How to get student loans for Community College and summer classes

Community college and summer classes offer a path to advance your degree and save money on tuition. Most community colleges charge thousands of dollars less per credit than similar courses at four-year universities, while summer classes at a state school or community college offer a way to potentially reduce the overall cost of completing a degree.

However, even with the lower tuition at community colleges or for summer classes, your child may still need help affording it. Here's information on obtaining student loans to pay for community college and summer classes:

Options for student loans for community college and summer classes

Federal loans are available to fund your undergraduate education, whether at a four-year school, community college, or for summer classes. In order to apply for federal student loans, your child will need to fill out the Free Application for Federal Student Aid (FAFSA^®) on an annual basis. Here's a breakdown of various loan options to help decide which will work best for your child's situation:

• Federal Direct Subsidized Loans: These loans are available to undergraduate students who demonstrate a financial need and can be applied to the cost of higher education or career school. With a federal Direct subsidized loan, the school determines the amount a student can borrow, and the U.S. Department of Education pays the interest on the loan while the student is in school.
• Federal Direct Unsubsidized Loans: Your student's school determines how much an undergraduate can borrow with a federal Direct unsubsidized loan. Borrowers will be responsible for paying for the interest accrued during the time they’re in school or the interest will capitalize when they go into repayment.
• Federal Parent PLUS Loans: Available for the parents of undergraduates, federal Parent PLUS loans can help fund college costs for students who are dependents and who are under 24 and unmarried. (Note: These loans are typically not available to individuals with an adverse credit history.)
• Private Student Loans: These loans come from banks, credit unions, and other financial institutions. Private loans can also be used to pay for school-related costs, not just tuition. However, you should check with your lender to confirm that a student can use the funds at a community college — lending may be restricted to four-year schools.

All loans charge interest, even if someone is just taking out student loans for summer classes. Federal Direct subsidized and unsubsidized student loans come with a fixed interest rate that's set on a yearly basis. The main difference between a subsidized and unsubsidized loan is who pays the interest — the U.S. Department of Education or the student — during the time your child is in school at least half time or during the grace period (six months after they leave school).

The interest rate of a federal Direct subsidized loan isn’t as important while your student is in school or during the grace period, because the federal government covers it.

With a federal Direct unsubsidized loan, interest payments aren’t required while the student is in school, but the interest does accrue. When the student begins to pay back an unsubsidized federal student loan, they’ll have to cover the principal plus the accumulated interest as part of the total amount owed.

Does your child need a cosigner?

Federal loans do not require a cosigner. If your child has good credit and an established credit history, they may not need a cosigner for a private student loan. In most cases, 18-year-old students have little to no credit and a cosigner is required. Applying with a cosigner who has a strong credit score may improve their chances for loan approval — and they could qualify for a lower interest rate. Lenders are more likely to approve these loan applications because having two individuals on the loan protects them from the borrower defaulting.

Loan repayment options

When considering student loans for community college or summer classes, think about how your child will repay them. Federal student loans offer the possibility of flexible repayment plans that fit around the budget of a new graduate. Federal student loan repayment plans are also available to borrowers at any time, so if your child finds themselves in a tough financial period after graduation, they'll potentially have resources available to them to help.

There are multiple options available for federal student loan repayment:

• Extended Payment Plan: The student loan repayment period is extended to 25 years to lower monthly payments.
• Revised Pay As You Earn Repayment Plan (REPAYE): The monthly payments will be 10% of the borrower's discretionary income.
• Pay As You Earn Repayment Plan (PAYE): Monthly payments will be 10% of discretionary income, but the total owed will not exceed a standard 10-year repayment plan.
• Income-Based Repayment Plan (IBR): Available for those with high debt, payments will be 10-15% of a family's discretionary income.
• Income-Contingent Repayment Plan (ICR): The monthly payment will either be 20% of the borrower's discretionary income or the amount they would have paid with a fixed interest rate over 12 years, whichever is less.
• Income-Sensitive Repayment Plan: This option allows for a loan to be paid off in 15 years.
• Loan forgiveness: Select borrowers can also receive student loan forgiveness if they qualify. Typically, loan forgiveness is extended to certain public service employees or teachers or under special circumstances, such as total and permanent disability.

Private student loans don't offer the same types of repayment programs as federal student loans, but many may offer resources for individuals experiencing temporary financial issues such as a job loss. Many private lenders also offer discounts for using another of their financial services, like a checking or savings account, or for enrolling in auto-pay. Private loans also may offer the option of refinancing at a lower interest rate, another tactic to lower a loan payment and reduce the total owed.

Private refinance loans are yet another option for all student loan borrowers who need help repaying their loans. Refinancing your student loans allows you to roll all of your federal and private loans into one private loan. But it's important to note that once you refinance a federal student loan into a private one, you can no longer access important features of federal student loans, such as repayment programs.¹ Refinancing loans also makes it easier to keep track of student loan repayment, since you only have to focus on one loan rather than multiple ones.

Ready to embark on your educational journey?

Citizens is here to help you navigate your student lending options for today and the future. Make sure to visit our Student Lending page — we’re on chat.