How Do You Qualify For Student Loans

Last Updated on May 19, 2022

How Do You Qualify For Student Loans?

Student loans are a great way to pay for your education, but they’re not always easy to get. If you’re wondering how to qualify for student loans, here’s a step-by-step guide:

Step 1: Research Your Options

When it comes time to apply for student loans, there are a number of options available to you. The first thing you’ll need to do is research all of the different types of loans available and find out which one will work best for your situation. This is important because not all student loans are created equal—some have better interest rates than others, some have better repayment plans, etc. It’s important that you take some time here so that you can make an informed decision.

Step 2: Apply for Financial Aid

Once you’ve decided on the type of loan that will work best for your situation, it’s time to apply! In order for any type of loan application to be approved by the lender, you must first apply for financial aid from them directly (or through another organization). This means providing information about yourself and your family’s income/assets/etc., as well as submitting tax returns or other documents proving these things (such as pay stubs).

Student Loans 2022 Applications: How to apply for Student Loan [12 Steps  for Student Loan Application Submission] - Fully Funded Scholarships

How Do You Qualify For Student Loans

demonstrate financial need (for most programs);

be a U.S. citizen or an eligible noncitizen;

have a valid Social Security number (with the exception of students from the Republic of the Marshall Islands, Federated States of Micronesia, or the Republic of Palau);

be enrolled or accepted for enrollment as a regular student in an eligible degree or certificate program;

be enrolled at least half-time to be eligible for Direct Loan Program funds;

maintain satisfactory academic progress in college or career school;

sign the certification statement on the Free Application for Federal Student Aid(FAFSA®) form stating that
you are not in default on a federal student loan,
you do not owe money on a federal student grant, and
you will use federal student aid only for educational purposes; and

show you’re qualified to obtain a college or career school education by
having a high school diploma or a recognized equivalent such as a General Educational Development (GED) certificate;
completing a high school education in a homeschool setting approved under state law (or—if state law does not require a homeschooled student to obtain a completion credential—completing a high school education in a homeschool setting that qualifies as an exemption from compulsory attendance requirements under state law); or
enrolling in an eligible career pathway program and meeting one of the “ability-to-benefit” alternatives described below.

Additional eligibility requirements can apply in certain situations including for non-U.S. citizens, students with criminal convictions, and students with intellectual disabilities.

Some federal student aid programs have their own eligibility criteria in addition to the general requirements listed above. Check with your college’s financial aid office if you have questions about a particular program.

Registering for Selective Service

Your registration status with Selective Service no longer affects your eligibility to receive federal student aid. However, you can still register through the FAFSA form. For general information about registering, call Selective Service toll-free at 1-888-655-1825 or visit

Note: If you are a citizen of the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau, you are exempt from registering.

Ability-to-Benefit Alternatives

If you were enrolled in college or career school prior to July 1, 2012, or if you are currently enrolled in an eligible career pathway program*, you may show you’re qualified to obtain a higher education by

passing an approved ability-to-benefit test* (if you don’t have a diploma or GED, a college can administer a test to determine whether you can benefit from the education offered at that school) or

completing six credit hours or equivalent course work toward a degree or certificate (you may not receive aid while earning the six credit hours).

how to apply for student loans through fafsa

To apply for federal student aid, first complete and submit the Free Application for Federal Student Aid (FAFSA®) form. Based on the results of the FAFSA form, your college or career school will send you a financial aid offer, which may include federal student loan(s). Your school will explain how to accept all, or a part of the aid offered.

Step 1: Fill Out the FAFSA
The first step in applying for student loans is to fill out the government’s Free Application for Federal Student Aid (FAFSA). The FAFSA asks a series of questions about the student’s and parents’ income and investments, as well as other relevant matters such as whether the family will have more than one child in college at the same time. Based on the information you supply, the FAFSA will calculate your Expected Family Contribution (EFC). That’s the amount of money the government believes you should be able to pay for college for the coming school year out of your own financial resources.

You can complete the FAFSA online at the office of the Federal Student Aid website.1 To save time, round up all of your account information before you sit down to start work on it. You must not only complete the FAFSA when you first apply for aid but every year after that if you hope to continue receiving aid.

