Can I take out college student loans for online colleges?
Online college degrees and courses can provide a great array of future benefits: higher pay, more job security and enjoyment. The problem may be that right now they cost money. IF you can't afford the tuition of an online college at the time of your enrollment, college student loans are designed to help you still afford the chance to further your education. Although the rules surrounding student loans for online colleges previously required those schools eligible for federal loans to have the majority of their classes offered in classrooms, this is no longer the case. Today the future online college student can apply for both federal and private college student loans. It's important to know the difference between the two.
In 2006 the government overturned a law requiring that federal student loans can only be awarded for institutions offering at least 50% of their classes in a traditional classroom setting. This means that students who hope to or are attending accredited online colleges are now eligible for the same federal student aid that is given to students attending traditional colleges. The first step to receiving a college student loan from the federal government is to complete the Free Application for Federal Student Aid (FAFSA) form. Federal loans awarded include the Perkins loan, Subsidized and Unsubsidized Staffords and Parent PLUS loans. These different loans all generally offer more security, better repayment terms and lower interest rates than private loans.
Most financial advisers recommend that college students first obtain the necessary funds for college first from federal loans, rather than private loans. Although online schools are eligible for federal student aid, all online colleges may not offer federal student aid. The first thing to do when investigating how to fund your online college tuition is to call the financial office of that college to determine the available federal and private aid.
In addition to federal loans, private college student loans are available for online colleges. Private student loans are loans that are awarded and administered by private banks, independent of the federal government aside from its regulations. Common providers of student loans include Sallie Mae, Citibank, Chase, Wells Fargo and a number of other banks. These loans often have different applications for each different bank. For this reason it's best to first browse the available student loans to determine which has the lowest interest rate and services match your needs. Private student loans often have poorer rates and conditions than federal student loans, so be sure to compare both! When awarded a private student loan for online college, the money is often sent directly to the school. Leftover money will likely be disbursed to you and can be used to purchase textbooks and other supplies. Just remember – you have to pay back all of your loans! The ultimate goal of student loans is that the funds provided for online college will increase your income to a point where the loans you took out are more than covered by your increased income and/or the benefits of your higher education.
