Applying for a Student Loan
Going to college is a great career move, but it's also an expensive one. Applying for a student loan is a necessity for most families. This article is going to be one of the "all you need to know about applying for a student loan" summaries. It's going to explain how long it takes to apply, and what kind of information is needed when filling out an application.
Student Loan Statistics
According to information published by the Bureau of Labor Statistics back in 2015, individuals with a bachelor's degree earn nearly 80% more than those with a high school diploma. But getting a college degree comes at a cost, and it's a high one. CollegeBoard statistics indicate the average cost to attend a private college is just a little over $49,879 (2020 / 2021, tuition and fees), which makes applying for a student loan an important first step for many.
No doubt getting a college degree provides a great financial benefit, but the cost of college is high. However, $200 billion in federal financial aid is budgeted for the fiscal year 2019 according to the Department of Education. With that in mind, let's take a closer look at the student loan application process.
Student Loan Applications
When filling out an application for a student or college loan, there are three factors to keep in mind:
- Timeline for applying
- Documents needed to complete the application
- Student loan reports
We're going to talk about each of these steps in the process in more detail in the paragraphs below.
Timeline for Applying
It can be reasonably argued that preparing for college starts in grammar school with good study habits. We might agree with that notion, but we are going to reel forward a bit, to senior year in college.In October or November, it's time to register for the SATs, it's also a good time to finalize the list of colleges of interest. If someone is going to apply for an early decision, they might have to complete an application to school as early as October. If that's the case, an enrollment decision might come as early as December.
In January, the student loan timeline starts. Between January 1st and February 15th, parents and guardians should fill out a Free Application for Student Aid, or FAFSA. This can be done right over the web on the FAFSA website.
Before starting the application, spend some time gathering certain documentation. For example, in the calendar years 2020 / 2021, applicants will need 2019 information including:
- 2019 W-2 Forms and other records of income
- 2019 Federal Income Tax Return: IRS Form 1040
- If a dependent student, then a parent's Form 1040 is required too
- Bank statements
- Investment and mortgage information (stocks, bonds, and other financial records)
- Social Security number
According to the Department of Education, it should take less than one hour to complete an application for a student loan over the web.
Student Aid Report
If a FASFA is completed in January, then a Student Aid Report or SAR should be received sometime in February, or roughly 4 weeks after completing the application. The student aid report should accurately reflect the information supplied during the application process.
At this point, it's important to correct any errors found on the report, and send it back to the FAFSA processor. February is a good time to complete any scholarship applications. It's also a good time to check back with the financial aid offices of the colleges; making sure they have everything needed to complete the process.
Expected Family Contribution
The finalized student aid report will contain notice of the expected family contribution, or EFC. The expected family contribution is based on the information supplied in the FAFSA, and is the information used by the financial aid offices to determine their offers of financial aid.
By mid-April, applicants will start to hear back from colleges, letting the student know if they've been accepted for enrollment. At this point, it's time to compare acceptance terms, scholarship offers, as well as offers of financial aid as outlined in Award Letters. This ends the cycle of applying for a student loan.
Colleges will consider both the expected family contribution and the cost of enrollment when developing an award letter. Families need to carefully consider all the information at hand before making a decision to enroll. Normally, enrollment decisions are required by May 1st, and a non-refundable deposit may be due at this time towards freshman tuition.
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