How often you need to apply for a 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.

With the student loans you get from the Federal Government, you sign your loan commitment at the start of the school year, and your interest rate is set for that year.

However, the government pays your school half of that year’s loan at the start of the fall semester, and the other half at the start of the spring semester.

In a way, that’s two different loans – because the fall portion (which is issued in September) has a few more months of interest added onto it than the spring portion (issued several months later in January).

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 basically 8 loans. Plus, the interest rate on these loans may be different each year.

One important note: 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.