When to start looking into student loans

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TL;DR

• Complete the FAFSA as soon as possible to find out if you’re eligible for federal aid.

• Exhaust options like grants, scholarships, and work-study opportunities first since you don’t need to repay them.

• If you still have funding gaps after you’ve maximized federal loans, you can take out private student loans at any time but it can take a few weeks to get the funds.

Table of Contents

1. Start here: fill out the FAFSA

2. Exhaust free money first

3. Savings accounts vs. student loans: when does each option make sense?

4. Federal vs. private student loans: when does each option make sense?

5. When to apply and how long it takes to get your money

6. How much should you actually borrow?

7. Need extra funding for college?

If you’re wondering when to start looking into student loans, the answer depends on your financial aid situation and how much funding you’ll need. In most cases, you should only borrow after you’ve exhausted free aid and know how much of a funding gap you have—then apply a few weeks before your tuition bill is due.

Here we’ll break down when to apply for both federal and private student loans and include several tips for smart and responsible borrowing.

Start here: fill out the FAFSA

Once you decide you’ll need help paying for school, fill out the Free Application for Federal Student Aid (FAFSA) first. By doing so, you can find out whether you qualify for aid, including federal loans, scholarships, grants, and work-study programs.

Ideally, you’d fill out the FAFSA as soon as possible as federal aid is awarded on a first-come, first-serve basis. The FAFSA is usually available on October 1 and you must submit it by June 30 of the corresponding academic year.

Also, keep in mind that states and colleges may have their own deadlines, so make sure you submit the FAFSA on time. You can view state deadlines online. For your intended college’s deadline, contact the school aid office.

Wait for a financial aid award letter

Once you submit the FAFSA, you’ll need to wait for a financial aid award letter from colleges that accept you. Also known as a college offer letter or a school aid offer, the letter will detail what financial aid you can receive at that particular college.

It will list the total cost of attendance and what grants, scholarships, and work-study programs you can use. It will also include a list of what federal student loans you can qualify for and what your expected contribution is outside of that financial aid package.

When you may receive a response from a college is dependent on when you apply and what type of application you submitted:

• Early decision: By mid-December

• Rolling admission: Within six to eight weeks of receiving your application

• Regular admission: March or April

FAFSA processing delays are common, so don’t be surprised if your award letter takes a little longer to arrive.

Exhaust free money first

Before taking out federal loans or private student loans and sign up for monthly payments after graduation, make sure you exhaust all interest-free financial aid opportunities first, including:

Scholarships and grants 

Both scholarships and grants are smart ways to cover your education costs because you don’t have to pay them back. Scholarships are usually awarded based on merit and grants are need-based, meaning they’re awarded based on financial circumstances.

While you can qualify for grants and scholarships from your college, you can also get financial aid from your state, non-profit organizations, and private companies. You can apply for multiple scholarships and grants to reduce your education costs.

To search for scholarships and grants, check out FastWeb, Scholarships.com, CareerOneStop, and Cappex.

Work-study programs

With a federal work-study program, you take on a part-time job related to your major. As an undergraduate student, you’re paid on an hourly basis, and you can use your earnings to cover a portion of your education costs. 

The number of hours you can work is determined by your federal work-study award, and your employer and the school financial aid office will base your schedule on your class schedule.

If a work-study program wasn’t included in your financial aid letter, reach out to the financial aid department to see if there is any availability. Not all schools participate in the federal work-study program, but many do and can help you. 

Savings accounts vs. student loans: when does each option make sense?

If you have a savings account for college-related expenses, it’s a good idea to put the funds towards your degree. Even if you only have a few hundred or thousand dollars, using your savings can reduce how much you need to borrow through federal and private loans.

For many students, building college savings and using loans to fill in the gaps is the most practical choice. Going this route can ultimately save you thousands of dollars in interest over time.

Federal vs. private student loans: when does each option make sense?

If you’ve applied for scholarships, grants, and a federal work-study program and still need money to pay for school, you may need to take out student loans. If that’s the case, you want to give yourself plenty of time to consider all your options.

Federal student loans

After you complete the FAFSA, your school will send a financial aid offer letter with instructions on how to accept your aid, including federal student loans.

Starting July 1, 2026, the One Big Beautiful Bill Act (OBBBA) enforces certain limits on federal student loan programs. These include:

• Graduate student loans: $20,500 annually; lifetime cap of $100,000

• Professional student loans: $50,000 annually; lifetime cap of $200,000

• Parent PLUS loans: $20,000 annually; lifetime cap of $65,000 per dependent

• All borrowers: $257,000 lifetime limit of all federal student loans, which includes undergraduate and graduate loans

Also, Grad PLUS loans are being phased out after July 1. If you’ve already borrowed a Grad PLUS loan, the new borrowing limits don’t apply to you, as long as you continue your program and are enrolled at least half-time. Since borrowing limits have changed for 2026, planning early is even more important as it can give you an idea of how much your federal loans will actually cover.

The fixed interest rates for each federal loan option are set each year and do not change based on your credit score, unlike a private loan. Federal loans also have a number of repayment options only offered by the federal government, including loan forgiveness plans.

