There are many benefits of getting an associate degree instead of a bachelor’s degree, including saving time and money. On average, it costs $3,520 a year to attend a two-year public institution versus $33,480 a year for a four-year private institution.
But that doesn’t mean you have the income or savings to cover all your education costs. Here’s everything you need to know about getting student loans for an associate degree.
Federal student loans for an associate degree
Whether you choose to attend a junior college or community college, you can get student loans for an associate degree. The federal government provides several borrowing options for associate degree students:
- Direct Subsidized Loan: If you’re eligible and prove financial need, the government will pay the interest on this loan while you’re still in school and for the first six months after you leave school. Your school determines how much you can borrow.
- Direct Unsubsidized Loan: While you don’t have to demonstrate financial need to be eligible for this loan, you’re responsible for paying interest immediately after taking out the loan. So, if you don’t pay while you’re in school, interest will accrue on the balance. Your school will determine how much you can borrow based on its cost of attendance and the other aid you’ve received.
- Direct PLUS Loan: This loan is available to eligible parents and allows them to borrow up to the cost of tuition minus any other financial aid. Their credit history is considered for qualification, and interest accrues during any nonpayment period.
To find out if you’re eligible for any or all of these loans, you must fill out the Free Application for Federal Student Aid (FAFSA). The process is easy and can be done online, but be aware of any deadlines your school might have for submitting the application.
Private student loans for an associate degree
You might have received scholarships, grants, and federal financial aid, but that money might not be enough to fund your entire education. That’s where private student loans for an associate degree can help. They can fill gaps in coverage, but you should keep some important factors in mind before applying.
Private student loans vs. federal loans
While federal loans are issued by the government, private student loans are offered through private institutions such as College Ave and banks. These lenders determine their own eligibility qualifications, interest rates, and repayment terms, whereas the government offers a fixed interest rate and a variety of repayment options.
Pros and cons of private student loans for an associate degree
There are a number of pros and cons of private student loans that could significantly impact your finances.
Private loans tend to have higher borrowing limits, so you can get more money to cover your tuition and living expenses if federal aid isn’t enough.
Some private lenders might offer loans with lower interest rates than federal loans have, saving you money over time.
There’s no deadline to apply for private student loans for an associate degree, so you have the flexibility to apply in the middle of the year if you face an unforeseen financial problem.
Your credit history is used to determine whether you’re eligible for a private student loan. So, if you have a low credit score, you might not qualify for a loan.
While you could get a lower interest rate, you also could get a higher rate (over 18% in some cases, according to the Department of Education). The rate is determined by your credit score and other financial factors, such as your income and debt-to-income ratio.
If you aren’t financially eligible for a private loan, you could need a cosigner. That isn’t necessarily a bad thing, but the cosigner’s finances will then determine the interest rate, which could be high.
You don’t have as many repayment options with private student loans compared to federal loans. For example, income-driven repayment plans (which cap your repayment at a certain portion of your income) aren’t available for private student loans.
Even if you get a lower interest rate, you might have to start paying back your loan while you’re school. The amount can vary from interest-only payments to principal and interest payments. Making payments can be tough if you’re not working during school.
Since there are many variables with private student loans for an associate degree, it’s important to shop around to find the best private student loan rates and understand all the terms before accepting a loan offer.
Student loans can help fund your associate degree
Regardless of the type of degree you’re pursuing, it’s best to go after as much free money as possible through scholarships and grants. But private student loans can be a good option to cover any remaining costs. Start with applying for scholarships and federal financial aid, and then bridge any gaps with private student loans. With so many options, paying for your associate degree doesn’t have to be a headache.
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 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.
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) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. 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. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of 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
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.82% – 12.82%3||Undergraduate and Graduate||Visit Ascent|
|4.34% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|3.88% – 12.88%6||Undergraduate and Graduate||Visit SunTrust|
|4.72% – 9.81%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.04% – 12.01%9||Undergraduate, Graduate, and Parents||Visit Citizens|