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.
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.
Need a student loan?Here are our top student loan lenders of 2020!
|* 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 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
2 Important Disclosures for College Ave.
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.
3 Important Disclosures for Discover.
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.
Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).
5 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicant’s ability to supply the necessary information for submission.
5 Important Disclosures for Citizens.
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 March 1, 2020, the one-month LIBOR rate is 1.62%. Variable interest rates range from 2.72% – 10.98% (2.72% – 10.83% 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 One 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.
Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensone.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
Citizens One Student Loan Eligibility: Borrowers must be enrolled at least half-time in a degree-granting program at an eligible institution. Borrowers must be a U.S. citizen or permanent resident or an international borrower/eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For borrowers who have not attained the age of majority in their state of residence, a co-signer is required. Citizens One reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Citizens One Student Loans private student loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens One Student Loans-participating school.
Please Note: International Students are not eligible for the multi-year approval feature.
Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
|2.75% – 10.65%*,1||Undergraduate and Graduate|
|2.84% – 10.97%2||Undergraduate, Graduate, and Parents|
|2.80% – 11.37%3||Undergraduate and Graduate|
|3.52% – 9.50%4||Undergraduate and Graduate|
|3.14% – 11.88%5||Undergraduate and Graduate|
|2.72% – 10.98%6||Undergraduate and Graduate|