Applying for Student Loans: What to Expect Step-by-Step

Posted by IPFW Admissions Team on 2/26/15 11:33 AM


Although your financial aid package will likely consist of many types of financial assistance—grants, scholarships, Work-Study funding—chances are you’ll end up needing to take out a loan. It’s more common than you might think: 7 out of every 10 college seniors who graduated from public and nonprofit colleges in 2013 had student loan debt.

For many students, taking out student loans may be your first “real” long-term financial responsibility, so it’s important to understand the process and what it means for your future—not only while you’re in college, but after you graduate, too. 

First, let’s go over the different types of loans.

  • Federal Subsidized Loans. These student loans are provided by the federal government toward your education expenses. ”Subsidized” means that the government pays the interest while you’re still in school, and you’re not responsible for any interest until after you graduate.
  • Federal Unsubsidized Loans. Also provided by the federal government, but these loans will accrue interest while you’re in school—which you’ll be responsible for paying after you graduate.
  • Private Loans. Most often issued by banks or credit unions, private loans are almost always unsubsidized (so they’ll accrue interest while you’re in school) and may come with higher interest rates than federal loans—some as high as 16%!

What do these look like in dollars? Let’s say you need to take out a $5,000 loan your freshman year to help pay for college. Here’s what this loan will cost you 4 years later when you graduate:


Interest Rate

Interest Kicks In

Interest You Already Owe after 4 Years in School

Federal Subsidized Loan


When you graduate


Federal Unsubsidized Loan


Day 1


Private Loan


Day 1


*This is based off of daily accrued interest over 1,460 days (4 years)

For most borrowers, federal student loans are the best option. Whether they’re subsidized or unsubsidized, your interest rate is fixed with federal loans, which will help you predict your payments after you graduate. Federal loans also offer more options for repayment, depending on your circumstances—such as deferment (think of it as a grace period where you don’t have to pay) if you experience financial hardship.

So what should you expect, step-by-step, when applying for student loans?

Step 1. Fill out your FAFSA. 

As with almost every type of financial aid, your very first step is to complete and submit your FAFSA. This will determine what types of loans you are eligible for, and give you a clearer sense of what additional types of aid you will receive. 

Private loans may not require a completed FAFSA, and will instead come with their own application process through the issuing bank or credit union. 

Step 2. Review your award package.

Typically, you’ll receive a notice to review your proposed award package during the spring. This will include a breakdown of what type of financial aid you are eligible to receive, including grants, Work-Study funding, and loans.

If you are eligible for federal student loans, you’ll be prompted to accept some of, all of, or none of the loans being offered for the following academic year. For example, you may choose to accept all of the subsidized loan money you’re offered, but only part of the unsubsidized loan. 

Step 3. Keep an eye on your student account.

Before each semester begins, funds will be dispersed from the federal government and applied to your student account at your university.

Then, if there’s a remainder, the leftover funds will be transferred to you (usually through direct deposit, if you sign up for it) to be used for living expenses, books, supplies, and what else you might need. This is called a refund.

Step 4. Plan ahead for those loan payments.

If you decide to take out a federal loan, you’ll usually have to start making payments six months after you graduate or drop below half-time enrollment.

Plan ahead for those payments after you graduate. Interest can really add up quickly, so if you can afford to make payments early (even if it’s just paying off the interest) that can make a huge difference, and your future self with thank you for it. There are also ways to defer payments if you decide to go to graduate school with the in-school deferment process, or to delay your payments if you need to through the forbearance process.

Looking for more information on student loans?

Still confused about student loans? Check out our free 2-page Quick Guide on Student Loans that covers all the basics you need to know.Get the Financial Aid QUick Guide: Student Loans

Topics: Financial Aid, Student Loans





Search the Blog