National parks, desert landscapes, red rocks, and of course the Grand Canyon are a few of the natural wonders found in Arizona. Another thing to know about this great state: It’s an amazing place to earn your degree. Over 200,000 students call Arizona their home base this year. Maybe you’d like to join their ranks.
If so, you’re probably thinking, “How can I afford my degree?” We have the details you need to make smart decisions and to help you make your education as affordable as possible.
Read on to learn all about funding options, from student loans, grants and scholarships at the federal level and specific to the state of Arizona, as well as student loan forgiveness programs. With this info at your fingertips, you’ll be able to see just how affordable it can be to earn your degree in Arizona.
Arizona students are willing to take on some student-loan debt to get their degree.
As of 2020, 47% of Arizona college attendees had student loan debt, and on average owed $24,298.
If your goal is to attend school in Arizona and you’re looking at ways to finance your education, you have options. And both federal and private student loans may be worth considering when researching how to pay for your college degree.
Federal student loans are all provided by the U.S. Department of Education’s William D. Ford Federal Direct Loan (Direct Loan) Program. If you take out a federal loan, the U.S. Department of Education is your lender.
To see which type of loan you may qualify for, you’ll need to fill out the (FAFSA®) form to apply for financial aid for college or grad school. You can review your state’s deadline and the federal FAFSA deadline.
You should also review the deadlines for each college to which you are applying, as one college may define their deadline as the date you submit your FAFSA form, while another considers it to be the date on which your FAFSA is actually processed. FAFSA will then offer you a financial aid package, dependent on your college, that may include grants, work-study opportunities, and federal student loan options. It is important to note that not every student will qualify to receive federal aid.
Direct Subsidized Loans: These are for eligible undergraduate students who demonstrate financial need, and they help cover the costs of higher education at a college or career school. The federal government pays the interest on Direct Subsidized Loans while a student is in school at least half-time. Interest starts accruing on these loans after a six-month grace period once students graduate or if they drop below half-time enrollment.
Direct Unsubsidized Loans: Eligible undergraduate, graduate, and professional students may qualify for these loans. Eligibility is not based on financial need. The interest on these loans begins accruing immediately after funds are disbursed (meaning paid out).
Direct PLUS Loans: These loans are for graduate or professional students, as well as for parents of dependent undergraduate students who need help paying for education expenses not covered by other financial aid. Eligibility for this loan is not based on financial need, but it does require a credit check.
Direct Consolidation Loans: As the name implies, this type of federal loan combines all of your eligible federal student loans into a single loan, with one loan payment. Students generally use this loan if they have taken out multiple federal loans and want to combine them for simplified repayment. The interest rate on these loans are the weighted average of the interest rates on all of the loans that a student is consolidating, rounded to the nearest one-eighth of 1%.
NOTE: All federal student loans have fixed interest rates, and they generally have lower interest rates than private loans.
Private loans are funded by private organizations such as banks, online lenders, credit unions, some schools, and state-based or state-affiliated organizations. Federal student loans have interest rates that are regulated by Congress. A key point to note: Private lenders follow a different set of regulations than federal loans, so their interest rates can vary widely.
What’s more, private loans have variable or fixed interest rates that may be higher than federal loan interest rates, which are always fixed. Private lenders may (but don’t always) require you to make payments on your loans while you are still in school. On the other hand, you don’t have to start paying back federal student loans until after you graduate, leave school, or change your enrollment status to less than half-time.
Unlike federal loans which can only be applied for within certain deadlines (once a year, and states have their own deadlines), private loans can be applied for on an as-needed basis. Even if you suspect you may need to take out a private loan, it’s still a smart move to submit your FAFSA before applying. That way, you can see what federal aid you may qualify for first.
If you’ve missed the FAFSA deadline and you’re struggling to pay for school throughout the year, private loans can potentially help you make your education payments. Just keep in mind that you will need enough lead time for your loan to process and for your lender to send money to your school.
Who doesn’t love a gift? You may sometimes hear grants and scholarships referred to as gift aid. That’s because while grants or scholarships may have certain academic or other requirements to keep them, you usually don’t have to pay them back as you would with a loan. Whether you call that a gift, a windfall, or free money, it’s a huge help when it comes time to pay for higher education.
There are a few instances where you may have to pay back grant money, but typically only if certain requirements aren’t met. Generally, grants are need-based (meaning they are distributed due to your financial need), while scholarships are awarded based on merit (such as academic, athletic, or artistic achievement).
