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How to Get a Student Loan
How to Get a Student Loan
July 11, 2021 / Nadav Shemer
How to Get a Student Loan
July 11, 2021 / Nadav Shemer

The first thing many people think about when preparing for college is how to get a student loan. This is hardly surprising given that annual tuition and fees can easily exceed $40,000 at private colleges and $25,000 for out-of-state students at public colleges.

If you’re wondering how to get money for college, then the options include your (or your parents’) income, savings plans, grants, scholarships, and of course student loans. Student loans can be broken down into two main categories: private student loans and federal student loans.

Keep reading to find out how to take out student loans in 2021-22, and how to decide whether to get a student loan from a private lender, the federal government, or both.

How to get student loans from private lenders

Private student loans are offered by private lenders such as banks, credit unions, and online lenders. These loans can be used for undergraduate or graduate studies, and sometimes for career training or other professional studies. They cover up to the full cost of admission, including tuition and fees, room and board, books and supplies, and transportation.

Most private student lenders offer a choice between fixed-rate loans, currently ranging from 3.49% to 12.99%, and variable-rate loans, currently ranging from 1.04% to 12.40%). The average loan has a rate of 5-8%, depending on the borrower’s (or cosigner’s) credit. There are usually no origination fees, application fees, or prepayment fees to worry about with a private student loan. Repayment terms usually range from 5-15 or 5-20 years.

Most lenders offer a choice of three or four repayment options while you’re in school, followed by a 6-12 month grace period following graduation before you’re expected to begin making full principal and interest payments. Here are the in-school options:

  • Full principal and interest payments, saving on your total loan cost.
  • Interest-only payments, striking a balance between loan cost and reduction of monthly payments during school.
  • Fixed (usually $25) monthly payments, reducing the interest you accrue while in school.
  • No payments while in school, freeing up cash in the short-term but increasing the total loan cost.

The other important thing to consider while thinking about how to take out a student loan from a private lender is the cosigner options. A cosigner is a person (typically a parent, but it could also be a close relative, family friend, or any other trusted person) with strong credit. The lender then agrees to assess your application on the basis of your cosigner’s credit score, enabling you to access competitive interest rates. Some, but not all lenders, allow a cosigner release after 12-24 months of consecutive on-time payments.

How to get student loans from the federal government

Federal student loans are student loans funded by the federal government. The main benefits to federal loans are the competitive interest rates, the fact that they usually don’t require a credit check, and the various forms of assistance (e.g. forbearance, loan cancellation) available to borrowers who get into financial trouble. However, federal college loans for students have higher origination fees and stricter eligibility requirements than private student loans. Most importantly, they usually only cover part of the cost of admission.

Federal loans can be broken down into three categories:

  • Direct subsidized loans. For undergraduate students with financial need. Interest rate of 3.73% (in 2021-22). Annual amount of up to $5,500 depending on grade level and dependency status.
  • Direct unsubsidized loans. For undergraduate, graduate, and professional degree students; financial need isn’t required. Interest rate of 3.73% for loans made to undergraduate students and 5.28% for loans made to graduate or professional degree students. Annual amount of up to $20,500 (less any subsidized amounts received for the same period) depending on grade level and dependency status.
  • Direct PLUS Loans. For parents who are borrowing money to pay for their dependent undergraduate child’s education, and for graduate or professional degree students; financial need isn’t required. Interest rate is 6.28%. The borrower must demonstrate good credit. Maximum amount is the cost of attendance minus any other financial aid the student receives.

How to choose your student loan

When it comes time to decide how to get money for college, the good news is you don’t have to restrict yourself to only one option. If you have a cosigner with excellent credit, then you may be able to get your entire tuition funded with a low-interest loan from a private lender. However, in many cases, it makes sense to combine federal and student loans.

As the above section shows, federal loans are good for getting you started. Even if you don’t have financial need, you can still apply for a direct unsubsidized loan with an interest rate of 3.73% - 5.28% interest rate to cover the first $20,500 to $20,600 in costs each year. Then, you can apply for a Direct PLUS loan or turn to a private lender to fund the remaining amount.


As this article demonstrates, there is more than one answer to the question, “How do I get a student loan?” First, calculate how much you expect to pay in annual tuition, fees, and associated costs. Then, work out how much you can afford to pay out of your own pocket. If possible, apply for grants or scholarships. Finally, consider federal loans, private loans, or a combination of the two to fund the remaining expenses.

By Nadav Shemer
Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. Nadav writes for He enjoys writing about the latest innovations in financial services and products.
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