Going to Summer School? Learn About Student Loans for Summer Classes First

 December 18, 2020
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If you’d like to take courses over the summer but need help paying for them, don’t worry — you can likely get student loans to cover costs. But you can only get financial aid for summer classes if you haven’t reached the limits for federal aid during the academic year.

To learn about the challenges you might face getting summer student loans, along with tips on how to finance your summer school classes, let’s touch on the following topics:

Summer student loans: What’s available

Neither the Department of Education nor private student loan lenders have student loan options specifically for summer classes. The loans available for summer programs are identical to the loans you use to pay for school during the academic year.

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However, there’s an important caveat: Limits on your federal student aid apply to summer classes, too. If you’ve already maxed out your federal aid for the academic year, you won’t be able to borrow more money from the Department of Education for summer classes.

Most undergraduate students face annual federal loan limits between $5,500 and $7,500, though you might be eligible for more if you qualify as an independent student or if your parents were denied a parent PLUS loan. Check out this article on federal student aid limits for more details.

If you’ve maxed out your federal loan funding, your only option for student loans will be from private lenders. To decide what’s best for your situation, let’s take a closer look at:

Federal student loans for summer courses

If you haven’t maxed out on federal loans for the academic year, borrowing from the Department of Education should likely be your first choice. Federal loans come with important benefits not available with private loans, including income-driven repayment (IDR) plans and Public Service Loan Forgiveness (PSLF).

Federal loan options include:

  • Direct subsidized loans, which are available to undergraduates with financial need. The government pays interest on direct subsidized loans while you’re in school and when your loans are in deferment after graduation. The interest rate on direct subsidized loans is 2.75% for the 2020-2021 year for undergrads.
  • Direct unsubsidized loans, which are available to undergraduate and graduate students regardless of need. You’re responsible for interest charges even while you’re in school, and unpaid interest is added to your loan balance. The interest rate on direct unsubsidized loans for undergraduates is 2.75% for the 2020-2021 year.
  • Federal PLUS loans, which are available to grad students and parents of undergraduates. The interest rate is 5.30% for the 2020-2021 year.

All federal loans have fixed interest rates set by the government. For most federal loans, you won’t need to pass a credit check to qualify.

Private student loans for summer courses

Because many students exhaust their eligibility for federal aid during the school year, there’s a good chance you’ll need to take out private student loans to cover summer classes.

Private loans are available from local and national banks, online lenders and credit unions. Interest rates vary based on the lender and your qualifications.

You’ll need good credit and proof of income to qualify for a private loan. If you don’t have a good credit score or income, a cosigner could help you qualify. However, your cosigner would be equally responsible for loan repayment. You should have an in-depth conversation with any potential cosigner about the risks before you take this route.

Using the FAFSA to get financial aid for summer classes

The most important thing you must do to get federal loans or grants for summer classes is to complete your Free Application for Federal Student Aid (FAFSA). This can be confusing when you’re attending summer classes.

The FAFSA runs for the entire academic year. But your school’s definition of an academic year might not line up with the Department of Education’s. You need to know which academic year your summer classes fit into so you can choose the right FAFSA to fill out.

Your school’s financial aid office can tell you which FAFSA form to complete. The sooner you complete it, the more likely it is you’ll receive funding; many sources of aid are offered on a first-come, first-served basis.

To complete the FAFSA, you’ll need to provide information about the school you’re attending, your income and any assets you have. You’ll also need to provide similar financial information on your parents. The school will receive this information and put together a financial aid package, including scholarships, federal loans and grants.

Just remember that you don’t have to borrow every cent that’s offered to you. If you can work while attending summer classes and borrow less, repayment after graduation could be easier.

Grants and scholarships for summer classes

Grants and scholarships are sometimes referred to as “gift aid” because in most (but not all) cases, you don’t have to pay them back. Explore these sources of funding throughout your undergraduate career:

Summer school college grants

Pell grants, which are available based on financial need, are the largest source of grant aid. They’re also one of the best options for covering summer classes.

Students can obtain Pell Grants for up to 12 semesters. In 2017, the grants became available for summer semesters.

Unfortunately, if you’ve already maxed out your Pell Grant, this source of money won’t be available for summer coursework. The maximum award amount can vary each year. The award amount from July 1, 2020, to June 30, 2021, is $6,345. To become eligible, you’ll need to complete the FAFSA.

States might also provide grant funding to students who want to take summer courses. For example, Pennsylvania has a Summer State Grant Program to help students cover the cost of summer classes.

You can find out if your state runs a similar program by using this map of state financial aid programs provided by the National Association of Student Financial Aid Administrators (NASFAA). Your school can also help you explore grant opportunities.

Summer school college scholarships

Scholarships might be available from the summer program you wish to attend, from local or national businesses, from churches or from many other organizations.

Scholarships can cover some or all of the costs of your courses, and you won’t have to pay back any of the money. This guide to finding scholarship money will give you a jumping-off point to start your search for funding. You should start applying for scholarships early to maximize your chances.

Going to summer school is a wonderful opportunity, but paying for it can be confusing. Grants, scholarships and student loans for summer classes can all play an important part in funding your coursework. But each comes with its own set of rules. Start your search for funding early so you’re not scrambling for money when classes start. Get started with these scholarship search tools.

Final tip on private student loans for summer classes

Once you’ve exhausted federal funding, grants and scholarships, applying for private loans is often your best option for covering the cost of your summer classes.

Most private lenders will allow you to borrow up to the school-certified cost of attendance. You can comparison shop among private lenders to determine which one offers you your best overall deal.

Pay attention to interest rates, repayment options and the lender’s reputation. Interest rates, for instance, can be fixed or variable. A fixed rate means your payment and interest charges will stay the same throughout the life of the loan. A variable rate can change over time, affecting your interest charges and monthly payments.

There are many great private lenders offering low or no payments while you’re in school, affordable interest and borrower protections. While you might need a cosigner to qualify, borrowing from a private lender can often make it possible to fund a summer program you otherwise wouldn’t be able to pay for.

Rebecca Safier contributed to this report.

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