Student Loans for Community College 2019 in United State (U.S.)
Student Loans for Community College – As community college becomes a more popular option for students for a variety of reasons, it’s important for students to know their financial options for affording a two-year school. If you’re considering a community college, be sure you know how to get student loans to cover all of your costs.
If you are looking for student loans for community college, go for federal loans first. Private loans should be your last alternative, after using grants, work-study, some personal savings, employer assistance, and federal student loans.
What Federal Loan Programs are Community College Students Eligible for?
1. Direct Subsidized
This federal loan is available to students who prove they have a financial need. You can borrow up to the needed amount determined by the school. To qualify, you must be enrolled no less than half-time at an accredited community college. The Department of Education will pay the interest on this loan while you’re still in school and for the first six months after you graduate.
2. Direct Unsubsidized
A Direct Unsubsidized loan doesn’t need you to demonstrate a financial need, but the school will still decide on how much you can borrow. Instead of basing the amount off of your financial need, your school will look at the cost of attendance compared to the other types of aid you’re receiving. You are responsible for paying the interest, and the interest will accumulate if you decide not to pay while you’re in school.
3. Direct PLUS
This is a loan available to parents of community college students. Like the Direct Unsubsidized loan, they can borrow up to the cost of tuition minus any other financial aid. The parents’ credit history is taken into consideration for qualification, and interest will accumulate during any non-payment period.
When to Consider a Private Community College Loan?
Even after you get federal aid and scholarship, you might not be able to cover the entire cost of your education. That’s when you can consider taking out private student loans to cover the gap.
How do Private Student Loans Differ from Federal Loans?
Unlike federal student loans which are issued by the government, private student loans are offered through lenders such as Citizens Bank or College Ave. Since these are private institutions, the eligibility requirements, interest rates, and repayment terms can vary depending on the lender. So be sure to check around to find the best private student loan rates.
What are the Advantages of Private Student Loans for Community College?
In addition to helping you cover any gaps in coverage; private loans have a tendency to have higher borrowing limits and can sometimes have lower interest rates. This means that you can have more money up front to cover costs associated with both tuition and living expenses, and potentially pay less over time if you secure a lower rate.
It’s also important to note that although there is a deadline to apply for federal loans through the FAFSA, there is no deadline to apply for a private loan. So, you can apply in the middle of a semester if you suddenly face financial challenges. Just be sure to give yourself a few weeks.
What are the Disadvantages of Private Student Loans for Community College?
Since eligibility for a private loan depends on your credit history, if you have a low or no credit score, you might not be able to take out a loan. But, you could use a cosigner if you’re considered ineligible. Even if you or your cosigner is able to take out a loan, a poor score could mean you’ll pay a higher interest rate and therefore more money along the line.
Also, you don’t have as many repayment options with private student loans compared to federal loans. You might have to start making some type of payment while still in school, and failing to pay on time can mean you’ll face sudden penalties. That’s why it’s important to understand all of the terms before taking out a private loan.
How to Get a Private loan?
To get a loan, you must apply through a lender, which include banks or private institutions such as Sallie Mae, www.salliemae.com. Each will have their own set of requirements to apply. They will then decide if you are eligible, how much you can borrow, the interest rate, and the repayment terms. Be sure to research a few lenders to make sure you’re getting the best options for your financial scenario.
How to Check for a Community College Student Loan?
1. Use grants first. Fill out the FAFSA as soon as possible after Oct. 1, when it opens, to get access to financial aid like the Pell Grant. These grants cover much of the cost of community college for students with low incomes and don’t need to be repaid. The FAFSA will also give you access to state and school grants.
2. If you need loans, choose federal loans first. These offer lower interest rates than private loans and come with the option to tie the payments to your income after you leave school. That can help you avoid falling behind on payments. The FAFSA will qualify you for federal loans. Some community colleges do not participate in the federal loan program.
3. Build good credit, or add a co-signer, when applying for private loans. If you need to make up for a gap in financial aid, private loans are your last stop. Students with good credit, generally a score of 690 or higher, will get the lowest interest rates.
Students under age 21 often don’t have the credit history required to get a private loan in their own names. Use a co-signer to qualify or to get a better rate; alternatively, search for private loans you can get without a co-signer.
4. Make sure your school is eligible. Some lenders will make loans to students pursuing associate degrees at four-year schools only. When exploring your options, make sure your community college is on the private lender’s list of eligible schools.
5. Compare loan features when shopping for a private loan. Compare offers to get the lowest student loan interest rate you qualify for. Note whether the lender will postpone payments in case you have difficulty affording them, known as forbearance, and for how long. Prioritize lenders that will let you release the co-signer after a period of time so they are not responsible for the debt.
6. Opt for a fixed interest rate. Fixed interest rates are a safer bet than variable interest rates because they won’t increase over time.
7. Watch the bottom line. Use a student loan calculator to see how much you’ll owe per month after borrowing for multiple years.
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