There are usually school deadlines you have to meet, so make sure you follow the directions carefully. In some cases, you can sign a Master Promissory Note and accept the loans online. With other schools, you may have to fill out a paper form and mail it back to the college.

Also, keep in mind that this is not a one-time process. In fact, you may want to reapply for new student loans each year as tuition costs increase every year. 

Private student loans

If you need additional funding, private student loans can be a useful supplement to federal loans. And, they have more flexibility, since you can borrow up to the total cost of attendance as certified by your school. Make sure you are only borrowing the loan amount that you need for attendance, borrowing too much will mean extra loan payments and interest.

However, you should still start shopping and apply for your loans as soon as you know you’ll need funding. It may take time to perform credit checks and find the right lender with a competitive interest rate offer. You may also need to work with a cosigner if you don’t have a robust enough credit history.

Fortunately, some lenders like Earnest let you check eligibility to get an idea of whether you may qualify before you apply. After you submit your official private loan application, get approved and sign, private lenders have to send the loan information to your school for certification before it can be disbursed. It can take weeks for the loan to be certified, so it’s a good idea to start the process as soon as possible.

When to apply and how long it takes to get your money

The types of loans you’re interested in will determine when you should apply and when you’ll receive your funds.

• Federal student loans: Complete the FAFSA and apply for federal student loans as soon as possible. The application usually opens October 1 and is available until June 30 of the following year. Funds are usually disbursed at the start of each semester.

• Private student loans: As soon as you exhaust scholarships, grants, work-study programs, and federal student loans, private student loans might make sense. You can apply for them at any time but you don’t want to wait until the last minute. It can take several weeks for your school to receive the funds from the time you fill out the application.

If you start school in the spring or transfer mid-program, you can complete the FAFSA anytime through June 30 of that academic year to find out your federal aid options.

There are no deadlines for private student loans, so it’s never too late, and you can apply for them at any time. However, applying earlier gives you time to compare options and ensures your funds are disbursed before your tuition bill is due.

Note that at Earnest, we see more private student loan applications in July and August but we recommend applying as soon as you can. We also see people applying in December to lock in additional funding for the spring semester.

How much should you actually borrow?

Your goal should be to only borrow what you need to cover tuition and additional expenses like books, supplies, meals, transportation, and other living expenses. As you estimate how much you might need, don’t forget to factor in any expected income from work-study or part-time work. This can reduce the risk of overborrowing.

While overborrowing might not seem like a big deal, it’s actually a common mistake with serious long-term consequences. If you borrow too much, you may struggle to pay off your student loans, extend your repayment timeline, and in turn, be forced to delay other financial goals, such as buying a house, starting a family, or retiring.

Even borrowing an extra $1,000 student loan can lead to financial stress down the road. The additional $1,000 could increase your monthly payments by $10 to $15 per month on a standard 10-year repayment plan. If you borrow an extra $50 to $75 per month, this may raise your payments by $50 to $75 per month plus thousands more once you factor in interest.

To get a sense of what your monthly payment with Earnest could look like, try our student loan calculator.

Need extra funding for college?

Earnest private student loans can help cover the cost of your education when federal aid isn’t enough. We offer flexible repayment options¹, a 9-month grace period², the ability to borrow with or without a cosigner, and automatic cosigner release. If you’re interested in our private student loans, learn more and apply today.

Next Steps Checklist

• Complete the FAFSA as soon as possible.

• Wait for your financial aid award letter.

• Decide which grants, scholarships, work-study opportunities, and federal loans you want to pursue.

• Estimate how much you need to borrow.

• Apply for private student loans to fill in any funding gaps.

Frequently Asked Questions (FAQs)

When can I fill out the FAFSA?

The FAFSA usually opens on October 1 each year but sometimes it may be available earlier. It’s a good idea to complete it as soon as you can to ensure you don’t miss out on potential federal aid opportunities, which are awarded on a first-come, first-serve basis. 

Can I apply for student loans after the semester starts?

Yes, you may be able to apply for student loans after the semester has already begun. For federal aid, you have until June 30 of the current academic year. Since private student loans don’t have specific deadlines, you can apply for them any time.

Is it possible to apply for student loans before a college accepts me?

Yes, the FAFSA opens on October 1, so you can and should apply for federal loans before you receive an acceptance letter from a college. You may be able to apply for private student loans too but it’s best to wait until you’ve exhausted all federal options first. 

Is there a point where it's too late to apply for this year?

No, private loans can cover past due balances up to 365 days, but the earlier you apply for them, the better.

This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice. It is accurate as of its publishing date.

Earnest Private Student Loans are subject to credit approval.

Before applying for private student loans, it’s best to maximize your other sources of financial aid first. It’s recommended to use a 3-step approach to assembling the funds you need: 1) Look for funds you don’t have to pay back, like scholarships, grants, and work-study opportunities. 2) Next, fill out a FAFSA^® form to apply for federal student loans options. 3) Finally, consider a private student loan to cover any difference between your total cost of attendance and the amount not covered in steps 1 and 2. For more information, visit the Department of Education website at studentaid.gov.

1 Repayment terms and repayment options available vary based on loan type.

2 Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.