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A College Student’s Guide To Student Loans & Financial Aid

For most college students (and parents), just hearing the words “student loan” probably induces a headache. Navigating your personal finances in college can be tricky, and ff you’ve never understood too much about money or economics, you may be intimidated by all the information needed to manage financial aid while you’re in school. And for incoming freshmen, paying for college might be the first big financial decision you make.

Before you start furiously Googling for answers or let frustration get the best of you, take a deep breath. Student loans don’t have to be as difficult as they sound, and you’re more than capable of handling all the logistics! We’ve got all the info you need to navigate student loans right here, from dealing with federal loans to getting private loans. Read on to learn the basics of getting a student loan.

How do I apply for a student loan?

We know that you were just working on college apps, but no matter what type of loan you want—and we’ll get into those types in just a second—you’re going to have to fill out an application. The Free Application for Federal Student Aid (better known as the FAFSA) doesn’t take as long as you might think. In fact, you can do it in about an hour! So just commit for those measly 60 minutes, and then, yes, you can return to your Netflix marathon in peace.

You’ll also want to fill out the CSS Profile if your school participates. The CSS Profile gives out institutional rather than federal aid, so your award would be a grant, scholarship or loan directly from your university rather than from the government.

We should also say here that you’re going to want to be applying for scholarships and grants, since you won’t have to repay those, and they can be a huge assist in helping you afford college. Even if you weren’t the valedictorian of your class, there’s plenty of scholarships that you’re eligible for—talk to your high school’s college counselor, because they probably have a whole list of scholarships that would be perfect for you!

After you’ve done all that, your financial aid might still leave something to be desired because of federal maximums on student loans. This is where private loans from outside institutions come in, and don’t worry—the application process is a bit less time-consuming for these. CommonBond and Sallie Mae are great options, and you can apply directly on their sites.

What do I need to apply?

First, it depends on what type of loan you’re applying for. There are two types of federal loans: subsidized and unsubsidized. Subsidized loans will save you a bit more money—because they’re based on demonstrated financial need, the U.S. Department of Education will pay the interest on your loan while you’re in school and during a six-month post-grad “grace period.” Unsubsidized loans, however, aren’t based on financial need, and you have to pay the interest yourself while you’re in school. So, in short, if you’re able to demonstrate financial need and get a subsidized loan, take that first before you accept an unsubsidized one.

Whether or not you demonstrate financial need is dependent upon the cost of attendance (COA) at your school, and your expected family contribution (EFC), or how much money the government thinks you should be able to pay to attend your school. Calculating your EFC involves a number of various factors, like your income, family size and benefits, and this requires you to submit a few different documents. For the FAFSA, you’ll need your social security number, tax returns, W-2s, bank statements and a couple other things, depending on your situation.

For a private loan, you don’t need to demonstrate financial need, but you’ll still need to provide information about your school’s cost of attendance, social security number and some other basic info. The most important thing you want to have to apply for a private loan, however, isn’t a thing—it’s a person, also known as the cosigner. Though a cosigner isn’t required for all private loan applications, it’s smart to have one. Your cosigner (generally your parent or another creditworthy family member) is the person who agrees to pay the balance of your loan in the event that you can’t. In other words, they’re making sure you’re better safe than sorry.

What about interest? How does that work?

Good question. If you missed that lesson in your high school economics class, interest is a daily price you pay for the amount you borrowed, aka the principal sum. It’s basically the money you pay in order to be allowed to borrow money. We know, it’s annoying. The interest is a proportion of the principal amount at a certain rate that either stays fixed (i.e., your payments for each period are always the same) or is variable (it changes with the market, so you may be paying more some periods than others). There’s benefits to both—a fixed interest rate makes it easier to factor payments into your monthly budget, even if you’re paying a bit more overall, while variable rate loans are currently lower cost, but could increase in the future.

The way that paying student loans works is that your payments will always go toward paying off the interest before they go to paying off the principal. You can use an online loan breakdown calculator to figure out exactly how much of your money is going toward reducing the principal each month, and how much is dedicated to paying off interest. You’ll want to know this because the more you repay of your principal, the smaller your interest is going to be, and the less money you’ll owe overall.

Any other ways I can be responsible about my student loans?

If you receive a federal loan, you may be required to complete something called entrance counseling by your school. This is a short in-person or online session that will explain further about the loan borrowing process, your rights and responsibilities, how you can manage your expenses, etc. Our advice? Pay attention. We know it’s not exactly fun stuff, but it’s a good way to make sure you arm yourself with knowledge about your loans, and the information will be useful far beyond freshman year.

After your first year of dealing with student loans, you can reassess your options a bit and choose a better plan. Remember, the power is your hands now as an adult and college student, so take the time to consider if you were satisfied with your lender—you’re not bound to the lender that helped you through the last year.

Ultimately, stay informed and take responsibility for your loans. Read up on the loan process, understand your interest rate and make sure you’re making the best choices for you in terms of loans, rates and repayment options. Studying isn’t just good for your grades—it’s good for your finances, too. Hopefully, this explanation has cleared up some of the haze surrounding student loans, and you can shake off some of that stress!

Erica Kam is the Life Editor at Her Campus. She oversees the life, career, and news verticals on the site, including academics, experience, high school, money, work, and Her20s coverage. Over her six years at Her Campus, Erica has served in various editorial roles on the national team, including as the previous Culture Editor and as an editorial intern. She has also interned at Bustle Digital Group, where she covered entertainment news for Bustle and Elite Daily. She graduated in 2021 with a bachelor’s degree in English and creative writing from Barnard College, where she was the senior editor of Columbia and Barnard’s Her Campus chapter and a deputy copy editor for The Columbia Spectator. When she's not writing or editing, you can find her dissecting K-pop music videos for easter eggs and rereading Jane Austen novels. She also loves exploring her home, the best city in the world — and if you think that's not NYC, she's willing to fight you on it.