The 1-2-3 steps to getting a student loan

College bills and student loans are no joke. The faster you knock out debt — even the good kind like student loans (since it bolsters your future earning power) — the bigger your net worth.

Q: What and when is the literal first step to figure out student loans?

Fill out the FAFSA (Free Application for Federal Student Aid) — TBH, everyone should do this even if you don’t for-sure need a loan. FAFSA not only gets you student loans, but possibly free money through grants and scholarships. Fill out the FAFSA online or download the FAFSA app.

WHEN? The year before you need the money, fill out the FAFSA on or shortly after October 1 (when it opens, for the next school year); some grants and scholarships are first come, first serve.

To knock it out, you’ll need these for both you and your parents:

• Social security number

• Tax returns (yours or, if you’ve never filed before, your parents’ from 2 years ago. So for 2020-21, you need 2018 returns)

• Account balances (checking, savings, and investment accounts)

• Records of any untaxed income (like child support payments and interest income)

The government and college get up in your money-business so they can determine the funds to give you (or let you borrow) for school. A lot of effort? Absolutely. Worth the effort? Absolutely.

Q: Any other ways to lessen my loan burden — scholarships or other options?

Once you hit “submit” on the FAFSA, you’re in the running for all kinds of financial aid from the government and your school. Double check that your school doesn’t have any other application requirements (EX: something called your CSS Profile).

Here’s a guide to the different ways to pay for college, ranked from BEST to WORST:

1. Money that’s 100% free: GRANTS & SCHOLARSHIPS
Awarded based on how much the gov calculates for your needs (using your FAFSA) or based on what makes you uniquely badass — grades, test scores, athletic feats, etc.

2. Earn the money: WORK STUDY
Program where your school gives you a part time job to help pay for college. Not everyone qualifies (the outcome of your FAFSA app will tell you); if you don’t, your own side-hustle is of course always an option.

3. Best case loan: FEDERAL STUDENT LOANS
2 main types for undergrads:

• Subsidized - the better kind. You qualify for them if your family’s income is under a threshold.
• Unsubsidized - open to anyone.

You must pay both sub/unsub loans back, there are programs that can help (more on that next week).

4. Last resort loan: PRIVATE STUDENT LOANS
These don’t come from FAFSA — you apply for them separately from banks. Unless you already have good credit, you may need a cosigner (a.k.a. A family member who promises to pick up the tab if you don’t make payments).

Q: How do I figure out how much to borrow in student loans?

Good news: your school does the heavy lifting math. After you submit the FAFSA, they’ll send you a letter listing all the financial aid you qualify for, and the school’s total price (including their guidance for total cost of attendance, since what it costs to live and study there can add another $20K). From there, you figure out the gap you need to fill with loans.

And because we love to make things simple, the calculation is:

That’s a lot — like hairspray-on-Toddlers-and-Tiaras-a-lot — so we’ll let it simmer. Next week, we share pro tips on how to prevent student loan build-up and getting it paid off (EX: dealing with servicers, repayment & forgiveness options). Remember, student loans are just one phase in life - roughly 70% of college students graduate with debt - so don’t sweat it. We’re here to help you navigate this phase so you can still live your best life.