How often do you need to apply for a student loan?

You might think that if you’re taking out a loan to help pay for your college education, you would take it out in one big loan. But that’s not quite how it works.

Common question: Do I get student loans every semester?

You apply for your student loan once a year by filling out the FAFSA. But your loan is actually paid out in two separate parts: one for each semester of that school year. The interest rate for both loans is the same and is set early in the year. The reason it works this way is so the interest on the loans doesn't start to accumulate until you actually begin using the money. Also, you can't be sure you will come back for the second semester (although we hope you do!)

Contrary to what you might think, it's not you who receives the money. The money is paid directly to your college – to cover tuition and other expenses. If there is any money left over and you have valid expenses – as defined by the federal government – you can use it. Living off campus and paying rent are typical examples of a valid expense.

What’s it all mean? It’s like this: If you go to college for four years, and you get two loans from the federal government each year, that’s 8 loans. Still, you only have to apply four times, because each application covers the full school year – and the interest rate is set once a year for both of that year's loans.

When do I need to apply for a Federal Student Loan?

Here's an important thing to remember: Federal Student Loans are not renewed automatically. You need to fill out the FAFSA® at the start of each year in college. But because each year is treated separately, you also have the option not to borrow in any particular year.

It can all feel a little confusing at first. But the more you know, the more you can feel in control.