Financial Aid 101
National parks, desert landscapes, 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 college degree. And there are many ways to make your Arizona education affordable, including student loans, grants and scholarships, and student loan forgiveness programs. This guide has the details you need to know.
Prospective Arizona students may be wondering about the state’s average student loan debt. According to a 2023 report, 47% of Arizona college attendees have student loan debt, with an average balance of $24,298.
of Arizona college
attendees have
student loan debt.
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.
Federal student loans are provided by the U.S. Department of Education’s Direct Loan Program. If you take out a federal loan, the DOE is your lender. All federal student loans have fixed interest rates, and they generally have lower interest rates than private loans.
To see which type of loans you may qualify for, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA®) to apply for financial aid for college or grad school. Be aware of your state’s deadline as well as 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.
Private loans are funded by private organizations such as banks, online lenders, credit unions, some schools, and state-based or state-affiliated organizations. 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 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, and the maximum is $2,500.
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 four years. 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 to $4,000 in the third and fourth year.
Arizona State University offers this award to eligible outstanding incoming undergraduate students at their university. The award amounts vary depending on the students’ achievements and whether they are in- or out-of-state. Many of their scholarships are renewable, too.
This scholarship program is for eligible low-income Arizona students to ensure that all tuition and fees are covered at Arizona public universities. The scholarship covers what’s left after all other aid, scholarships, and grants are applied.
Recommended: SoFi Scholarship Search Tool
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 2024-2025 school year, the federal student loan interest rate is 6.53% for undergraduates, 8.08% for graduate and professional students, and 9.08% for parents. The interest rates, which are fixed for the life of the loan, 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 for
up to 25 years.
Editor's Note: On July 18, a federal appeals court blocked continued implementation of the SAVE Plan. Current plan enrollees will be placed into interest-free forbearance while the case moves through the courts. We will update this page as more information becomes available.
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 10 years. Payments start relatively low, then increase over time (usually every two years).
To qualify for this plan, you must have more than $30,000 in outstanding Direct or FFEL loans. While typically, you won’t qualify for Public Service Loan Forgiveness (PSLF) if you choose this loan, you may be eligible under a temporary opportunity called the Temporary Expanded Public Service Loan Forgiveness (TEPSLF), which has limited funding and will be available until the funds run out. Monthly payments on the Extended Repayment Plan are typically lower than under the 10-year Standard Plan or the Graduated Repayment Plan, because borrowers have a longer period to pay them off (and therefore make more interest payments).
Most student borrowers are eligible for this plan; parents with PLUS loans are not eligible. The SAVE Plan lowers payments for almost all borrowers compared to other income-driven plans because your payments are based on a smaller portion of your adjusted gross income (AGI). 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 never be higher than the 10-year Standard Plan amount. Generally, however, borrowers may pay more over time than under the Standard Plan.
For more information on repayment plans, check out our Student Loan Repayment Options article to help add some clarity.
Granted, it’s not always easy to pay loans back on time. When it comes to student loan default, 10% to 20% of student loans are typically in default. And since the federal payment pause ended in October 2023, nearly 50% of borrowers haven’t made any payments (17% of them are in deferment or forbearance and 29% are past due). To help you avoid being among those who default on your student loans, let’s take a look at refinancing options.
One 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 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. 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 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 volunteer service and length of service, 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 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.
Federal loan forgiveness programs are a logical place to start, but it can be smart to also consider other student loan forgiveness programs. 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 by covering their tuition, fees, and instructional materials.
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 for two years in federally designated Health Professional Shortage Areas (HPSA) or Arizona Medically Underserved Areas (AzMUA) for two years.
Recommended: College Finder Tool
In the spirit of transparency, we want you to know that 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 there are absolutely zero fees.