Student loans are often an essential part of attending college and obtaining higher education, and though they are necessary, they can also be fairly confusing to navigate. There are many different factors that go into obtaining a student loan, and it’s important to understand all you can about student loans before entering into an agreement for one. Our article gives you essential information about student loans and how long it might take to obtain one.
Understanding Student Loans
Student loans are loans that are specifically given for the purpose of paying off tuition. Most student loans are only allowed to be used for tuition expenses, though you might be able to use them to pay for housing on campus or textbooks in certain circumstances. Loan terms vary, so it’s important to read closely about the details of your student loan before applying for one.
The two main types of student loans that you will deal with include federal loans and private loans. Federal loans are typically handled and awarded via the FAFSA or the Federal Application for Student Aid. This application determines your eligibility for a variety of loans and need-based grants or financial aid, and you will be able to accept loans directly through the government’s website after submitting a FAFSA application.
On the other hand, private loans are received through private lenders, such as banks or other organizations. You will be required to pay a private loan back, typically with interest, within a set period of time that depends on your loan’s terms. Private grants or scholarships are gifts, and these don’t need to be repaid; make sure you understand the difference before accepting a loan, grant, or scholarship from a private lender or donor.
Timeline for Federal Student Loans
In general, federal student loans that are processed through your FAFSA application may take a few weeks to a few months to receive. The timeline you might expect for this process is below:
- You must first complete your FAFSA application via the government’s website. You will be asked which schools to send your financial information to as part of the application; put the schools you are applying to here.
- Your FAFSA will be processed within a few days or even weeks, and you will receive a student aid report that tells you how much financial aid you are eligible for. This report includes loans, grants, and certain scholarships.
- The schools you have applied to will use your student aid report to determine how much financial aid to award you. They will send you an award letter directly with their decision. This may take another few weeks to a few months.
- You will need to accept your loans and complete a master promissory note, a document that outlines your loan’s terms. Pay attention to this so you are sure you understand your loan’s repayment plan.
- After you have agreed to your loans, it will take another few weeks for them to be disbursed and for you to receive the funds.
Every individual’s situation is different, and it’s important to keep track of your application during this time and provide any additional information needed to ensure you and your school receive loans as quickly as possible.
Timeline for Private Loans
Private loans tend to be processed faster due to the flexibility that private lenders typically have. In general, you can expect to wait between a few weeks and around a month to receive a private loan. Steps for receiving a private loan include:
- First, you will complete a loan application and submit it directly to the organization you are requesting a loan from, such as a bank or credit union. Make sure to put any cosigner’s name down as well.
- Next, you will hear back from your application within a few hours to a few days, up to a week. This depends on where you are requesting a private loan from.
- Next, you will receive a letter with your loan decision and information on when you can expect funds to be deposited. This may take a few weeks to a month after your award decision is made.
Make sure to research the private lender you are working with to ensure they are legitimate and to learn more about the loan process. You can even look up individuals connected with the lender (we recommend this background lookup) to make sure there is nothing suspicious on their background report.
Student Loan FAQs
The following answers to frequently asked questions about student loans can help you gain more clarity on this subject.
When Should I Apply for Student Loans?
Typically, you will want to apply for student loans as soon as possible. This ensures you have plenty of time to receive funds and provide any additional information should something hold up your loan application processing time. Try to follow FAFSA application guidelines, school guidance, and other private lender information to ensure your student loan applications are handled on time.
How Much Can I Borrow in Student Loans?
How much you can borrow in student loans depends on your financial situation and other factors such as credit. Private lenders and federal loan applications evaluate your financial need based on the information that you provide in your application; speak to a lender or review the government’s FAFSA website for more loan information.
Are Federal or Private Student Loans Better?
In most cases, individuals prefer to utilize federal student loans over private loans. This is because private loans usually have higher interest rates, and they may have more difficult repayment terms. Some federal loans have deferred interest or other incentives to make students choose them over more predatory financing options.
Receiving the Educational Funding You Need
Student loans can be difficult to navigate, but they are an important part of many people’s education journey. Make sure you understand the terms of the student loan you are dealing with and that you start your loan applications early to ensure you receive the funding you need.