Guide to Refinancing and Associate’s Degree Student Loans

By Melissa Brock · January 17, 2023 · 9 minute read

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Guide to Refinancing and Associate’s Degree Student Loans

An associate degree is a two-year course of study often offered by a community college or junior college. You can get one of four types of associate degrees: AA (associate of arts), AS (associate of science, AAA (associate of applied arts), and AAS (associate of applied science).

When refinancing associate’s degree loans, a lender pays off your current loan or loans and gives you a new loan with new terms, ideally at a lower interest rate. Refinancing can help you save money over the life of your loan.

Refinancing or paying for an associate’s degree doesn’t have to be complicated. Here’s what to know about the options to decide if one is right for you.

What Is an Associate’s Degree?

Associate’s degree programs can include a wide variety of course degrees, including general education coursework and job training. Many associate’s degrees require students to complete about 60 credits.

Your degree can often be tied to your earning potential. The higher the degree you obtain, the more your job salary may increase. If you continue your education beyond an associate’s degree, you may be able to increase your earning power.

Based on the Bureau of Labor Statistics (BLS) Current Population Survey, workers with an associate’s degree had median weekly earnings of $938 in 2020 compared with $781 for workers with a high school diploma. As mentioned, job salary generally increases the higher the degree you obtain.

So what is an associate’s degree in terms of your job prospects? Getting an associate degree can mean you’re putting yourself on a track toward higher earning potential and job security as well as wider opportunities for your future career — opportunities that you might not necessarily gain without a degree.

Here are examples of jobs you can get with an associate’s degree:

•  Dental hygienist

•  Registered nurse

•  Respiratory therapist

•  Paralegal

•  Legal assistant

•  Veterinary technician

•  Court reporter

•  Ultrasound technician

•  Medical assistant

•  Graphic designer

•  Air traffic controller

•  Police officer

•  Drafter

Recommended: Can You Refinance Student Loans Without a Degree?

Paying for Associate’s Degrees

There are several ways to pay for an associate’s degree. You can use the income you’re earning from a job to pay for school or use money that you’ve saved for education. You may also want to consider applying for scholarships, federal grants, federal work-study, and/or federal student loans to pay for an associate’s degree.

Scholarships and grants are award money that you don’t have to repay. Grants are usually need-based, while scholarships are awarded based on academics, extracurricular activities, major, and other merit factors.

Federal work-study refers to a part-time job that you can get on campus (sometimes off campus). You must file the FAFSA in order to qualify for work-study.

You can apply for both federal and private student loans for associate degrees. Federal student loans are loans that come from the federal government. You do have to repay student loans after you leave school, even if you don’t finish your degree.

You may also want to apply for private student loans if the aid you receive won’t be enough to cover your bill for the semester or for the year. It’s generally recommended that you exhaust all of your federal loan options before looking into private student loans. Private student loans are student loans that aren’t backed by the federal government. They may come from credit unions, banks, or other types of financial institutions. Here’s an overview of applying for both federal aid and private student loans for associate’s degrees.

Step 1: File the Free Application for Federal Student Aid (FAFSA).

In order to qualify for federal student aid (aid from the federal government), you must file the FAFSA (Free Application for Federal Student Aid) and fill in the school code for the school or schools on your list. You’ll have to fill out the FAFSA every year prior to the start of a new school year.

Recommended: FAFSA Guide

Step 2: Review your Student Aid Report (SAR).

The financial aid office at the school you’re considering will receive your FAFSA information to determine your eligibility for federal and state aid. You and the college will both receive a Student Aid Report (SAR), which is a paper or electronic document that offers basic information about your eligibility for federal student aid. It also lists your answers on the FAFSA.

Step 3: Look over your financial aid award.

You’ll receive a financial aid package after you provide the college with all the necessary documentation. You will likely receive a financial aid award package via email, which will detail the scholarships, grants, work-study, and loans that your school will give you. You’ll then have to accept or decline the aid you receive from the college. If you’re awarded federal student loans, you can decline all or part of those loans.

You’ll also need to complete entrance counseling and the Master Promissory Note at the Federal Student Aid website.

Step 4: Evaluate your need for private student loans.

Do you need more coverage? You may need to apply for private student loans to cover the costs of your degree. This means shopping around for a private student loan lender that fits your needs. Find out if your school offers a lender list, and be sure to compare:

•  Interest rates

•  Student loan fees (like origination fees)

•  Repayment options

•  Whether you’ll need a co-signer or not, which you may need if you don’t have a credit history. A parent, relative, or any other creditworthy individual can co-sign with you to boost your chances of getting a student loan.

