How the Student Loan Process Works

The student loan process can be confusing, but we’re here to help. In this post, we’ll walk you through everything you need to know about how to apply for and receive a student loan.

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Applying for Loans

The first step in applying for a student loan is to fill out and submit the Free Application for Federal Student Aid (FAFSA). The FAFSA is used to determine your eligibility for federal, state, and institutional financial aid. After the FAFSA is processed, you will receive a Student Aid Report (SAR). The SAR will list your Expected Family Contribution (EFC), which is used to determine the types and amounts of aid you are eligible to receive.

Filling out the FAFSA

The Free Application for Federal Student Aid (FAFSA) is used to apply for federal, state and institutional financial aid.

You will need to fill out the FAFSA every year that you are in school in order to continue receiving aid. The FAFSA becomes available on October 1st each year, and you will want to fill it out as soon as possible since some aid is awarded on a first-come, first-served basis.

You will need your parents’ tax information in order to fill out the FAFSA, as well as your own financial information. Be sure to have this information handy when you sit down to fill out the form.

Once you have submitted the FAFSA, you will receive a Student Aid Report (SAR). This report will provide you with information about your Expected Family Contribution (EFC), which is used to determine your eligibility for financial aid.

If you have any questions about filling out the FAFSA or interpreting your SAR, be sure to contact the financial aid office at your school.

Applying for federal loans

The first step in applying for federal loans is to complete the Free Application for Federal Student Aid (FAFSA). The FAFSA becomes available on October 1 each year, and you’ll need to complete it as soon after that date as possible. The sooner you complete the FAFSA, the better your chances of getting the loans you need.

Once you’ve completed the FAFSA, you’ll receive a Student Aid Report (SAR). The SAR will give you an estimate of how much money you’ll be eligible to receive in federal loans.

Next, you’ll need to fill out a Master Promissory Note (MPN). The MPN is a legally binding document that outlines the terms and conditions of your loan. Once you’ve signed the MPN, your loan will be processed and the funds will be disbursed to your school.

Depending on your school and your loan type, you may have to complete entrance counseling before your loan can be disbursed. Entrance counseling is a brief session that explains your responsibilities as a borrower. It’s important to understand all of the terms and conditions of your loan before you sign the promissory note.

If you have any questions about the student loan process, please contact our office for more information.

Applying for private loans

To apply for a private student loan, you will need to fill out a Private Loan Application and Credit Agreement, which you can get from your lender. You will also need to provide documentation of your income, assets, and debts. Once you have submitted your application and it has been approved, your lender will disburse the loan funds to your school (or directly to you in some cases).

To apply for federal student loans, you will need to fill out the Free Application for Federal Student Aid (FAFSA). The FAFSA is available online at fafsa.ed.gov. You will also need to provide documentation of your income, assets, and debts. Once you have submitted your application and it has been approved, the federal government will disburse the loan funds to your school (or directly to you in some cases).

If you are a parent borrower, you will also need to complete a Parent PLUS Application and Credit Agreement form. This form is available from the Department of Education at studentaid.ed.gov/sites/default/files/plus-loan-app-English_0.pdf

Receiving Loans

Each academic year (Fall, Spring, and Summer), the U.S. Department of Education (ED) makes Direct Subsidized and Unsubsidized Loans available to eligible undergraduate and graduate students. The first step in receiving a Direct Loan is completing the Free Application for Federal Student Aid (FAFSA®) form.

Loan disbursement

Loan disbursement is when your loan funds are sent to your school.

For Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans, and Federal Perkins Loans, the U.S. Department of Education (ED) pays your lender the amount you’re scheduled to receive for the semester or other enrollment period. If loans are disbursed in more than one payment, you may have a grace period for each loan. For information about grace periods, see When Repayment Begins.

If you’re receiving Direct Consolidation Loan proceeds, ED sends the money directly to you (unless you’ve selected the option for ED to pay your loans to your current loan holders). If your consolidation loan includes FFEL Program loans, HEAL Program loans, Direct Loans or Perkins Loans that are being repaid under any of the standard repayment plans with terms of up to 30 years and have been consolidated more than once before July 1, 2006 (referred to as pre-July 1, 2006 consolidation loans), we calculate a single blended repayment schedule based on all of these loans’ weighted average interest rate before consolidating them into a new Direct Consolidation Loan. Fixing the interest rate could result in slightly higher or lower monthly payments than if those pre-July 1, 2006 consolidation loans were not included in this calculation; however, they’re still subject to the standard repayment plan terms with a repayment period not to exceed 30 years from the date consolidation disbursement is made. If any pre-July 1, 2006 Federal consolidation loan was repaid under an income-contingent repayment plan or an income-based repayment plan prior to being consolidated into a new Direct Consolidation Loan on or after July 1, 2006 (referred to as post-June 30, 2006 consolidation loans), we don’t include those post-June 30, 2006 consolidation loans when we calculate your single monthly payment amount under the income-contingent repayment plan or income-based repayment plan. As a result, post-June 30th consolidation loans aren’t subject to capitalization of unpaid interest that accrues during periods when payments aren’t required under either income-contingent repayment plan.

