The cost of college can be crippling. A year at a public university costs an average of $9,650 for in-state students. A year at a private school amounts to a staggering $33,480. With such high numbers, it’s no wonder many students have trouble paying for college and leave school with a huge debt.
One of the most effective strategies to reduce your college expenses is known as the 2+2 plan. Under this approach, you attend a community college for two years and then transfer to a four-year school. Tuition at a community college is significantly lower than tuition at a four-year school, so the 2+2 plan can significantly reduce your total costs.
When you’re considering options for paying for college, the 2+2 plan is cost-effective, but it can affect the availability of financial aid.
How community college affects your financial aid options
When you decide to transfer from a community college to a four-year school, you need to resubmit the Free Application for Federal Student Aid with the new institution’s information.
Your income and family information might not change when you transfer, but your Expected Family Contribution could be different. That’s because each college has its own eligibility requirements for grants, scholarships, and loans.
However, you shouldn’t panic about the cost of financing your education after you transfer. You’ll remain eligible for financial aid, although there might be some variations because of your status. Your financial aid options include grants, federal loans, and private student loans.
Grants are one of the best forms of financial aid you can receive. Unlike student loans, which must be repaid with interest, you usually don’t have to repay grants. You can use grants to reduce your college costs and minimize debt.
If you follow the 2+2 plan, you can qualify for federal grants as long as you haven’t earned a bachelor’s or a professional degree. Two key grants are available from the federal government:
Pell Grants: Students with financial need can get up to $5,920 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.
Federal student loans
As a transfer student, you’re eligible for all types of federal student loans. However, transferring can affect the amount of aid you receive in the following ways.
Transferring can impact the availability of Direct Subsidized Loans, under which the government covers the cost of interest that accrues.
You can receive subsidized loans for only 150% of the published length of your program. For example, if you enroll in a four-year school, you can qualify for subsidized loans for only six years.
If you receive subsidized loans to help pay for community college and then transfer to another program, the length of study will count against your eligibility period. For instance, if you receive two years’ worth of subsidized loans for community college and then transfer to a four-year school, you’ll be eligible for only four years’ worth of additional subsidized loans.
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 2018, you can borrow up to $57,500 in subsidized and unsubsidized loans to fund an undergraduate degree. 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, you’ll have to find additional sources of funding.
Private student loans
When you transfer from a community college to a four-year school, federal loans might not be enough to cover the total cost of attendance. If you exhaust the eligibility period or hit the maximum loan limit, you might need other financing help.
One option to help fill the gap and complete your education is private student loans. 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. Make sure you use all your federal aid options before you apply for private student loans.
Paying for 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. It also can impact your financial aid availability, so be prepared and know all your options before you transfer.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, 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 11/1/2018. Variable interest rates may increase after consummation.
2 Important Disclosures for Discover.
3 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 applicants ability to supply the necessary information for submission.
* 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.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 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.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 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.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.94% – 12.78%1||Undergraduate, Graduate, and Parents|
|4.04% – 13.04%3||Undergraduate and Graduate|
|4.34% – 12.99%2||Undergraduate and Graduate|
|4.12% – 10.98%*,4||Undergraduate and Graduate|
|5.03% – 11.23%5||Undergraduate and Graduate|
|4.12% – 13.13%6||Undergraduate and Graduate|
|4.92% – 10.01%7||Undergraduate and Graduate|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents|
|4.26% – 12.13%9||Undergraduate, Graduate, and Parents|