Community colleges initially developed on the fringes of what were supposedly more respectable post-secondary education programs. For decades, community colleges got a bad rap as a second-class education meant for those who couldn’t afford or who couldn’t meet the high academic requirements of more traditional universities.

Now that reputation is changing as cultural norms about post-secondary education start to shift.  Community colleges are becoming acceptable additions to any resume. They are more affordable and serve as a more accessible entry point into post-secondary education.

For many people, community college is the perfect place to test out the educational waters, averaging $12,000 cheaper in annual tuition than a comparable university. Plus many of the programs offered through community colleges provide on-the-job training, co-op positions, and hands-on experience. But even with the many positives to community college, prospective students still struggle to meet the community college tuition.

What Prospects are There for Community College Applicants?

It's unfortunate, but true, that a significant knowledge gap exists between undergraduates enrolled at a university and those enrolled at a community college. The knowledge gap has nothing to do with the quality of the academic program, but entirely to do with the options for student funding. More often than not, community college applicants assume they are not eligible for student loans, or any other types of financing. This could not be further from the truth.

Community college students are almost always eligible for the same types of student loans as those attending a traditional university. However, many community college attendees don’t apply because they don’t know about their options.

Although community colleges are on average $8,000 per year in annual tuition, versus the $22,000 average yearly tuition at a conventional school, it doesn’t make the price of tuition any easier to bear.

Federal Financial Aid for Community College

Community college students should always apply under the Free Application for Federal Student Aid (FAFSA) before taking any other steps. Once submitted, a FAFSA provides both the student and the participating school information on whether or not the student qualifies for federal (and sometimes non-federal) student aid.

Here are a few of the most common federal student loan programs available to graduates, undergraduates, and students at participating community colleges. Speak with your school’s financial aid office to determine eligibility:

Federal Perkins Loan Program

The Federal Perkins Loan Program is available through many community colleges across the United States for students with a demonstrated financial need. It's different from other federal loans because it is granted and issued by the school itself and not by the U.S. Department of Education.

Eligibility requirements vary, but students must be enrolled either full or part-time in a participating school. The maximum yearly limit is $5,000 per year up to a maximum of $27,500. The interest rate for the Perkins loan currently sits at five percent. Because this loan is determined by financial need it falls under the same application process as the FAFSA.

Direct Subsidized & Direct Unsubsidized Loans

The primary difference between a Direct Subsidized and a Direct Unsubsidized Loan is financial need. In the former option, the eligible student must demonstrate severe financial need on their application. The participating school ultimately determines the amount of the student loan, but there are yearly maximums for both versions of the Direct Loans, which depend on a few factors. Also, there is an aggregate maximum of $31,000 with no more than $23,000 coming from subsidized loans.

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The current interest rates for both subsidized and unsubsidized versions of the Direct Loans sit at 4.45 percent as a fixed rate for the duration of the loan. There are also loan fees associated with Direct Loans, currently 1.069 percent. Students must complete a series of financial awareness counseling sessions before receiving their Direct Student Loan. The application is also made via the FAFSA.

The primary restriction on federal student loans for community college programs is that not all colleges participate. Approximately nine percent of community college students attend academic colleges that do not participate in the federal program. They are therefore not eligible.

Considering grants, scholarships, and many other types of federal student aid that require no repayment should always be exhausted before seeking out any further financial assistance. Student loans for community college, either federal or private, are a long-term financial burden on the graduate and should not be taken lightly.

Private Student Loans for Community College 

Federal student loans come with a series of safety nets, and worst-case scenario fallback options if graduates cannot meet their repayment terms. Private student loans for community college often contain more predatory lending terms, like penalties for early repayments. Always do your due diligence before signing any financial contracts. Understand the terms before you sign the dotted line.

Wells Fargo Private Loans for Community College

Wells Fargo offers private student loans for community college that have no origination fees or early repayment fees. Their variable rate option has a current interest rate range from 5.91 percent to 11.65 percent, and their fixed rate loan currently ranges between 7.46 percent and 12.65 percent. You’ll notice these interest rates are significantly higher than the federal student loan options. 

Students may borrow up to a maximum $15,000 per year towards their community college degree. The lifetime aggregate limit for a two-year community college program is set at $40,000. Wells Fargo has an easy online application process that is also available over the phone.

Sallie Mae Smart Option Student Loan

Sallie Mae offers fixed rate loans with interest rates currently ranging between 5.74 percent and 11.85 percent, and variable rate loans with interest rates currently ranging between 3.62 percent and 10.54 percent.

They also offer three in-school repayment plans, including deferred payment, fixed rate repayment, and interest only repayment options. Unlike other private student loans for community college, there are no fees for early repayments. The application is easy and takes only 15 minutes through their online portal.

Just because community colleges offer a cheaper alternative to a four-year university degree does not disqualify them from federal or private financial aid. Take the time to explore your options and determine what funding is open to you as you enroll in a community college program.