College loans for online learners
With the cost of education rising, student loans are a fact of life, even in the world of online education where tuition fees tend to be significantly lower. Thus, if you anticipate needing help to meet the cost of your education, you should have a good working understanding of the federal student aid process. In addition, you should familiarize yourself with alternate and supplementary sources of funding, including grants for college, scholarships, and institution-based aid packages.
Student Financial Aid 101: College Loans from the Federal Government
Before you apply for any form of financial aid or student loans, the first thing you need to do is check to see whether or not the online school you're planning to enroll in is considered a qualified institution. The federal government maintains a list of qualified educational institutions, so check with the Department of Education to make sure your school is on the list.
If it is, you may be eligible for the following types of loans:
- Subsidized loans. On a subsidized loan, the Department of Education will make interest payments on your behalf while you are enrolled in school at least part-time. While these types of loans are usually reserved for students attending traditional classes, you may still qualify for them if you are completing some of your course requirements online.
- PLUS loans. These loans are for graduate or professional students only. If you're working on your Master's degree online, or if you're working towards a professional certification or designation, you may qualify for a PLUS loan if you have good credit history, are enrolled at least half-time, and can demonstrate financial need.
- Perkins loans. A Perkins loan is a low-interest federal student aid package available to undergraduate and graduate students who have exceptional financial need. You can only get Perkins loans if you are enrolled in a degree program. Both part-time and full-time degree program students are eligible.
In the United States, student loan interest rates vary, depending on whether or not your loan is subsidized and what type of loan you get. While interest rates change over time, student loan interest is typically calculated using a "fixed interest" model, which means they are set at a specific level and remain at that level until you pay off the debt. Thus, the amount of interest you pay is unaffected by changes in interest rates in the general economy.
Additional Sources of Funding
You should only take out student loans if you absolutely have to in order to meet the costs of your education. As such, be sure to investigate alternate sources of funding, including:
- Government grants for college. Federal Pell grants are available to undergraduate students who have not already earned a degree or professional designation and have demonstrated the requisite financial need. In addition, grants may be available to people who have served in the military, and their family members. Unlike loans, grants do not have to be repaid.
- Scholarships and bursaries. Like grants, scholarships and bursaries do not have to be repaid. They are generally awarded to students who show significant potential and have demonstrated financial need. Most bursaries are performance-based, meaning that you can only qualify for them once you have met defined standards of academic excellence. Scholarships, on the other hand, may be available to you before you begin your program or course of study.
- Institution-based financial aid packages. Many online schools advertise that "financial aid is available to students who qualify." It's a good idea to check with the school's internal financial aid department before applying for loans to get a clearer idea of the costs you need to meet and the available options for meeting them.
If you need additional assistance, contact your school's financial aid office. A counselor or employee will be happy to direct you to resources specific to your location, course of study, and personal situation.