How Private Student Loans Help Cover the Gap After Financial Aid

Paying for college often involves combining multiple sources of funding. Scholarships, grants, savings, federal student loans, and other financial aid can reduce education costs, but they don’t always cover the full cost of attendance.

If your financial aid package leaves you with remaining education expenses, understanding your financing options can help you make informed decisions. Private student loans may help eligible borrowers cover qualified education costs that remain after other financial aid has been applied.

Start with the FAFSA

The first step in paying for college is completing the Free Application for Federal Student Aid (FAFSA®). Schools use the information you provide to determine your eligibility for various forms of financial aid, including:

• Federal grants
• Work-study opportunities
• Federal student loans
• Some state financial aid programs
• Certain institutional aid programs

Completing the FAFSA each year helps ensure you’re considered for available federal financial aid before exploring additional financing options.

If you’re unsure whether completing the FAFSA is necessary before applying for a private loan, read our guide on Do You Need to Complete FAFSA Before Getting a Private Student Loan?

Review Your Federal Financial Aid Offer

After your FAFSA is processed, your school will provide a financial aid offer outlining the types and amounts of aid you qualify to receive.

Your offer may include:

• Scholarships
• Grants that generally do not require repayment
• Federal Direct Subsidized Loans (for eligible students)
• Federal Direct Unsubsidized Loans
• Work-study eligibility

Federal financial aid can significantly reduce college costs, but it may not cover your entire cost of attendance.

To better understand how schools determine your education expenses, learn more about the Cost of Attendance (COA) and what it includes.

Understanding the Remaining Financial Aid Gap

After applying scholarships, grants, federal loans, and personal savings, many students still have education-related expenses to pay.

This difference is commonly referred to as the private student loan gap or simply the financial aid gap.

The gap can include qualified education expenses such as:

• Tuition and mandatory fees
• Housing and meal plans
• Books and required course materials
• Technology required for coursework
• Transportation
• Other eligible education expenses included in your school’s Cost of Attendance (COA)

Example:

In this example, the student would still need to identify a way to pay the remaining $6,500 in qualified education expenses.

How Private Student Loans Can Help

Private student loans are designed to help eligible students finance qualified education expenses after other financial aid has been considered.

Depending on the lender and your eligibility, private student loans may offer:

• Loan amounts up to your school’s certified cost of attendance, minus other financial aid received
• Fixed or variable interest rate options
• Multiple repayment options
• The ability to apply with a qualified cosigner if needed

Your school typically certifies the loan amount to help ensure you do not borrow more than your eligible education expenses.

Before applying, it’s helpful to understand how to improve your chances of getting approved for a student loan, especially if you’re applying without a cosigner.

Should You Borrow the Entire Gap?

Not necessarily.

Before applying for a private student loan, consider:

• How much you can pay from savings or current income
• Whether additional scholarships are available
• Whether family members can contribute toward expenses
• Borrowing only what you need for qualified education costs

Borrowing conservatively may help reduce the amount you’ll repay over time.

Comparing Private Student Loan Options

If you’re considering a private student loan, it’s important to compare lenders carefully.

Look at factors such as:

• Interest rates
• Fees (if applicable)
• Repayment options
• Cosigner availability and requirements
• Customer service and borrower support
• Available borrower benefits

To help evaluate your options, read How to Compare Private Student Loan Lenders before making a decision.

Frequently Asked Questions

Can I get a private student loan before completing the FAFSA?

While some private lenders do not require completion of the FAFSA, many financial experts recommend completing it first so you can determine your eligibility for federal financial aid before considering private borrowing.

Can a private student loan cover all remaining college costs?

Eligible borrowers may be able to borrow up to their school’s certified cost of attendance minus other financial aid received, subject to lender underwriting, credit criteria, and school certification.

Do I need a cosigner?

Some students may qualify independently, while others may need a creditworthy cosigner depending on the lender’s eligibility requirements.

Can parents apply for a private student loan?

Some lenders offer private student loans that parents may apply for to help finance a student’s education. Eligibility and loan options vary by lender.

Final Thoughts

Federal financial aid is an important first step in paying for college, but it may not cover every education expense. If you still have remaining qualified costs after reviewing your financial aid package, a private student loan may be one option to help bridge the gap.

As you evaluate your financing options, these additional resources may help:

• What Is the Cost of Attendance?
• Do You Need to Complete FAFSA Before Getting a Private Student Loan?
• How to Compare Private Student Loan Lenders
• How to Improve Your Chances of Getting Approved for a Student Loan

Borrowing for college is an important financial decision. Taking time to understand your options and borrowing only what you need for qualified education expenses can help you plan for the future.