Every year, tens of thousands of high school seniors and their families sit down and try to figure out how to take out federal student loans. The excitement that comes with an acceptance letter is often tempered by the knowledge that college is, to put it mildly, expensive. Full tuition, fees, room, and board at a private university can easily hit $75,000 and up each year. Luckily, there are numerous scholarships, grants, and loans available to help. Federal student loans are, perhaps, the most common.
Any financial process is important to understand, but few have become as important as learning how to take out federal student loans for your education. If college is in your future, this is essential information.
Before the 1990s, buying a home was by far the largest investment a person would make in their lifetime. Since education costs have ballooned so dramatically, now the lifetime costs for some education can surpass the value of homes or at least be a very close second on that list of largest investments.
Nobody would tell you to buy a house without thinking clearly about the purchase and taking proper steps to do it right. A college education is in that same category of financial decisions that you must make with care.
How to take out federal student loans: Steps to follow
When you fill out the Free Application for Federal Student Aid (FAFSA), you will need some basic information. Having this information prepared ahead of time is critical to a successful application, and we’ll explain why in a moment.
First, make sure that you have this information ready to fill out your application without delay.
- Date of birth
- Social security number
- Your contact information
- List of schools you will attend, the school’s contact info, and major you will pursue
- Tax returns for your parents
- Tax returns for yourself (if you file independently)
- Information on untaxed income
- Other assets in your name or your parents’ name
- Gift aid received through scholarship or grants
Once you have these items prepared, you will be able to quickly complete your FAFSA forms, which can be to your advantage. FAFSA can operate on a first-come, first-serve basis, and getting your application in as early as possible will help ensure that you get the most amount of aid for your education.
How to take out federal student loans: Know what to avoid
As we mentioned, FAFSA works on a first-come, first-serve basis. The form for the following year opens on October 1st of the prior year. This means you will still be in the early stages of your current education year, but don’t make the mistake of delaying your application, or you might get less aid than you hope.
Some states and schools have additional steps they require to access funds for other federal programs. Many of these also operate on a first-come, first-serve basis, so it is crucial to stay ahead of the game when looking for these alternative federal funds for education. The earlier you are, the better your chances of getting a good aid package.
Don’t be fooled into paying for help in filling out FAFSA forms or other application forms, either. Any site offering to help for a fee has no connection with the Department of Education. Ignore their offers. Most high school guidance offices can help with the FAFSA. At the very least, they can direct you to other free resources for college financial planning.
Do your best not to borrow more than you need. Paying for education while you’re in school can be a challenging burden, but the less debt you come out of school with, the better off you will be for a quick start to your career and financial savings. Too many people shy away from applying for grants and scholarships, but you should search for programs and apply if you fit their criteria. Any money you don’t need to pay back is always better than debt.
Do you feel more confident in how to take out federal student loans? What are your biggest concerns in paying for your education? What help do you need?