A community college can be a great place to earn transferrable credits at a significantly lower cost than at many four-year colleges or universities. According to the Community College Research Center, about 34% of undergraduate students in 2017 attended two-year colleges—and for a good reason. Community colleges offer associate degree programs, allowing students to fast-track their way into fulfilling and rewarding careers in various fields.
Perhaps your end goal is to obtain an associate degree. Or, maybe you’re planning on transferring to a four-year program down the road. Regardless, community college offers some excellent opportunities for you. Even with the comparatively low cost of community college, however, you may need help paying for school.
The good news is that student loans are available to help you pay for community college.
Before You Get Started…
Before you begin filling out any loan applications to pay for community college, make sure you’ve filled out and submitted your Free Application for Federal Student Aid (FAFSA). This application can help you take advantage of financial aid options that may be available to you. This could include grants, work-study programs, and federal loans. Keep in mind that there are strict deadlines for submitting your FAFSA, and you’ll need to re-apply with each new academic year. It’s also important to understand that if you plan on taking out any federal loans, you will need to submit a FAFSA.
In addition to taking advantage of federal aid, apply for other scholarships and grants before taking out student loans. These can reduce the amount you need to borrow. In turn, this will save you money down the road.
Federal Student Loans for Community College
The United States government treats community college just like any four-year institution, so you’ll have all the same federal loan opportunities available to you. There are many types of federal loans that you may qualify for, though the most advantageous are subsidized federal loans.
With a subsidized student loan, you won’t accumulate any interest on your loan while you’re in school. Instead, interest is deferred until you begin making payments in the repayment period. With an unsubsidized student loan, by contrast, you will start accumulating interest as soon as the loan is disbursed.
Many community college students use federal loans because the interest rates are competitive, and you don’t need credit to qualify. Federal loans also come with a wide range of repayment options to suit your lifestyle. But be aware there is a maximum loan limit with federal student loans.
Private Student Loans for Community College
Most private lenders, including those available through LendKey, also offer student loans for community college students. However, many of these lenders will have a list of “approved” schools—and your community college must be on that list to borrow. Often, private loans are a practical way to cover any remaining financial gap after reaching your federal loan limits. And unlike federal loans, with private loans, you can apply for and receive funding from a private lender at any point during the academic year.
On the other hand, eligibility for private loans is typically based on your credit history and other financial factors. As a result, some borrowers may have a harder time qualifying if they have poor credit or don’t have established credit history. Many private lenders, however, do allow for applicants to add a co-signer if needed. Specifically, a co-signer with a good credit history can help you get approved for more favorable rates on your private loans.
What if You Pursue Further Education?
Once you’ve completed your credits through your community college and are no longer enrolled, your repayment period will begin based on your loan agreement. For most student loans, there is a six-month grace period after you leave school; once this grace period ends, you must start making payments on your student loan balance. However, this can vary based on the type of loan you have and your specific lender’s terms, so be sure you know what your obligations are. Don’t hesitate to contact your lender with any questions or concerns so you can stay on top of your loans.
If you’ve decided to transfer your community college credits to a four-year university, most lenders (both federal and private) will defer your loan payments until you’ve completed your four-year degree. However, you may need to show proof of enrollment (usually in the form of a registration letter or class schedule) each semester.
Keep in mind also that while your payments may be deferred until after you complete your four-year degree, interest may continue to accrue. One exception to this would be a subsidized federal loan where your interest continues to be deferred until you enter repayment.
If you have an unsubsidized student loan, it may be in your best interest to at least begin paying off your student loan interest monthly while you are in school. This can help you avoid having the interest added to the principal amount of your loan (interest capitalization) and save you money when it comes time to repay your loans.
The Bottom Line on Borrowing Money for School
Borrowing money for community college typically isn’t much different than borrowing money for a four-year college. There are many student loan options to help you fund community college, ranging from subsidized/unsubsidized federal loans to private loans.
No matter where your interests lie, you can likely find a degree program that will help you get started in that field. For many students, earning an associate degree at a community college opens the door to many opportunities at a lower cost than other types of schools. And, of course, you always have the option of transferring your credits to a four-year school if you decide to pursue your bachelor’s degree down the road.