1, please proceed to step #2.

To fill out a FAFSA, you will need:

  • Social Security number (and your parents’, if you’re a dependent)
  • Driver’s license number
  • Alien Registration number (for non-U.S. citizens)
  • Federal tax information or tax returns including IRS W-2 information
  • Documents on untaxed income
  • Financial information (cash, checking and saving accounts, investments, etc.)

While the online application is a little time consuming, it is worth the effort as you may be awarded money you hadn’t originally accounted for.

 Step #2 – Compare and Contrast Loan Options

With multiple types of student loans available, it’s likely that you’ll qualify for more than one.

Types of student loans:

  • Stafford loans
  • Perkins loans
  • PLUS loans
  • Consolidation loans
  • Institutional loans
  • Private and state loans

US citizens may be eligible for multiple loans, however international students are only eligible for private student loans. Each type of loan has distinct loan limits, repayment terms and interest rates. When you apply for a loan, the provider will tell you how much money you can borrow in addition to the corresponding terms and conditions.

Private loans are not considered to be need-based, therefore they have a different set of qualifications. They generally only require a good credit history, but may also ask for a cosigner (if you are an international student, you will need a US cosigner!). Compare your private student loan options here.

 Step #3 – Gather the Necessary Documents

Examples of necessary documents:

If you are considered a dependent, you will need the same set of information for your parents in addition to your own.

 Step #4 – Figure Out If You Are Considered an Independent or a Dependent

Independents usually meet at least one of the following qualifications:

  1. Over the age of 24
  2. Married
  3. Parent
  4. Active duty military service
  5. Armed forces veteran

This will apply to US citizens needing financial aid (international students can skip this step!). While these are not cut and dry stipulations, usually if you aren’t dependent on your parents, you are considered an independent, as this may affect how much financial aid you are eligible for. In case you are unsure whether you meet the requirements to be considered an independent, make a meeting with the financial aid office at your university, as this may determine the type of loans you can borrow in addition to the amounts.

After filling out the FAFSA, it is usually a good idea to wait for your Student Aid Report (SAR) to arrive from the U.S. Department of Education. The SAR will inform you of your Expected Family Contribution (EFC). From there, each school you’ve applied to will determine the amount of aid they’ll award you, based on your SAR, and they’ll send you a Financial Aid Reward Notice with the final amount of your aid package.

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