There is no one-size-fits-all grant or scholarship amount or requirements, and both scholarships and grants can come from a variety of entities (including private organizations and federal or state governments).
Some scholarships or grants can be for a small amount that may help you pay for your books or research supplies, but others can cover the entire cost of your education. That means tuition, room and board, and the extras. Which is a very good thing. Who knew parking passes could be so expensive?
If you’re an Arizona college student, you’re in luck! You have a lot of Arizona college scholarships and college grants at your disposal. Here, we share just a sampling of “gift aid” options to check out.
In this program (also known as AzLEAP), student financial assistance is gifted in the form of need-based grants to eligible low-income, undergraduate Arizona resident students. Students must demonstrate substantial financial need. The average grant award each year is $1,000.
First-generation students can apply for this need-based scholarship. The award provides both financial and academic support for eligible Arizona high school graduates attending an Arizona public university for up to eight semesters. The program includes a $12,000 per year scholarship.
Applicants for this scholarship must be attending or have graduated from a high school in Southern Arizona. The award amount rises from $2,000 the first year ato $4,000 in the third and fourth year. Eligible students only from select counties may apply.
Arizona State University offers this award to eligible outstanding incoming undergraduate students at their university. The awards, which can top $10,000 per year, vary depending on the students’ achievements and whether they are in- or out-of-state. Many of their scholarships are renewable, too.
Arizona ranks 37th in total financial aid dollars and spends $28.6 million on aid. Let’s take a closer look at how that aid is distributed.
|Need-Based Grants||Total Student Aid||State Average Spending Per Undergraduate Student|
If you’ve taken out student loans to attend a school in Arizona, it is never too early to start thinking about your repayment plan. And guess what? You have quite a few repayment options at your disposal.
Take a deep breath—you’ll have time to pay off your loans once you leave school. The standard student loan repayment term is 10 years, but allowances are made for eligible loan borrowers who need more time to pay off their loans (up to 25 years).
Federal student loan interest rates vary based on what year you receive the loan. For the 2022-2023 school year, the interest rate on Direct Subsidized or Unsubsidized loans for undergraduates is 4.99%, the rate on Direct Unsubsidized loans for graduate and professional students is 6.54%, and the rate on Direct PLUS loans for graduate students, professional students, and parents is 7.54%. The interest rates on federal student loans are fixed and are set annually by Congress.
For private loans, terms and conditions such as interest rates are set by the lender and vary due to many factors. Federal student loans typically offer the lowest interest rates and more flexible repayment options as compared to private student loans.
Standard federal student
loan repayment term.
Allowances can be
made for borrowers.
Up to 25 years.
Just like there are several types of loans to explore, there are also different kinds of repayment plans. You can learn more about your repayment options for federal student loans here, but the following high-level summaries can give you an idea of which repayment plan may work for you.
Most borrowers are eligible for this plan and may often pay less over time than with other plans because the loan term is shorter. (Typically, less interest accrues over shorter loan terms than longer ones if payments are made in full and on-time.) There is a 10-year repayment period with this plan.
Most borrowers are eligible for this plan, which allows them to pay their loans off over a longer period than the Standard Repayment Plan. Payments start relatively low, then increase over time (usually every two years).
To qualify for this plan, there are income thresholds for certain loan types to qualify, and you won’t qualify for Public Service Loan Forgiveness (PSLF) if you choose this loan. Monthly payments are typically lower than under the 10-year Standard Plan or the Graduated Repayment Plan. Borrowers may also have a longer period to pay them off (and therefore make more interest payments).
Direct Loan borrowers (and all Consolidation Loan borrowers) with eligible loan types may be able to choose this plan. Monthly payments are 10% of discretionary income, and any remaining loan balance will be forgiven after 20 years (for undergraduate studies) or 25 years (for graduate or professional studies).
To qualify for this plan, borrowers must have a higher debt relative to their discretionary income. Payments for this plan are capped at 10% of discretionary income (and never more than what would be paid on the Standard Repayment Plan. In addition, any remaining balance will be forgiven after 20 years.
IBR is designed for borrowers who have a high debt relative to their income in order to qualify. Monthly payments will not usually be higher than the 10-year Standard Plan amount. Generally, however, borrowers may pay more over time than under the Standard Plan.
Direct Loan borrowers with an eligible loan type may want to consider ICR. This plan is different from IBR because there is no financial hardship requirement. But, it may cost more over time when compared to the 10-year Standard Repayment Plan, and any remaining balance will be forgiven after 25 years.