What to do if you can’t pay back your loans

If you find yourself in a situation where you can’t afford to make your student loan payments, don’t panic. There are several options available to you.

One option is to contact your student loan lender and ask for a deferment or forbearance. A deferment is when you temporarily postpone making your loan payments. Forbearance is when your lender agrees to temporarily lower your monthly payment amount or gives you a break from making payments altogether.

Another option is to look into income-driven repayment plans. These plans allow you to make smaller monthly payments based on how much money you make. You can apply for an income-driven repayment plan online at https://studentaid.gov/h/apply-for-aid/repayment-plans#income-driven.

If you’re struggling to make ends meet, don’t hesitate to reach out for help. There are plenty of resources available to assist you in making your student loan payments and getting your finances back on track.

Loan Forgiveness

There are several ways to get your student loans forgiven. You can apply for loan forgiveness through your school, the government, or a private company. The most common type of loan forgiveness is through the government’s Public Service Loan Forgiveness Program. This program forgives the remaining balance on your Direct Loans after you’ve made 120 qualifying monthly payments while working full-time for a qualifying employer.

Loan consolidation

Loan consolidation is the process of combining multiple student loans into a single loan. Loan consolidation can simplify loan repayment by consolidating multiple loans into a single monthly payment. When you consolidate your student loans, you will have a fixed interest rate for the life of the loan.

You can consolidate your federal student loans by going to the Federal Student Aid website. You can consolidate your private student loans through a private lender.

There are benefits and drawbacks to consolidating your student loans. You should consider consolidation if you have multiple student loans with different interest rates, if you are struggling to make monthly loan payments, or if you want to extend the repayment period for your loans.

Consolidating your student loans will not lower your interest rate. However, consolidating your federal student loans can give you access to additional repayment plans and forgiveness programs. Consolidating your private student loans will not give you access to these repayment options.

Consolidating your student loans will extend the repayment period for your loans, which means you will pay more in interest over the life of the loan. If you are having trouble making monthly loan payments, consolidating your Loans into one larger Loan with a lower monthly payment may be a good option for you.

Before consolidating your student loans, you should consider all of your options. You should compare Interest rates, fees, and repayment terms before choosing a consolidation Loan.

Loan rehabilitation

Loan rehabilitation is a process where you make 9 timely payments of an amount that is agreed upon by you and your loan servicer. Once you have made all 9 payments, the default status on your loan will be removed and you will once again become eligible for additional federal student aid. If your loan is in default, you are not currently eligible for federal student aid.

Loan discharge

If you’re having difficulty repaying your federal student loan, you may be eligible for loan discharge. Loan discharge releases you from having to repay some or all of your loan.

To get a loan discharged, you must meet certain requirements and must apply for discharge through your loan servicer. Depending on the type of discharge you’re eligible for, you may have to provide documentation to support your claim.

There are several types of loan discharge: false certification, closed school, death or disability, unpaid refund, bankruptcy, and Perkins Loan Cancellation.

You may be eligible for a false certification discharge if you were unable to complete your program of study because your school falsely certified your eligibility to receive a Direct Loan.

If your school closes while you’re enrolled or soon after you withdraw, you may be eligible for a closed school discharge.

If the borrower of a Direct Loan dies or becomes totally and permanently disabled, the loans will be discharged. If the borrower was in the process of consolidating his or her loans at the time of death or total and permanent disability, the consolidation loan will also be discharged. A cosigner on the loan is released from further obligation. You may also be eligible for this type of discharge if you’re unable to complete your program of study because of a borrower’s death or total and permanent disability. For example, this could occur if the borrower was your parent or stepparent who died or became totally and permanently disabled while you were still enrolled in school at least half time with Title IV aid. To apply for this type of discharge due to a borrower’s death or total and permanent disability: Complete and submit an application for Total and Permanent Disability Discharge (PDF) along with proof of the borrower’s death certificate OR confirmation from SSA that the borrower is receiving SSDI benefits due to being Totally Disabled; OR award letter from VA indicating that the veteran is receiving 100% Permanent & Total (P&T) benefits due to service-connected disabilities; OR confirmation from Veterans Affairs that he/she is unable gain substantially gainful employment due to service-connected conditions OR certification by licensed physician/practitioner that his/her illness or injury has left him/her unable gain substantially gainful employment For more information about this type of discharge click here . If any questions regarding this form please contact us . All other questions can be found in our Frequently Asked Questions section . For all other types please visit our Types Of Discharge page . How do I apply? The first step is identifying which type(s) of discharge that you feel that you qualify under. After that is done please follow these steps: Download and print form Complete form Mail Form Include any additional requested documentation