How long does it take to get a student loan?

There are two aspects to this question: How long does it take to apply for and be approved for a student loan? Once approved, how long does it take for you to get your student loan money? The answers may differ by lender and by the type of loan (federal vs. private).

Time to Get a Federal Student Loan

With federal student loans, you must first file the FAFSA (Free Application for Federal Student Aid). Depending on when and how the FAFSA is filed, whether it is signed electronically and whether you provide a valid email address, it can take 3 days to 3 weeks for the FAFSA to be processed.

After the college financial aid office receives the FAFSA data, it will determine your financial aid eligibility. If you are determined eligible for student aid, it will prepare a financial aid award letter. The financial aid award letter for first-time, first-year students, sometimes called a financial aid notification, typically arrives in late March or early April. The financial aid award letter will include information about need-based federal student loans, such as the Direct Subsidized Loan. Some colleges also include information about non-need-based federal student loans with the award letter, such as the Direct Unsubsidized Loan and the Parent PLUS Loan. Some do not. However, all federal student loans are obtained through the college’s financial aid office, regardless of whether eligibility is based on demonstrated financial need.

Next, you will sign a Master Promissory Note (MPN), which covers a continuous period of enrollment of up to 10 years.

After you sign the MPN, the college will disburse the federal student loan funds. (Colleges draw down the student loan funds on a regular basis using the same Common Origination and Disbursement (COD) system as used for federal grants.) Colleges can disburse federal student loan funds within 10 days before the first day of classes. However, some colleges may be subject to a 30-day delay in disbursing federal student loan funds to borrowers who are first-time, first-year borrowers. These colleges may not disburse the federal student loan funds until 30 days after the first day of the payment period. After applying the funds to institutional charges, such as for tuition, fees, and campus-controlled room and board, the credit balance, if any, must be “refunded” to the student within 14 days.

Thus, depending on when you sign the MPN, it may take up several weeks for you to receive the money from a federal student loan.

Time to Get a Private Student Loan

Some private student loan programs advertise that they provide credit decisions in three minutes or less. In practice, this means that an ineligible borrower will be denied the loan in seconds, but final approval of an eligible borrower may take more time. The initial online approval may be followed by a secondary review to confirm private student loan eligibility.

There are two main types of private student loans: school certified and direct to consumer. School certified loans require your college to confirm your eligibility and to approve of the loan amount. School certified loans are disbursed through the college. Direct-to-consumer loans do not involve any school certification and are paid directly to the borrower. Most private student loans are school certified. Few lenders offer direct-to-consumer loans anymore, despite their popularity, because these loans had a high fraud rate.

After loan approval, it can take 2 weeks to 2 months for the lender to send the loan proceeds to the college or to you, as applicable. If the money is sent directly to the college, it typically takes 1-2 weeks before the remaining money is refunded to you.

Thus, from the date the loan is approved, it can take 3-10 weeks for you to receive the student loan money from a private student loan.