How to Refinance or Get Alabama Student Loans

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Alabama is home to some of the best colleges in the South, including Samford University, the University of Mobile, and Huntingdon College.

But those great schools come with a high price tag. According to the Institute for College Access and Success, 50% of graduates from four-year public or private schools in Alabama have student loans. The average amount of debt is $31,275.

Researching your loan options can help you save money after graduation. Here’s what you need to know about Alabama student loans and other options available to pay for school.

Alabama student loans and grants

Although many states have their own student loan programs, Alabama doesn’t offer student loans to residents. Instead, the state awards grants to eligible students.

Unlike student loans, which you have to repay with interest, you don’t have to repay grants. They can be a great way to reduce your college expenses and help limit how much you need to borrow in student loans. Here are Alabama’s two state grants.

1. Alabama Student Assistance Program

The Alabama Student Assistance Program is a grant worth between $300 and $5,000 per year. The state government awards the grant to undergraduate Alabama residents with financial need. To be eligible, you must complete the Free Application for Federal Student Aid.

2. Alabama Student Grant Program

If you’re an Alabama resident enrolled in an undergraduate program in the state, you could qualify for up to $1,200 per year with the Alabama Student Grant Program. To apply, contact your school’s financial aid office.

Other student loan options

If you’re not eligible for Alabama’s grants or need more money to pay for school, you can take out federal or private student loans.

Federal student loans

If you need to take out loans, federal loans are a smart starting point. Federal student loans tend to have lower interest rates and more benefits than private student loans. These perks, such as access to income-driven repayment plans, can make repayment less stressful once you graduate.

The federal government operates the Direct Loan program. Within that program, there are four types of student loans:

  • Direct Subsidized Loans: With a Direct Subsidized Loan, the government covers the cost of any interest that accrues while you’re in school, for six months after you leave school, and during any deferments. Loans disbursed after July 1, 2017, have an interest rate of 4.45%. These loans are for undergraduate students with a demonstrated financial need.
  • Direct Unsubsidized Loans: Direct Unsubsidized Loans have the same interest rate as Direct Subsidized Loans for undergraduate students, but you are responsible for paying all the interest that accrues on your loan. The interest rate for graduate or professional students is 6.00% as of July 1, 2017.
  • Direct PLUS Loans: Direct PLUS Loans are for graduate students or parents taking out loans to pay for their child’s education. They have an interest rate of 7.00% as of July 1, 2017.
  • Direct Consolidation Loans: If you graduate with many different federal student loans, Direct Consolidation Loans can help simplify your debt into one loan with one monthly payment.

Private student loans

Although federal loans tend to be the most cost-effective option, many federal loan programs have borrowing maximums. If you need more money to finish your degree, applying for private student loans can help fill the gap.

Unlike federal student loans, which are issued by the government, private student loans are offered by individual banks and financial institutions.

When a private lender reviews your loan application, it bases its decision on your credit history and income. As a student, your income might be small and you probably don’t have an established credit history.

To get approved for a loan and qualify for a competitive interest rate, you might need a cosigner to apply for the loan with you.

A cosigner is usually a parent or relative who has better credit and a higher income than you. The cosigner provides a guarantee that you’ll repay the loan.

If you fall behind on your payments, the cosigner has to make them. A cosigner lessens the risk to the lender, so it’s more likely to issue you a loan if you have one.

The interest rate and repayment terms on private student loans can differ from lender to lender, so it’s a good idea to compare offers from private student loan companies to ensure you get the best deal.

Refinancing options for graduates

If you already graduated and are looking for ways to take charge of your debt, consider student loan refinancing.

With refinancing, you take out a loan with a private lender for the amount of some or all of your current student loans. The new loan will have different repayment terms than your old ones, including a new interest rate, monthly payment, and repayment term.

You can refinance both private and federal student loans. But refinancing has some drawbacks if you have federal loans, such as losing out on perks like access to income-driven repayment plans.

However, if your goal is to save money or get out of debt faster, refinancing can be a tool you can use to achieve your goals.

To apply for student loan refinancing, check out this list of the best student loan refinancing lenders.

Managing your student loans

By researching your education financing options, including Alabama student loans, you can choose the most cost-effective loans for your situation. By applying for grants and taking out federal student loans for college, you can reduce how much you need to take out in higher-interest debt later.

If you need help identifying your education loan or refinancing options, sign up for the Student Loan Hero app to get free help.

Need a student loan?

Here are our top student loan lenders of 2018!
LenderRates (APR)Eligibility 

1 = Citizens Disclaimer.

2 = CollegeAve Autopay Disclaimer: 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.

* 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.
4.12% – 11.85%*3Undergraduate and GraduateVisit SallieMae
3.69%
12.07%
2
Undergraduate, Graduate, and ParentsVisit CollegeAve
4.07%
12.19%
1
Undergraduate, Graduate, and ParentsVisit Citizens
3.83% – 12.11%Undergraduate and GraduateVisit Ascent
4.63% – 9.71%Undergraduate and GraduateVisit LendKey
3.62%
9.79%
Undergraduate, Graduate, and ParentsVisit CommonBond
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.