This article describes the steps involved in getting a student loan for college. The majority of students will complete these steps, but some students may be required to complete additional steps depending on their school’s financial aid process. If you are having difficulty with any of these steps, please contact an Edfinancial Services customer service representative.
Step 1: Completing the FAFSA®
The Free Application for Federal Student Aid, or FAFSA®, is the key to many types of financial aid. The FAFSA is required to obtain a federal student loan. A student will complete the FAFSA each year for the applicable school year.
The FAFSA asks the student for basic information such as name, date of birth, Social Security Number, and what school the student plans to attend. The student may also have to provide income tax information for himself and his parent(s). The FAFSA can be filled out on paper or online through the U.S. Department of Education’s FAFSA website. To complete the FAFSA online, the student and/or parent, as applicable, should first apply for an FSA ID from the Department of Education; the FSA ID allows you to sign the FAFSA electronically. When complete, the Department of Education reviews the FAFSA.
Step 2: Reviewing the FAFSA
The Department of Education reviews the student’s FAFSA to determine the Expected Family Contribution, or EFC. The EFC describes how much the student’s family should be able to contribute to the expense of the student’s education. Factors such as family size, number of family members in college, and family savings and income are used to calculate the EFC. The amount of federal aid that a student is eligible for is based on the EFC; the greater the EFC, the lesser the amount of federal aid the student can receive.
The FAFSA typically asks for both parents’ income information, or information for whichever parent claims the student as a dependent. Most traditional students are claimed as a dependent on their parents’ income taxes. To be considered an independent student, you must be at least 24 years old, have served in the military, be married, or have dependents of your own. Also, if you are a graduate student or your parents were denied for the Parent PLUS loan, you are automatically considered independent and may be eligible for additional funding.
Step 3: Results of the FAFSA
Once the EFC is determined, the Department of Education will send a Student Aid Report, or SAR, to the student explaining how much federal funding the student is eligible to receive. The Institutional Student Information Report, or ISIR, is also generated by the Department of Education and sent to the school(s) listed by the student on the FAFSA. The ISIR contains information similar to that on the SAR and tells the school(s) how much aid the student may receive. The results of your FAFSA will be available after your application is processed, and you can check the status on the Department of Education’s website.
Step 4: The Award Letter
Schools take the information on the ISIR and the student’s admission application to create an award letter for the student. The award letter may be received electronically or through the mail and tells the student how much he can borrow in federal loans, as well as any scholarship or grant money he may elect to receive. The student must wait for this letter before he can move to the next step.
Step 5: Accepting the Money
With award letter in hand, the student can choose how much money he wants for school, up to the full amount offered in the award letter. Students can accept the full amount offered to them, or they can take a partial amount depending on their needs and expenses.The student must accept the money through the school’s preferred process, which usually involves paper or electronic forms. You should accept awards only from the school you plan to attend.
Step 6: Getting a Loan
Your school will provide you with information on how to apply for a student loan. If you are a first-time borrower, you will sign a master promissory note, or MPN, in order to receive loan funds. You may also be required to complete entrance counseling which will inform you of your rights and responsibilities as a borrower. Once your loan funds are disbursed, they will be sent to your school and will be applied toward your account. You should contact your school's financial aid office if you have questions about your student loan.