Financing your academic ambitions often requires you to obtain student loans, and for most borrowers, that means taking out federal student loans and/or private student loans. As the names would suggest, federal student loans are funded by the federal government. Although federal loans are often serviced by private entities, the rules and regulations that govern them are dictated by the government. 

Private student loans are provided by private lenders, such as banks, credit unions, or other lending organizations. Private loans and borrowers are held to the rules and regulations (within legal bounds) of the private lender. 

Both federal and private loans have benefits. Deciding which are the best student loans for you requires a thorough review of your finances, how much you need to borrow, and your overall academic and professional intentions. However, because federal loans often offer more robust repayment plans and borrower protections, most borrowers choose to start by applying for federal student loans. Lets take a look at a breakdown of federal and private student loans, as well as how long it takes to get a student loan.

How to Get a Federal Student Loan 

Step-By-Step Guide for Federal Student Loans 

The first step when applying for federal student loans is to complete and file the FAFSA, or the Free Application for Federal Student Aid. There are many things to consider when completing and submitting a FAFSA, and one of the most important is deadlines.

With that in mind, once you determine you need to complete a FAFSA, check the federal student aid deadlines to determine the requirements as they apply to your state of residency and the school for which you are applying.

Once you determine your application deadline requirements, you’ll need to complete the application, which will require you to have the following information available:

  • Your Social Security number (SSN) or Alien Registration Number (if not a U.S. Citizen)
  • Your W-2s, federal income tax return, and any other records of money you've earned
  • Bank statements or investment records, if applicable
  • Records of untaxed income, if applicable

An FSA ID, which is required to electronically sign your application and can be created on the Federal Student Aid website.

Please note that in some cases, specifically if you are considered a dependent student, you will likely need to provide parental information that aligns with the requirements above. You can learn more about independent and dependent student status by visiting the “Will I need my parents’ information” section of the FAFSA website.

Once your application has been submitted, it will be reviewed. Once processed, you will receive a Student Aid Report (SAR). The SAR includes a summary of the information you provided on your FAFSA as well as an estimate of how much financial aid you are eligible for and your expected family contribution (EFC), or what you are expected to pay.

How quickly you receive your SAR depends on your FAFSA submission. Applications submitted online with a valid FSA ID and email address can be processed in as little as three to five days. However, applications submitted online or via mail without the appropriate information can take up to three weeks.

Around the time you receive your SAR, the school(s) you included on your FAFSA will also receive the Institutional Student Information Record (ISIR) which will allow them to review your eligibility and create an award package. The school will then send you an official aid offer.

To accept the financial aid award you must contact your school’s financial aid office. Please check with your individual school for information on the financial aid acceptance process. Regardless of their process, you will need to read and sign loan documentation, including the Master Promissory Note (MPN), which is the legal agreement between the borrower and the lender. The MPN will include the terms and conditions of your loan (rates, repayment, etc.).

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Most U.S. citizens who meet the basic eligibility requirements will be approved for a federal loan, although rates and amounts will vary based on need. However, some student may find they lose eligibility if they do not maintain satisfactory academic progress, they’ve defaulted on a federal loan, or they owe a refund on a federal grant. So, while it is possible to be denied, it’s not a frequent occurrence if you are attending a credible college full-time and file all the proper paperwork on time.

How Long Does It Take to Get a Federal Student Loan? 

After the MPN is signed, the college or university can disperse the funds up to ten days before the first day of school. However, some schools may be required to hold the funds for 30 days after the first day of the payment period. This type of delay is typically only for first-time borrowers in their first year of school.

Once the funds have been disbursed and tuition and fees are accounted for, any remaining balance on the loan disbursement must be refunded to the student within 14 days.

The exact amount of time between the time you accept the financial award and you receive additional funds can vary based on a variety of factors. These include when you signed the promissory note as well as your school’s disbursement and payment calendar. For that reason, it’s best to contact your school’s financial aid department for disbursement specifics.

How to Get a Private Student Loan

Step-By-Step Guide for Private Student Loans

While federal loans require you to submit a single application and await an award notification outlining the current rates and terms you are eligible for, applying for a private student loan isn’t necessarily as straightforward.

There are a variety of private student loan lenders, and each has their own set application and eligibility requirements, rates, and terms. As such, the first step in the private student loan application process should always be to research the loans available to you.

Some private lenders offer student loans without a cosigner, but some will, particularly if you have a limited credit history, a low credit score, or little to no income. For this reason, it’s important you identify a reliable cosigner who is willing to accept the risks and responsibilities of that role before you apply for loans.

Much like federal student loans, private student loan applications typically require the potential borrower to provide information about their current financial standings. This includes annual income or W-2s, rent or mortgage payments, tax returns, and employment information. Additionally, many lenders will also require information about your prospective academic career including the school you will be attending, the costs you will incur, and when you’ll be graduating.

After gathering the required information, you must submit a formal loan application. Applications will vary based on the lender you select, so it’s best to consult the lenders website for additional information about the application process and requirements.

How Long Does It Take to Get a Private Student Loan?

Applying for a private student loan may be quicker than the FAFSA process, with some lenders denying or approving applications within the same day. However, just because the initial application and approval is quick doesn’t mean the funds will be processed by your school immediately. The entire process can take up to two months, so it’s best to submit the application at least two months in advance of need.

For many, student loans are a necessity for academic growth. Both federal and private loans can satiate the financial need associated with higher education, but each lender has a unique set of requirements and processes. To make the most of your loan opportunities, be sure to read all the requirements (including the lender and school’s deadlines), review the rates and terms, and work with your school to determine the best process.