Federal Student Loans: Applying and Borrowing
Applying for federal student loans starts with filling out the FAFSA, the form that also notifies the government and the schools you’re applying to that you’d like free money, please.
Take these first steps towards your first student loans:
1. Get a FSA ID
The very first thing you need to do is get a FSA ID. You’ll need this to fill out the FAFSA, modify information on it, and access your student aid information down the road. Go to the FSA ID site, enter your email address, and create a username and password. Parents will need their own FSA ID as well, if their financial information is requested.
2. Fill out the FAFSA by the deadline.
In order to qualify for federal financial aid, you need to fill out the FAFSA by June 30th of the year you’re applying. For instance, if you want financial aid for the 2015-2016 school year, you need to fill out the FAFSA by June 30, 2016. Basically, you can fill it out all the way into part of summer sessions. But then there’s your set of personal deadlines. First, you want to make sure you’ve applied several weeks before the first semester YOU need funding, so the money arrives on time. School, state, and scholarship deadlines are important. It’s generally a good idea to apply as soon as you can.
3. Accept student loan funds as you need them.
You should generally accept all the subsidized student loans--loans where the interest is paid by the government--you qualify to receive. Why? Let’s say you only need $2,000 this year, but you were awarded $5,500 in subsidized student loans. Accept the $5,500 and put $3,500 in a savings account. The following year, let's say you’ll need $7,000 in student loans. You’re awarded that amount, but only $5,500 of it is subsidized. Reject the $1,500 that isn’t subsidized, and use $1,500 from your savings account to make up the difference.
Note: Save some of your money if you think you’re going to attend a summer session. There are annual federal student loan limits that apply to the full school year.
4. Apply for PLUS loans only when necessary.
Whether you’re applying for PLUS loans as a grad student or as a parent, these loans have higher interest rates than subsidized and unsubsidized loans. But they’re borrowed after other borrowing limits are exhausted. For example, graduate students can borrow $22,500 annually in unsubsidized loans. Really think about whether you want to borrow more than that. The answer may be talking to your financial aid office about additional scholarship opportunities, or choosing a different university