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 some of the best student loans for community college, follow these five important tips.
1. Prioritize low-cost federal student loans
When searching for your 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 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!
|1.24% – 11.44%1||Undergraduate, Graduate, and Parents|
|1.25% – 11.15%*,2||Undergraduate and Graduate|
|1.24% – 11.98%3||Undergraduate, Graduate, and Parents|
|1.24% – 12.49%4||Undergraduate and Graduate|
|1.80% – 11.89%5||Undergraduate and Graduate|
|2.71% – 12.99%6||Undergraduate and Graduate|
|3.52% – 9.50%7||Undergraduate and Graduate|
|* 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 Earnest.
2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
3 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.
Information advertised valid as of 9/1/2020. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.
4 Important Disclosures for Discover.
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
5 Important Disclosures for SoFi.
UNDERGRADUATE LOANS: Fixed rates from 4.23% to 11.76% annual percentage rate (“APR”) (with autopay), variable rates from 1.90% to 11.66% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 11.83% APR (with autopay), variable rates from 1.80% to 11.73% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.30% to 11.98% APR (with autopay), variable rates from 1.97% to 11.89% APR (with autopay). PARENT LOANS: Fixed rates from 4.60% to 11.26% APR (with autopay), variable rates from 1.90% to 11.16% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 07/10/2020. Enrolling in autopay is not required to receive a loan from SoFi. SoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).
6 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.
7 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.17% effective Sep 1, 2020 and may increase after consummation.