The Steps To Getting Approved For A Loan For An Associate's Degree
An Associate’s degree can help you get a stable employment. A two-year undergraduate course from any community or junior college can help increase your monthly income. Although the cost of a two-year degree is cheaper than that of a four-year Bachelors program, you might still need to look for financial aid to cover related expenses.
In this blog, we’ll discuss the steps on how you can get approved for a student loan so you can get your Associate’s degree.
Step 1: Fill Out The Free Application for Federal Student Aid
Your first step in the loan application process will be to fill out the FAFSA for the community college or junior college that you wish to attend. The FAFSA, or the Free Application for Federal Student Aid, specifies how much help you are eligible to obtain from need-based financial aid including scholarships, work-study programs and subsidized federal student loans. It’ll also help you to apply for loans that are not dependent on need, such as unsubsidized federal student loans.
To be eligible to submit your FAFSA, you must:
- Be an American citizen or an eligible non-citizen
- Have a valid SSN (yours and your parents)
- Have a GED, High School Diploma or equivalent qualification
- Banking and investment statements
- Tax return forms
- Driver’s license
- Have a proven financial need (for most loans)
Step 2: Turn To Federal Aid
By filling out the FAFSA, you’ll be eligible for federal subsidized and unsubsidized loans. Federal student loans offer lower rates and flexible repayment options. When you have a subsidized loan, the accrued interest will be taken care of by the federal government.
Federal student loans will allow you to defer payments if you’re experiencing financial hardship or have lost your job. You can also make use of alternative income-based repayment plans and other options like loan forgiveness, discharge, and cancellation.
Step 3: Think About Private Loans
There are a variety of private loan lenders across the US, but not all lenders provide loans for associate’s degrees. You’ll need to search around for the available options, compare the rates and fees, and do your research.
Which Private Loans To Consider
Choosing the right private lender is a crucial process. Consider key offerings such as repayment terms, interest rates, cosigner release, fees and charges, and other benefits.
Here are our picks for the top three private student loan lenders:
- College Ave - The lender offers favorable rates and multiple repayment terms. You’ll get a 0.25% discount on the rate when you sign-up for automatic payments. There are no hidden prepayment penalties, application, or origination fees
- CommonBond - This lender offers a range of loans for degrees. All of the loans require a cosigner, but this means that you’ll gain access to more competitive rates. You can borrow up to the full cost of attendance with multiple repayment options, including a full deferment
- Credible - This is a lender matching platform offering personalized independent and cosigned loans for students with different repayment terms. The company deals with top-rated lenders and is one of the few private lenders that runs soft checks before approving the application. Additionally, there is no origination, service, or late payment fee involved
Step 4: Do Your Research
If you’re considering getting a private student loan, it’s important to evaluate the options.
Take into account factors like the APR, repayment term, income-based repayment options, fees and other charges, eligibility criteria, customer service, reviews, and more. Moreover, check if the lender will provide benefits like deferments, grace periods, and other alternative options in case you face difficulties in repayment.
Finally, calculate the total cost and the amount you’ll be paying over the life of the loan. Use online calculators to get an estimate.
Step 5: Only Take What You Really Need
Consider the total amount you’ll need to cover the cost. Just because you can get a higher amount doesn’t mean that you need to take it. The higher the loan amount, the more difficult it gets to pay it off.
Borrowing more than you require will only attract higher interest, especially if you’re applying for a private loan. For instance, let’s say you borrow $50,000 for 15 years at 6% rate. By the end of the term, you’ll pay almost $25,950 as interest. However, if you take $40,000 for the same period and cover the remaining amount from your pocket, you’ll only pay a total interest of $20,757 over the life of the loan. A lower amount will also help you choose a shorter repayment term, thus allowing you to save more on interest.
If you’re looking for a student loan to cover the costs of an Associate’s Degree, you must start by filling out the FAFSA form. Plan your total expenses and apply for a loan that amounts to what you need. Remember, before you sign the agreement, review the terms and conditions so you can have better clarity and save money over the life of the loan.