Which Loan Is Right for You?

Depending on your financial situation, you may need to look at using both federal aid and private student loans to cover your college expenses.

Federal student loans typically don’t require a credit check, offer the option of deferring payments while attending school or seeking employment, and don’t require a co-signer.

Private student loans from lenders, like credit unions and banks, are a good way to pay for educational expenses not covered by other means. You’ll have to undergo a credit check for a private student loan, and if your score or credit history isn’t strong enough, you may need someone to co-sign (accept joint responsibility for) the loan.  

The Application Process

The first step in the application process is filling out the Free Application for Student Aid (FAFSA) form to determine the amount of federal aid you’re eligible to receive. If your award package doesn’t completely cover the cost of attendance, you’ll need to consider additional funding opportunities, such as private student loans. Private loans have their own application processes that differ by lender.

Federal Application

The Free Application for Federal Student Aid (FAFSA) connects you with grants, loans and work study funds available through the federal government. Many state governments, colleges and career schools also use your FAFSA information to award you their aid.

To be considered for federal financial aid, you must complete a new FAFSA every year. Forms are available free online at FAFSA.gov starting Jan. 1 for the upcoming school year.

Provided you have the information you need upfront, you can complete the form in about 30 minutes. You don’t have to finish filling it out all at once, though. Once you start it, you have the option to save it and return to finish later.

In general, you’ll need the following information to complete the form:

Social Security or Alien Registration Number

Federal tax information or tax returns

Records of untaxed income

Cash, savings and checking account balances

Investments other than the home in which you live

Schools with which you want to share your information

If you’re applying as a dependent rather than an independent, additional details about your parent’s finances are needed.

You can complete and submit your FAFSA entirely online at FAFSA.gov, or you can download a PDF of the application and mail it in. Within a few days of submitting, you’ll receive an email letting you know your FAFSA was processed.

If you’re a first-time applicant, you’ll receive an aid offer stating the amount of aid you could receive from each school you applied to and listed on your FAFSA. Review and compare your offers, and use them to help you make an informed decision about what school to attend. Renewal applicants will receive an aid offer from the school they’re attending.

To receive your financial aid, formally accept your aid offer. Talk to your school’s financial aid office to determine when and how your aid will be paid out, what it covers and how much (if any) money will come to you once tuition and fees are paid.

Private Student Loan Application

Private student loans are a good option to help cover expenses not met by federal student loans, grants and scholarships. Before you apply, compare the amount of federal aid you receive to the total amount it will cost to attend your school to help identify just how much you need to borrow.

Many private lenders, including Navy Federal, allow you to apply entirely online. While applications vary by lender, you’ll likely need to supply the following information to complete your loan application:

Permanent address, phone number and email

Social Security Number

Government-issued photo ID

Basic information about your academic standing, including current GPA

School transcript (unless you’re a first-semester freshman)

Proof of income

If you’re applying with a co-signer, they need to provide much of the same information, as well as additional details, such as personal references and proof of employment.  

Comparing Private Lenders

Before applying, keep these considerations in mind as you shop around and compare:

Interest rates: Different lenders offer different interest rates for private student loans. Determine which lender and loan option will give you the best value.

Repayment plans: Some lenders give students the flexibility to pay a smaller amount during college and then begin to pay larger sums after graduation. Ask if the lender might also agree to a new repayment plan if you can’t find immediate employment after graduation.

Money-saving benefits: Ask if your lender has discounts for setting up automatic payments or having other accounts with them, like checking or savings. Navy Federal offers a discount for automatic payments.

Customer service: You should feel comfortable asking the lender questions about your loan and the repayment options. A knowledgeable loan officer can be your ally in times of financial hardship and will help you avoid late or missed payments.

Reputation: Many colleges have a list of lenders they consider to have a good track record of offering competitive rates and providing good customer service.

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