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Although community college is often much less expensive than a traditional four-year university, it can still come with a hefty price tag. Scholarships and grants are the best first step if you need help paying for community college, but you can also turn to student loans.
Here are the best student loans to help finance your community college education:
7 best student loans for community college
Federal Direct Loan
Federal student loans should always be your first choice when it comes to financing your community college career. Unlike private student loans, eligibility and interest rates aren’t based on creditworthiness or history, and you get benefits that private lenders don’t offer.
For community college, you have two options: Direct Subsidized Loans and Direct Unsubsidized Loans. Subsidized loans are offered to students who demonstrate financial need, and interest is paid by the government while you’re in school. Unsubsidized loans, on the other hand, accrue interest while you’re in school, though they’re available to all students.
The main downside of these loans is that you’ll have a loan cap of $5,500 to $12,500 each year, depending on your dependency status and year in school. You’ll also need to pay a loan fee upon disbursement.
As long as you are pursuing a bachelor’s degree at an eligible school, you may qualify for a SoFi student loan. SoFi is known for its extensive member benefits, like an unemployment protection program, a discount on ACT/SAT prep courses and one-on-one coaching with the aim of helping your future job search.
SoFi offers private student loans with low rates, no fees and four repayment term options. You can also qualify for one of these loans even if you’re attending only half time.
Just be aware that borrowers (or their co-signers) will need to be employed or have sufficient income, though SoFi doesn’t specify its minimum income or credit score requirements. While in school, you’ll need to maintain satisfactory academic progress.
Ascent offers three types of student loans for undergraduates, giving borrowers in a variety of financial situations plenty of options:
- Co-signed credit-based: Students apply with a co-signer. Approval is based on the creditworthiness of you and your co-signer.
- Non-co-signed credit-based: Students apply without a co-signer. You must have at least two years of credit history, and approval is based on your creditworthiness.
- Non-co-signed outcomes-based: Juniors and seniors can apply without a co-signer. Approval is based on your school, field of study and potential future salary.
There are some pretty significant benefits to borrowing with Ascent; it offers deferment and forbearance options, low loan amounts and member rewards. However, it does have a lower loan cap than many of its competitors, with a $200,000 aggregate total for undergraduate loans (or $400,000 for graduate loans), and its outcomes-based loan has only two term options.
Citizens Bank offers loans to students who are enrolled at least half time in a degree-granting program. It stands out for its multiyear approval program, which saves borrowers the trouble of having to submit a full application each year of school. After your initial application, you can go through only a soft credit check for subsequent years of funds.
In addition to an autopay discount, Citizens Bank has a 0.25 percent discount for borrowers who already have a qualifying Citizens Bank account — such as a checking account, auto loan, credit card or student loan. Combined, these discounts can shave a significant amount off of already low interest rates.
Before applying, consider your priorities when it comes to your interest rate and monthly payment. Citizens Bank has only fixed interest rates for its student loans, so you’ll be locked into your rate for the entirety of your loan term.
Earnest student loans are available to students pursuing a degree full time at a four-year Title IV institution. These loans come with a plethora of benefits, like a nine-month grace period and the ability to skip one payment every 12 months.
Earnest also has some of the lowest starting interest rates in the business, and borrowers can take out up to the full cost of attendance.
A downside of Earnest is its eligibility requirements: You or your co-signer must have a credit score of at least 650, at least three years of good credit history and a minimum annual income of $35,000. Also keep in mind that if you take advantage of the skip-a-payment feature, your skipped payment will be added to the end of your repayment period.
While most lenders require you to be enrolled in a bachelor’s degree program with at least half-time status, Sallie Mae offers loans to students enrolled less than half time, students pursuing an associate degree, students earning a certificate at a degree-granting school and more.
You can cover up to 100 percent of your school-related costs with Sallie Mae, and as little as $1,000, which makes this lender one of the most flexible when it comes to loan amounts.
Sallie Mae does have some downsides. For one, it doesn’t disclose many eligibility requirements, and you won’t be able to determine your eligibility without a hard credit check. This is compounded by the fact that Sallie Mae has relatively high APR caps, so you could be offered an expensive loan if you have poor credit.
CommonBond offers undergraduate loans from $2,000 to the full cost of attendance, with a $500,000 lifetime borrowing limit. You can choose from among four repayment options while you’re in school: full deferment, a fixed $25 monthly payment, interest-only payments or full monthly payments. This gives you much more flexibility in chipping away at your loan balance or reducing your interest paid over time.
CommonBond also has generous forbearance. If you experience financial hardship, you can request payment deferment for up to 24 months over the life of the loan.
Keep in mind that if you’re borrowing as an undergraduate, you’ll be required to use a co-signer with CommonBond — though you can apply for co-signer release after two years of on-time payments. CommonBond’s grace period is also shorter than that of many other lenders, lasting only six months.
How to find the best loan for community college
The best student loan for students is almost always a federal student loan. If your community college qualifies for federal aid, apply for as much money through the federal government as you can before turning to private lenders.
If you do need to take out private student loans, compare a few private lenders to find the best rates and terms for your financial situation. Every private student loan lender has its own eligibility requirements and will weigh your finances differently. Get prequalified to see exactly what you qualify for.
Many lenders will fund any type of four-year degree program, though some only work with specific schools. Community colleges could be harder to find on lenders’ lists of approved schools, so double-check that your program is included when comparing lenders. You can often find a list of approved schools near the beginning of a lender’s prequalification form.
Ultimately, the best loan for you is the one that can give you an affordable monthly payment and reasonable terms. You may prioritize APR, repayment terms or hardship protections, but also keep an eye out for special promotions or unique features.