How Transferring From a Community College to a 4-Year School Affects Your Financial Aid

 April 3, 2020
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You might wonder about the difference between financial aid at a community college versus a university. Perhaps this is because you’re considering a popular strategy that can reduce your college expenses, sometimes referred to as the 2+2 model. Under this approach, you attend a community college for two years, then transfer to a four-year school for the final two years. Tuition at a community college is much lower than that at a four-year school, so the 2+2 plan can significantly reduce your total costs over four years.

But how does the 2+2 plan affect your financial aid options? You’ll likely still remain eligible for financial aid, but there may be some changes in your status. We’ll explain below.

How transferring from community college may affect your financial aid options

While going to community college, you may have had financial aid in the form of federal loans, private loans or grants. When you decide to transfer from a community college to a four-year school, you can’t expect to just transfer all your aid with you.

You may have already submitted a Free Application for Federal Student Aid (FAFSA) for community college over the past two years. You’ll now need to resubmit the FAFSA with the new institution’s information. If you are using a Renewal FAFSA form, which auto-populates some information, make sure you note your new school, as well as any other information that may have changed.

It’s possible that your Expected Family Contribution may be different if the cost of the new school or your home situation have changed since you last applied.

However, you shouldn’t panic about the cost of financing your education after you transfer to a new institution. You should remain eligible for financial aid, although there might be some variation depending on your current financial status and factors such as your new school’s price tag and available aid programs.

Getting a grant or scholarship when you transfer

Grants and scholarships are wonderful forms of financial aid. Unlike student loans, which must be repaid with interest, you usually don’t have to repay grants and scholarships. You can use this kind of reward to reduce your college costs and minimize debt.

If you are following the 2+2 plan and are already receiving a scholarship or grant, you should find out whether these awards are transferable to your new school; for instance, you may have a scholarship specific to your first school that you cannot take with you. As for federal grants, as noted above, you will have to reapply for the new year.

Two key grants are available from the federal government:

  • Pell Grants: As of the 2020-2021 school year, students with financial need can get up to $6,345 per year in addition to other financial aid.
  • Federal Supplemental Education Opportunity Grants: These grants are awarded to students with financial need. You can receive up to $4,000 per year.

You also may be able to get a state grant. You can find out more from your specific state contact through the Department of Education.

Additionally, there are scholarships offered specifically for transfer students, including those coming from community colleges.

You can also find potential avenues for grant or scholarship money specifically for people already in college.

Getting federal student loans when you transfer

As previously noted, as a transfer student, you will need to fill out the FAFSA to reapply for federal student loans. Keep in mind that although you can take out federal loans while you’re in community college and at a four-year school, there’s a limit on the amount you can borrow over the length of your education.

As of 2020, you can borrow up to $57,500 in total subsidized and unsubsidized loans to fund an undergraduate degree if you are an independent student or a dependent student whose parents cannot obtain a PLUS loan. Only up to $23,000 can be subsidized.

If you took out federal loans while in community college, the amount you can borrow in federal loans after you transfer will be reduced accordingly. If the new school’s costs are higher than the amount you can borrow, it may be time to find additional sources of funding.

Getting private student loans when you transfer

When you transfer from a community college to a more expensive four-year school, federal loans and grants may not be enough to cover the total cost of attendance. If you hit the maximum loan limit, you might need other financing help.

One option to help fill the gap and complete your education is to take out a private student loan. Unlike federal loans offered by the government, private loans are issued by banks and financial institutions. Private lenders usually offer higher borrowing limits, so you could take on as much debt as you need to pay for school.

However, keep in mind that private student loans tend to have higher interest rates and fewer benefits than federal loans. For example, with federal loans, you don’t have to make repayments until you are out of school. Private loans may require payment while you are still in school. Private loans are also often not subsidized, and they usually require that you have good credit or a strong cosigner, unlike most federal loans (aside from PLUS loans).

Make sure you use all your federal aid options before you apply for private student loans.

How to save even more on college

When it comes to paying for college, following the 2+2 plan is one of the most cost-effective strategies for reducing your education expenses. Going to community college and then transferring to a four-year school can help you save thousands of dollars. But as we’ve seen, it can also impact your financial aid, so be prepared and know all your options before you transfer, and don’t hesitate to visit the financial aid office at your new school with any questions you might have.

Meanwhile, look for other ways to trim the cost of college. Start with these college scholarship tools on your quest to save more money, and then consider ways to spend less on non-tuition costs. And remember that even after you’ve taken out student loans, there are also ways to save on your repayment.

Rebecca Stropoli contributed to this report

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