How to Pay for an Online College in 4 Steps

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If your online college is eligible for federal aid, you might be able to get federal student loans for online classes. If it’s not, you may still be able to access private student loans.

But before borrowing money for school, make sure to apply for grants, scholarships and other aid that you generally don’t have to pay back.

How to get student loans for online classes

If you need additional funding, here’s how to go about getting student loans for online classes:

  1. Determine if your school is eligible for federal financial aid
  2. Find out if your program is accredited
  3. Compare federal and private student loans for online college
  4. Examine other options if school accreditation is an issue

1. Determine if your school is eligible for federal financial aid

If you want to access federal financial aid (including student loans) for an online college, your school must be accredited by a federally recognized accrediting agency. The good news is there are plenty of accredited online colleges that can set you up with federal student loans and financial aid.

For example, about 75% of students at online-only Capella University received financial aid as of Dec. 31, 2019, including federal grants, work-study opportunities and loans. Many more traditional schools, including public nonprofit giant Arizona State University, offer fully online degrees.

Find out if your school is eligible by using the Department of Education’s Federal School Code Search tool. You can find your school’s code by asking its financial aid office or doing a search — with “[school name] federal school code” — online.

The Federal Student Aid office also maintains a downloadable spreadsheet of school codes.

2. Find out if your program is accredited

Go a step further to determine if your degree path would also be accredited. You can type your school’s name into the Department of Education’s Database of Accredited Postsecondary Institutions and Programs. You might find, for example, that your school’s nursing department enjoys full accreditation, while its program for teachers has lost its backing.

Use the federal agency’s tools instead of relying solely on your school. A school might tell you that it enjoys the support of an accrediting organization — but that organization could be dubious. You also can cross-check your school’s accreditation claims using the Council for Higher Education Accreditation’s list of legitimate accreditation organizations.

Confirm your findings with the school’s financial aid office. Then, complete the Free Application for Federal Student Aid (FAFSA) — the FAFSA will determine the amount and kind of federal aid you’ll be eligible to receive, including student loans.

Depending on your Expected Family Contribution (soon to be renamed the Student Aid Index), you might be eligible for direct subsidized loans, a specific kind of federal student loan. With these loans, the government pays interest on the debt while you’re enrolled and during the first six months after you graduate, so it’s better than direct unsubsidized loans.

Federal aid can also be available in the form of grants and work-study opportunities, if your family demonstrates financial need.

3. Compare federal and private student loans for online college

Whether you’re an online or on-campus student makes no difference in the world of federal student loans. The interest rates, repayment terms and other details are the same for each type of loan.

The federal government should usually be your first stop for borrowing, since its student loans come with low interest rates and flexible repayment plans. What’s more, federal loans are eligible for various loan forgiveness programs.

However, some private student loan companies offer certain borrower protections, such as the ability to defer repayment while you’re in school or if you lose your job. And if you have strong credit or can apply with a creditworthy cosigner, you could find competitive rates on a private student loan.

There is, however, another key nuance of student loans for online college: Just because your school is eligible for federal loans doesn’t mean that it will be eligible to work with every private lender.

You can check with lenders directly if you don’t see your school as an option on your initial loan application. Then, use our student loan payment calculator to figure out the amount of interest you’ll be responsible for during your loan term.

No matter what type of loan you use, borrow only what you need after applying for gift aid like grants and scholarships. Gift aid doesn’t have to be paid back, unlike federal student loans.

4. Examine other options if school accreditation is an issue

You could run into trouble when financing your education if you opt for an online college without accreditation. Speak with the school’s financial aid office about your options — as well as asking why it doesn’t enjoy the accreditation of a legitimate accrediting body.

Often, for-profit colleges (online and on-campus) might not have the proper accreditation, so you can’t finance your degree with federal loans.

If you’re seeking a certificate for a specific trade and not for an associate or bachelor’s degree, your school might not be accredited. However, there are ways to find student loans for trade programs.

At the same time, even if you can find a reputable lender for your program, you’d be wise to question the school for not being accredited. Schools that enjoy accreditation offer more student loan options. More importantly, they could also be better suited at preparing you for a career.

At the end of the day, attending an online college could be a big money-saver, especially if you don’t have to pay for on-campus room and board.

Paying for school will come with challenges, whether your classroom is virtual or not. When you’re on the lookout for student loans for online classes, start by examining your school’s accreditation. That’ll help you figure out if it’s eligible for federal and private student loan options.

Rebecca Safier contributed to this report.

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