Step 2: Compare Your Financial Aid Offers
The financial aid offices at the colleges you apply to will use the information from your FAFSA to determine how much aid to make available to you. They compute your need by subtracting your EFC from their cost of attendance (COA). Cost of attendance includes tuition, mandatory fees, room and board, and some other expenses. It can be found on most colleges’ websites.

In order to bridge the gap between your EFC and their COA, colleges will put together an aid package that may include federal Pell Grants and paid work-study, in addition to loans. Grants, unlike loans, do not need to be paid back, except in rare instances. They are intended for students with what the government considers “exceptional financial need.”

Award letters can differ from college to college, so it’s important to compare them side by side. In terms of loans, you’ll want to look at how much money each school offers and whether the loans are subsidized or unsubsidized.

Direct subsidized loans, like grants, are meant for students with exceptional financial need. The advantage of subsidized student loans is that the U.S. Department of Education will cover the interest while you’re still at least a half-time student and for the first six months after you graduate.2

Direct unsubsidized loans are available to families regardless of need, and the interest will start accruing immediately.2

Payments and interest on these loans was suspended in 2020 during the economic crisis, with both resuming in mid-2022.3

If you qualify, a college might offer you both subsidized and unsubsidized loans.

Federal loans have a number of advantages over student loans from banks and other private lenders. They have relatively low, fixed interest rates (private loans often have variable rates) and offer a variety of flexible repayment plans.

The confusingly-named Expected Family Contribution (EFC) will be renamed the Student Aid Index (SAI) in July 2023 to clarify its meaning. It does not indicate how much the student must pay the college. It is used by the school to calculate how much student aid the applicant is eligible to receive.4

However, the amount you can borrow is limited. For example, most first-year undergraduates can only borrow up to $5,500, of which no more than $3,500 can be in subsidized loans. There are also limits on how much you can borrow in total over the course of your college career.5

If you need to borrow more than that, one option is a federal Direct PLUS Loan. PLUS loans are intended for the parents of undergraduates (as well as for professional and graduate students). PLUS loans have higher limits—up to the full cost of attendance minus any other aid the student is receiving—and are available regardless of need. However, the parent borrower must generally pass a credit check to prove their creditworthiness.6

Private student loans lack the flexible repayment options available with federal loans.
Step 3: Consider Private Student Loans
Another option if you need to borrow more money than federal student loans can provide is to apply for a private loan from a bank, credit union, or other financial institution.

Private loans are available regardless of need, and you apply for them using the financial institution’s own forms rather than the FAFSA. To obtain a private loan, you will need to have a good credit rating or get someone who does have one, such as a parent or other relative, to cosign on the loan.

Having less-than-stellar credit can make it difficult to qualify for student loans. Private lenders will consider your income and credit history, and as a college student, you likely have poor credit or no credit at all. However, some lenders offer student loan options for borrowers with bad credit.

Generally, private loans carry higher interest rates than federal loans, and these rates are variable rather than fixed, which adds some uncertainty to the question of how much you’ll eventually owe. Private loans also lack the flexible repayment plans available with federal loans and are not eligible for loan consolidation under the Federal Direct Consolidation Loan program. However, you can refinance your private loans after you graduate, possibly at a lower interest rate.

Each college will notify you of how much aid it is offering around the same time that you receive your official acceptance. This is often referred to as an award letter. In addition to federal aid, colleges may make money available out of their own funds, such as merit or athletic scholarships.

Step 4: Choose Your School
How much you’ll have to borrow to attend one college versus another may not be the most important factor in choosing a college. But it should definitely be high on the list. Graduating from college with an unmanageable amount of debt—or, worse still, taking on debt and not graduating—is not only a burden that might keep you up at night; it can limit—or even derail—your career and life choices for years to come. Also factor in the future careers you are considering when you choose to pay more for college. A career with a high entry-level salary will put you in a better position to repay your loans and justify taking on more debt.

How Do You Borrow College Money Under Federal Loan Programs?
There are five letters to remember: FAFSA. To qualify for a federal loan, you will need to complete and submit the Free Application for Federal Student Aid, aka FAFSA. Borrowers must answer questions about the student’s and parents’ income and investments, in addition to other relevant matters, such as whether the family has other children in college. Using that information, the FAFSA determines the Expected Family Contribution, which is being rebranded as the Student Aid Index. That figure is used to calculate how much assistance you’re eligible to receive.

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