Finally, apply for a private student loan by filling out basic personal information and any required financial information.

Paying Off Student Loans for an Associate’s Degree

What are your options for paying off student loans? There are many ways to pay for an associate’s degree. Here are some of the repayment paths to consider.

Job Income

Ideally, you’ll find a job directly related to the results of finishing your associate’s degree. The money that you earn can go toward paying off your student loans.

You can even set up automatic deductions from your bank account so you won’t need to worry about missing a payment. You can contact your student loan servicer if you’d like to set up automatic deductions.

One way to pay off your loans faster is to pay more than the minimum monthly amount. This will also help you save on the interest that will accrue on your loans because you’re paying them down faster. You can also save up and pay off a lump sum as well.

Starting Early

You don’t need to wait to graduate to start paying off your student loans. You can start paying off your student loans early, while you’re still in school. This is another great way to save on the interest that could accrue on your loans in the future and help you pay your loans off faster. It’s a good idea to have a plan in place if you want to start paying them off early (an online budgeting tool may help). Even little amounts can make a difference over the long run.

Using Tax Deductions

Some tax deductions can often be a big help and student loan tax deductions are no exception. You can get a student loan interest deduction when filing your taxes when you pay at least $600 in qualified student loan interest. Your lender will send you IRS Form 1098-E, the Student Loan Interest Statement. You’ll be able to save money on your taxes as long as you have student loan interest to deduct.

Applying for Loan Forgiveness

It’s important to note that you can only qualify for student loan forgiveness through federal student loans.

For example, you may want to qualify for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. If you work for a government or not-for-profit organization, PSLF forgives the remaining balance on your Direct Loans after you have made 120 monthly payments under a repayment plan as a full-time employee.

If you have Direct Loans or FFEL Program loans, you may be able to take advantage of the Teacher Loan Forgiveness program. In this case, you must teach full-time for five complete and consecutive academic years in a low-income elementary school, secondary school, or educational service agency. You can qualify for up to $17,500 on your Direct Loan or FFEL Program loans.

Contact your loan servicer if you think you qualify for one of these programs and take a look at other cancellation or discharge programs you might qualify for.

Refinancing Student Loans

If you’re thinking about refinancing associate’s degree loans, it’s important to understand that you can’t refinance a federal student loan into a new federal student loan — all refinances become private student loans. This also means that you give up the possibility of qualifying for forgiveness, cancellation, and discharge through the federal government, as well as deferment or forbearance options.

Note that having a good credit score is key to refinancing your student loans. Your credit score is a three-digit number that summarizes how well you pay back your debts. A private lender will also take your credit utilization into account, which reveals how much of your available credit you actually use. Having a high credit score and low utilization ratio can help you get the best rates possible.

Refinancing Student Loans With SoFi

Refinancing student loans can be a great way to save money over the life of the loan if you’re able to refinance at a lower interest rate and you don’t plan to use federal programs. As a reminder, if you refinance a federal loan, you’ll lose access to federal benefits and protections.

If you’re considering refinancing, SoFi offers competitive rates, no origination fee, and unemployment protection. You can also talk to a representative who can walk you through the process.

Find out if SoFi student loan refinancing is right for you.


How much are student loans for an associate’s degree?

Federal and private student loan lenders may charge a variety of fees for associate degree student loans, including origination fees, late payment fees, and returned check fees. However, some lenders don’t charge any of these fees at all. It’s a good idea to do a side-by-side comparison of all costs before you choose one lender over another.

Does FAFSA cover associate’s degrees?

Yes, you can tap into federal student aid options to pay for associate’s degrees. You must file the FAFSA and send the information to the schools on your list that you’re considering to complete your associate’s degree. You may qualify for a combination of federal student loans, grants, and work-study for student loans for associate’s degree. One of the best things you can do is to talk through the details with a financial aid professional at the college you plan to attend.

Can you refinance after your associate’s degree?

Yes, you can refinance associate degree student loans after you obtain your associate’s degree. You’ll want to determine whether you can get a better interest rate and/or pay your loans off faster with a refinance. However, note that you’ll lose access to federal loan benefits and protections when you refinance. Federal programs such as forgiveness and income-driven repayment do not apply to private student loans.

Photo credit: iStock/SolStock

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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