5 Valuable Ways to Find the Best Student Loans for Community College

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Of the 20.4 million students who go to college in the U.S., more than 40 percent attend community college.

Some of these students seek an associate degree, while others plan to transfer into a four-year program and earn their bachelor’s.

This “2+2” approach to college can be a huge money saver, since tuition and fees at community colleges are often a lot lower than they are at four-year schools.

That being said, the cost is still significant — averaging $3,570 per year, according to the College Board — so you might need financial aid and student loans to cover it.

If you’re looking for the best student loans for community college, follow these five important tips.

1. Prioritize low-cost federal student loans

When searching for the best student loans for community college, take advantage of low-cost Direct Loans from the Office of Federal Student Aid.

Currently, federal Direct Loans have a fixed interest rate of 4.45%. You might get unsubsidized loans, which collect interest while you’re in school, or subsidized loans, which don’t accrue interest until after your grace period ends. If you have financial need, you might also qualify for free money such as from the Pell Grant.

To access federal student loans and grants, all you need to do is submit the FAFSA. After your application is reviewed, you’ll get a financial aid award letter with offers for federal student loans. You’re not obligated to take out these loans, but they likely have some of the lowest interest rates you’ll find on the market.

Note that some community colleges don’t participate in the federal student aid program. If your community college doesn’t take part, you might consider enrolling at a different school that does.

2. Search for state loans with low interest rates

For an additional source of government funding, find out if your state offers community college loans for living expenses and tuition. Some state agencies or state-sponsored nonprofits provide low-interest (or even no-interest) loans to residents.

The Massachusetts No Interest Loan Program, for example, offers zero-interest loans between $1,000 and $4,000 per year to residents with financial need. Similarly, the Alaska Supplemental Education Loan program offers low-interest loans to residents or students attending a participating school in the state.

To find out if your state offers this perk, head to its Department of Education website. You might also call the education office directly for information, or simply Google your state name, along with a term like “student loan program.”

Along with federal student loans for community college, state-backed loans have some of the lowest costs of borrowing thanks to low interest rates and fees.

3. Find affordable interest rates from a private student loan lender

Private student loans are another option for covering tuition and living costs. As you search for the best student loans for community college, your top priority should be finding the lowest interest rates and fees, which vary by lender.

Citizens Bank, for example, offers APRs between 4.72% – 12.19%. College Ave rates range from 4.54% – 11.98%.

To find out what interest rates you might be eligible for, apply for a rate quote with multiple lenders. This process is like comparison shopping; you’ll see a bunch of offers to ensure you’re getting the best deal.

You might also use a student loan calculator to figure out what your monthly payments and interest charges will look like for each loan.

All this research will ensure you’re finding the best student loans with the lowest rates for your situation. Pay close attention to interest rates and fee structures before choosing a lender to make sure you’re getting the best student loans.

4. Look for repayment options that fit your needs

Although a low interest rate is a top priority, it’s not the only one. You should also pay close attention to your repayment options on each type of loan. The best student loans will have flexible plans that meet your needs.

Note that federal loans and private loans have different repayment options. Federal loans come with a variety of plans, including the Graduated Repayment Plan and income-driven options. You can also temporarily pause your loan payments through deferment or forbearance if you continue your education later or hit tough times.

Private lenders, on the other hand, typically let you choose between terms of five, 10, or 15 years. Some lenders, such as College Ave, give you a few additional options for repayment while you’re enrolled in school, including:

  • No payments
  • Interest-only payments
  • Flat monthly payments of $25
  • Full interest and principal repayment right away

Some private lenders also offer forbearance if you run into economic hardship.

Consider what type of plan you’ll need as a student and after you graduate. By learning about the repayment plans of each loan type, you’ll be better prepared to choose the right loan — and know which ones to avoid.

5. Consider loans that could qualify for forgiveness

Finally, you might prioritize a loan that could be eligible for partial or complete forgiveness in the future.

Federal Direct Loans, for example, could qualify for forgiveness through programs like Public Service Loan Forgiveness or Teacher Loan Forgiveness. Alternatively, your loans could be discharged after 20 or 25 years of on-time repayment on an income-driven plan.

You could also find loan repayment assistance for private student loans. Several private and state-backed programs throughout the country offer assistance, typically in exchange for work in a certain field.

If your career plans could lead to loan forgiveness, consider taking out a loan that will be eligible for whatever forgiveness program is in your sights.

Do your research to find the best student loans and financial aid

Student loans are an invaluable tool for funding your education and earning your degree. But they also have a dark side, as too much community college student loan debt can leave you struggling financially for years after you graduate.

Before taking on loans you might later regret, make sure to do your research. By applying for federal financial aid and learning about repayment plans, you can find the best student loans for your unique situation.

Plus, you can reduce your college expenses with scholarships or income from a part-time job. By learning how to manage your money today, you’ll set yourself up for a more stable future.

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* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.

1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

(1)All rates shown include the auto-pay discount.  The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.

Information advertised valid as of 11/4/2019. Variable interest rates may increase after consummation.


2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

3 Important Disclosures for Discover.

Discover Disclosures

  1. Students who get at least a 3.0 GPA (or equivalent) qualify for a one-time cash reward on each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  2. View Auto Reward Debit Reward Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward.
  3. Aggregate loan limits apply.
  4. Lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest interest rate offered on the Discover Undergraduate Loan and highest interest rates offered on Discover student loans, including Undergraduate, Graduate, Health Professions, Law and MBA Loans. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable Margin percentage. The margin is based on your credit evaluation at the time of application and does not change. For variable interest rate loans, the 3-Month LIBOR is 2.250% as of October 1, 2019. Discover Student Loans will adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Please visit discover.com/student-loans/interest-rates for more information about interest rates.
Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

4 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).

  1.  Rates are as of July 1, 2019 and include auto-pay discount. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment. Variable rates may increase after consummation.

5 Important Disclosures for Citizens.

Citizens Disclosures

Undergraduate Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2019, the one-month LIBOR rate is 1.70%. Variable interest rates range from 2.80% – 11.06% (2.80% – 10.91% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.72% – 12.19% (4.72% – 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.

Please Note: International Students are not eligible for the multi-year approval feature.

2.84%
10.97%
1
Undergraduate, Graduate, and Parents

Visit College Ave

2.87% – 10.75%*,2Undergraduate and Graduate

Visit SallieMae

2.80%
11.37%
3
Undergraduate and Graduate

Visit Discover

3.52% – 9.50%4Undergraduate and Graduate

Visit CommonBond

2.80% – 11.06%5Undergraduate and Graduate

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Published in Big Money Decisions, Paying for College, Student Loan Repayment, Student Loans