If you need to take out student loans to afford to complete your degree, it's important to know the ins and outs of borrowing and avoid falling victim to student loan myths that could cost you.
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One of the key things you need to know? The deadlines for both federal and private student loans. You generally must apply each year for the funding you need and could be locked out of the most affordable loans if you wait too long to take action.
What are the deadlines for private student loans?
Private student loans don't have the same strict deadline that applies to federal student loans. In fact, you can typically apply for a private student loan at any time -- which makes this option attractive if you discover you haven't been provided with enough federal aid to fund all your costs during the school year.
However, you do want to make sure your private student loan lender is able to disburse the funding to your school by the payment deadline -- which means your school's tuition due date could serve as a de facto deadline for securing your private loan funding. If you're trying to get your money sent to your school on time, you'll need to find out how long each private lender's approval and disbursement process takes and make sure you apply in enough time for them to approve you and release your money.
The specific timeline for getting a private student loan can vary substantially from one lender to another. Many will approve you in minutes and can disburse funding within just a few days to a few weeks. Others may require more financial documentation or there may be secondary reviews beyond the automatic online loan approval that hold up the process and result in a longer delay before your funds can be released.
If you know you need to borrow for the next academic year, consider shopping for loans with Credible today so you don't wait until the last minute and find yourself scrambling to secure funding when tuition is due.
You also want to make sure you leave yourself time to find the right private lender, as there can be substantial variation in interest rates, qualifying requirements, and loan terms from one lender to another. In fact, you should always make sure to get quotes from several private lenders and compare their loan offerings before going forward with formally applying with the one offering you the best deal.
The good news is, Credible makes it easy to find the right loan so you can move quickly if necessary. You can visit Credible to view a rates table to compare fixed and variable rate loan offerings from multiple lenders at once and use their online student loan calculator to see what your monthly payment would be with different loans.
What are the deadlines for federal student loans?
It's always best to take out the maximum amount of federal student loans available to you before applying for private student loans, as loans from the Department of Education offer affordable fixed interest rates, are easy to qualify for regardless of credit history, and provide both flexible repayment options and the possibility of loan forgiveness.
To become eligible for federal student loans, you need to complete the Free Application for Federal Student Aid (FAFSA) for each academic year that you need funding.
The FAFSA becomes available at the start of October and should be completed as soon as possible. For example, for the 2020-2021 academic year, the FAFSA was first available on October 1, 2019. Completing the FAFSA right away is advisable because many types of federal financial aid are available on a first-come, first-serve basis and you don't want to be limited in the aid you receive because you waited.
However, while you should fill out your FAFSA right away, the actual deadline is a long time from when the forms first become available online. In fact, it's not until the end of June in the following year.
Some states and colleges have earlier deadlines than the federal one, and your college also must have access to your information from the FAFSA by your last day of enrollment during the 2020 to 2021 school year -- which is another reason you don't want to wait until the last minute to complete your forms.