Four-year degrees aren’t the only good thing going on in higher education. Community colleges offering two-year programs can be a wonderful option for students looking to gain a higher education in less time. And, it’s also a great option for those looking to save a little cash while bettering their current skills, prepping for a four-year university, or going for an associate’s degree.
Moreover, it can often save students thousands of dollars in the long run toward the career of their dreams too. Though community college can cost far less than a four-year school, it still isn’t free. Here are a few helpful ways to gain a little financial assistance for your personal education journey.
The Government Looks at Community College the Same Way It Does a Four-Year School
Federal student loans are available for both two- and four-year colleges. The process of applying for federal aid is the same, regardless of the school, as long as the Department of Education sees it as an “eligible degree or certificate program.” Vocational, career, trade, or online schools often offer federal loan options, but it’s not a guarantee. If you’re not sure whether your school participates in federal loan programs, you can confirm with your school before moving forward.
To apply for federal aid, including student loans, a potential student must fill out the Free Application for Federal Student Aid (FAFSA). Don’t worry, filling out the form is easier than it sounds. On the FAFSA, all would-be students will list the schools they are interested in attending using the Federal School Code . (Go ahead, add your dream school. Now’s the time to shoot for the moon.) The schools listed will use the FAFSA application answers to determine the types and amounts of aid a student can receive.
After submitting the FAFSA, the applicant will receive an award letter from each school listed on the FAFSA application. This will tell you what aid you qualified for. If you plan on applying for federal aid to attend community college, consider applying as early as possible.
Some federal aid is determined on a first-come, first-served basis , so the earlier you submit your FAFSA, the better position you may be in to receive aid.
Those hoping to obtain a federal loan for community college can apply for one of three: Direct Subsidized, Direct Unsubsidized, and Direct Plus. Here’s how to determine which one of those may be the best fit for your education goals.
Direct Subsidized and Unsubsidized Loans
When it comes to borrowing federal student loans, the government really is helpful and offers both subsidized and unsubsidized loans to assist students in covering the cost of higher education. For both subsidized and unsubsidized loans, the school a potential student hopes to attend will determine how much a student is eligible to borrow.
Direct Subsidized Loans are based on financial need and they come with a major benefit—The U.S. Department of Education pays the interest while the student is still enrolled in school at least half-time and for the loan grace period (usually the first six months after leaving school).
Direct Unsubsidized Loans are similar to subsidized loans except that they are not based on financial need, they are based on your cost of attendance and other financial aid you receive. As such, the borrower would be responsible for all accrued interest on the loan. While not required to make payments as a student, there is an option to make interest-only payments on the unsubsidized loan.
If the decision is made to not make the interest payments during grace periods on your Direct Unsubsidized Loans, the accrued interest will be capitalized. That means, when graduation day comes and school is over and the grace period ends, the interest that has accumulated on the loan will be added to the principal value of the loan and you’ll be responsible for paying off both. Interest will also continue to accrue based on that new principal.
Also, before you go thinking of student loans as a windfall, there is an annual limit to how much money undergraduate students can borrow in Direct Subsidized and Unsubsidized Loans. For example, the limit for your first undergraduate year is $5,500 for dependent students (and $9,500 for independent students.)
Direct PLUS Loans
There is another option from the government, known as the Direct PLUS Loan . This loan is available to parents of dependent students. Unlike both Direct Subsidized and Unsubsidized Loans, when a person borrows via a Direct PLUS Loan, he or she will be subject to a credit check. If the person has an adverse credit history, they may not be approved to borrow the loan.
If you are a parent of a dependent undergraduate student, you can receive a Direct PLUS Loan for the remainder of your child’s college costs not covered by other financial aid.
It’s important to note when a person borrows a Direct PLUS Loan, there are fees in addition to interest. With this loan, parents can borrow up to the cost of attendance (determined by the school) minus any other financial aid received. In order to obtain this loan, parents must qualify and their credit history will be checked. Interest will also accrue.
Private Student Loans
If a student does not receive enough aid through federal student loans or maxes out his or her eligibility for federal student loans, they can seek additional funding through private student loans. Private student loans are borrowed from banks, credit unions, or other lenders.
Each institution has its own eligibility requirements so each borrower will have to check with individual lenders to see about qualifications. Like federal loans, there is usually a limit to the amount you can borrow with private loans, which can vary by lender. The limit might be the cost of tuition, less the amount of aid the student is already receiving, for example. However, the limit on some private loans may be higher than the federal loan limit.
Furthermore, government student loans come with deadlines to apply , while students may apply for private student loans at any time. But one major downfall of private student loans is the fact that they may also come with higher eligibility requirements, like a specific credit score, to even be considered.
Other Options For Community College Student Loans
Federal and private loans aren’t the only options. And this is where, as a student, you can really do some homework.
Several states also offer their own student loan programs to help students. To qualify for many of these loans, a student must be a resident of the state program you’re applying for, or an out-of-state student enrolled in a college or university within that particular state. Check out each state’s student loan offerings here .
Saving Post-Graduation
Even if you went to community college, you may still graduate with student loan debt. But, there’s a way you can save after graduation as well. Upon completion of your degree (or, if you’ve already finished school), you may want to consider looking into student loan refinancing with SoFi.
This way, you may be able to get a better interest rate than what you originally qualified for or change the terms of your loan to fit your post-grad life. And you can focus on earning and saving for your future thanks to your hard-earned education.
When you refinance with SoFi there are no prepayment penalties or origination fees. Plus you’ll gain access to benefits like community events, career coaching, and unemployment protection. To see what your student loans could look like after you refinance with SoFi, take a look at our easy to use student loan refinance calculator.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF JANUARY 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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