Not all educational opportunities end with a degree. Many adults hold non-degree certificates. But if you’re hoping to get financial aid to continue your education, you might not qualify for federal student aid.
That’s because the Department of Education’s (DOE) eligibility rules for non-degree-seeking students are murky. Fortunately, there are numerous ways to pay for schooling, even as you enter trade and vocational schools and non-degree programs.
Federal aid for a non-degree-seeking student
A non-degree-seeking student might be pursuing a certificate, professional training or licensing, or a career-based education that doesn’t end with a diploma. Their access to federal student aid might seem black and white on the surface, but there is plenty of gray area.
You don’t have access to federal loans if you’re enrolled in a non-degree program, but there are two common exceptions:
- You’re completing courses that are required for entering a degree program.
- You’re completing courses for teacher certification or recertification.
Moreover, you might be eligible for government loans if you’re attending a certificate program that prepares you for a specific career.
Certificate programs come in all shapes and sizes. You might have found yours via a traditional university, a small trade or career school, or through a local community college.
You can find out if your certificate program is eligible for federal aid by ensuring that it’s accredited. Take these three steps when seeking out a program:
- Find a program: Search for certificate-awarding programs using the NCES’ College Navigator.
- Confirm a program’s accreditation: Search the DOE’s database of accredited schools.
- Complete the FAFSA: Find the school codes of federally approved programs on the DOE’s iLibrary.
Before or after taking on this research, check in with your school’s financial aid representatives. They can tell you about your access to federal loans. At East Carolina University, for example, non-degree-seeking students can find a list of certificate programs that are eligible for federal aid.
If you’re eligible for them, prioritize federal loans over private loans. Federal loans have lower interest rates, plus more repayment options and protections. For Direct Subsidized and Unsubsidized Loans disbursed after July 1, 2017, for example, the interest rate is 4.45%. Private loans, meanwhile, top out at closer to 12.00%.
A $5,000 federal loan would set you back $6,204 over a 10-year term. Borrowing the same amount from a private lender at the 12.00% interest rate would cost you $8,608.
Alternative non-degree-seeking student loans
Keeping in touch with your school might also lead you to alternative options. This is especially important for non-degree-seeking students who have maxed out or were ineligible for federal loans in the first place.
Not all private lenders offer non-degree-seeking student loans. When shopping around, ask lenders what types of programs you can attend and still be eligible to apply for loans.
Sallie Mae’s Career Training Smart Option Student Loan, for example, caters to students who are pursuing professional training or licensing or a trade certificate. It offers loans with a minimum balance of $1,000.
Wells Fargo’s private loan for career and community colleges awards a maximum of $15,000 per year for two-year schools and $20,000 per year for four-year schools.
In addition to attending a participating U.S.-based school, you would need to meet traditional student loan criteria, such as being a U.S. citizen (or permanent resident) or having a co-signer who is.
Once you have identified lenders that offer non-degree-seeking student loans, you’ll want to employ the same strategies as degree-seeking students. This includes applying with lenders within a 30-day window to limit your credit hit when comparing rates and repayment options.
Avoid loans for non-degree students, if possible
Just because you’re a non-degree-seeking student looking to further your education doesn’t mean you have to take out loans.
Before resorting to borrowing money — via non-degree-seeking student loans, personal loans, or your credit card — compare programs based on cost. To become a chef without spending a fortune on culinary school, for example, you might research community colleges and trade schools before committing to a big-name culinary institution.
There are even significant differences among lower-end options. The average cost to complete a junior college program is $2,700 but balloons to $33,000 for trade schools, according to Value Colleges.
If you’re not set on a specific profession, you might also compare potential career paths. Among booming trade careers that don’t require student loans, for example, electricians are paid during their apprenticeships. For another, industrial machinery mechanics receive on-the-job training.
And don’t forget about gift aid that doesn’t need to be repaid. You should prioritize professional development scholarships, for example, over any loan.
You might be in the position of pursuing a different career via a more costly certificate program. If you’re still leaning toward taking out a loan, you might also like to know that refinancing loans for career schools could prove to be difficult. Most lenders require applicants to have an associate’s or bachelor’s degree under their belt.
Choose the right way to pay for the right school
Maybe you’ve already chosen your school, and now you’re trying to figure out how to pay for it. Or perhaps you know that you need more education but aren’t sure about your career path.
Whatever your situation, understand that the following three variables could decide whether non-degree student loans are in your future:
- Your program or school cost
- Your eligibility for federal aid
- Your need for private student loans
Choosing a lower-cost program that would require a private loan, for example, might turn out to be more expensive than attending a higher-cost program that is approved for federal loans.
As you weigh your options, make sure you pick the right way to pay for schooling. It could save you thousands of dollars down the road. Equally important is picking a school with the best ROI.
Need a student loan?Here are our top student loan lenders of 2019!
|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 an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7% variable Annual Percentage Rate (“APR”): 96 monthly payments of $179.28 while in the repayment period, for a total amount of payments of $17,211.20. 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 5/22/2019. Variable interest rates may increase after consummation.
* 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.
3 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
4 Important Disclosures for Discover.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.99% – 11.32%2||Undergraduate, Graduate, and Parents|
|4.50% – 11.35%*,3||Undergraduate and Graduate|
|4.84% – 13.49%4||Undergraduate and Graduate|
|4.25% – 11.30%5||Undergraduate and Graduate|
|4.50% – 9.47%6||Undergraduate and Graduate|
|3.74% – 9.72%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.32%8||Undergraduate, Graduate, and Parents|