Borrowers can expect to pay more over time than under the 10-year Standard Plan. Monthly payments are based on annual income, but loans will be paid in full within 15 years. This repayment plan is only available for FFEL Program loans, which are not eligible for PSLF.
Another option to potentially help accelerate student loan repayment is to refinance your student loans with a private lender. Some private lenders, like SoFi, will let you consolidate and refinance both your federal and private student loans into one loan and a single interest rate. It’s a great way to streamline your bill paying and financial life in general.
Consolidating your loans (aka combining them) under one lender gives you the opportunity to refinance your loan and get a new term and interest rate. If you have an improved financial profile compared to when you took out your original loan, you may be able to lower your interest rate when you refinance, or even shorten your term to pay off your loan more quickly!
But, it is important to remember that if you refinance federal student loans with a private lender, you will lose access to federal programs such as the income-driven repayment plans mentioned above, as well as student loan forgiveness and forbearance options.
At first glance, student loan forgiveness looks appealing, but it may not be as easily attainable as one might think. For example, 98% of those who applied to the Public Service Loan Forgiveness (PSLF) Program were denied due to issues such as not meeting the program requirements or mistakes made on their forms.
That being said, there are state-specific and federal Public Service Loan Forgiveness programs that certain student loan borrowers may be eligible for.
Before you review your options, it’s important to know that the terms forgiveness, cancellation, and discharge essentially mean the same thing when it comes to federal student loans, but are applied in different scenarios. For example, if you are no longer required to make loan payments due to your job, that could fall under forgiveness or cancellation.
Or, if the school you received your loans at closed before you graduated, this situation would generally be called a discharge.
Even if you don’t complete your education, can’t find a job, or are unhappy with the quality of your education, you must repay your loans. But there are circumstances that may lead to federal student loans being forgiven, canceled, or discharged. Here are some of those options:
The PSLF Program may forgive the remaining balance on eligible Direct Loans, after 120 qualified monthly payments are made under a repayment plan (and working with a qualifying employer).
Those who teach full-time for five complete and consecutive academic years in a low-income school or educational service agency (amongst other qualifications) may be eligible for forgiveness of up to $17,500 on select federal loans.
Cancellation for this specific loan is based on eligible employment or eligible volunteer service and the length of time applicants were in such a position, among other factors.
Qualification may relieve eligible borrowers from repaying a qualifying Direct Loan, a Federal Family Education Loan (FFEL) Program loan, and/or a Federal Perkins Loan or to complete a TEACH Grant service obligation.
Due to the death of the borrower or of the student on whose behalf a PLUS loan was taken out, federal student loans may be discharged.
Certain eligible borrowers may have federal student loans discharged if they file a separate action during bankruptcy, known as an “adversary proceeding.”
Borrowers who were unable to complete an academic program because their school closed might be eligible for a discharge of Direct Loans, Federal Family Education Loan (FFEL) Program loans, or Federal Perkins Loans.
Due to a variety of circumstances, borrowers may be eligible to discharge Direct Loans or FFEL Program loans due to issues such as identity theft or mistakes made by a school.
Certain borrowers may be eligible for partial discharge of Direct Loans or FFEL Program loans if they withdrew from school, but the portion of a loan that the school was required to return to the borrower wasn’t returned.
Federal loan forgiveness programs are a logical place to start, but it can be smart to also consider other student loan forgiveness programs, too. There are forgiveness programs tailored to loan borrowers who live in certain locations, or have an in-demand and service-based vocation. Arizona offers a number of student loan forgiveness programs. Here are some to consider.
This is a need-based forgiveness program for teachers, designed to financially support and encourage eligible college students who are Arizona residents. The program assists students who plan to pursue a teaching profession in an Arizona public school. The maximum forgivable loan is $7,000 per academic year for up to three years.
Medical providers in rural private practice sites may qualify for this repayment program. It helps promote the recruitment and retention of health care professionals by repaying their qualifying educational loans. To be eligible, providers must commit to providing primary care services in federally designated Health Professional Shortage Areas (HPSA) or Arizona Medically Underserved Areas (AzMUA) for two years.
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In the spirit of complete transparency, we want you to know that we believe you should exhaust all of your federal grant and loan options before you consider a SoFi private student loan.
We believe that it is in each student’s best interest to look at federal financing options first in order to find the right financial aid package for them.
If you do decide a private student loan is the right fit for your educational needs, we’re happy to help! SoFi’s private student loan application process is easy and fast. We offer flexible payment options and terms and, don’t worry, there are absolutely zero fees.