How to Use Student Loans for Community College

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Zina Kumok

By Zina Kumok

June 6, 2023

With costs at four-year colleges and universities climbing ever higher, attending community college is an attractive option for students looking to save some money. The average annual tuition for a public community college was $5,155 for in-state students and $8,835 for out-of-state students for the 2021-2022 school year. For a private community college, tuition costs rose to $15,477 per year, on average.

While community college can be a cost-effective alternative to traditional higher education, the price tag can still be too steep for many students to pay in cash. Luckily, if you’ve exhausted scholarship and grant options, you can use student loans for community college.

How to Get Student Loans for Community Colleges

In many ways, applying for and receiving student loans for community college is similar to the process for a four-year institution. There are a few factors you want to keep in mind before you start the process.

  1. Apply for federal student loans before looking into private student loans.
  2. If you do qualify for federal loans, make sure the community college you’d like to attend accepts federal student loans — not all community colleges do.
  3. If you qualify for federal loans, and you’re planning to finish your degree at a four-year institution, understand the limits on borrowing federal loans.
  4. If you don’t qualify for federal student loans, or the school you want to attend doesn’t accept them, look into private student loans.

Following these guidelines can set you up to select the student loans for community college that will offer you the best terms. From there, your next step is to prepare for the more detailed process of applying for different types of loans.

Apply for Federal Student Loans

It’s always a good idea to use federal student loans before you borrow private student loans. That’s because federal student loans generally have lower, fixed interest rates, options for income-based repayment, more generous deferment options, lower total interest payments (for subsidized loans), and the possibility of having student loans forgiven.

The first step to get federal student loans for community college is to fill out the Free Application for Federal Student Aid (FAFSA) form.

This U.S. Department of Education form asks for financial information about you and your family to determine financial need and whether you qualify for student loans and government grants. If you don’t fill out the FAFSA, you aren’t eligible for financial aid, including federal student loans from the Direct Loan program. Because financial circumstances and eligibility may change from year to year, you’ll have to fill out a new FAFSA form each year.

Students need to demonstrate financial need to be eligible for Federal Direct Subsidized loans. Borrowers who don’t meet the requirements for need-based aid can still qualify for Direct Unsubsidized loans. However, you must meet other eligibility requirements, such as being enrolled at least half-time. You typically don’t need to go through a credit check or have a cosigner to apply for federal student loans.

Parents can also take out parent loans to help pay for their child’s tuition. The most common of these loans are PLUS loans through the Direct Loan program. It’s important to note that Direct PLUS loans are unsubsidized loans, and they generally have higher interest rates than other federal loans.

Apply for Private Student Loans

It’s best to exhaust all other options before borrowing private student loans, including savings, scholarships and grants, federal student aid, and cutting college costs if possible. 

If you’ve examined the possibilities and decided that private student loans for community college are your best option, the next step is to compare private lenders to figure out which is best for you. 

Here are some factors to consider before choosing a lender:

  • What the lender requires for approval, including minimum credit score and income
  • The interest rate on the loan, and whether it’s a fixed or a variable rate
  • The size of the monthly payment
  • Available repayment options
  • How long you’ll have to pay the loan back
  • Whether you’ll need a cosigner (this is fairly common for minor students who haven’t built their own credit yet)
  • Options for pausing payments if you are unable to make your payments somewhere down the road
  • Any fees, such as disbursement or origination fees
  • Reviews and reputation of the lender

Many private student loan lenders offer different types of perks. For more information, check out our resource on the best private student loans.

Be Aware of Federal Student Loan Limits

For many students, community college is a stepping stone to enrollment in a traditional four-year university. If you plan to attend community college and then transfer to a four-year school, you should be aware that taking out federal student loans now can impact your borrowing ability later. 

The aggregate student loan limit for federal student loans is $31,000 for dependent undergraduate students and $57,000 for independent students. Dependent students are those who live at home or whose parents support them financially. Independent students are those who are married, 26 or older, or have served in the military.

Suppose you’re a dependent student who borrowed $5,000 in federal student loans for your community college tuition. That means you’ll only have access to $26,000 in federal loans to pay for the four-year institution. 

Keep in mind that some maximum loan amounts are based on the cost of attendance. For Direct Subsidized loans, each school determines the amount you can borrow based on the cost of attendance and other financial aid you receive.

If the federal student loan limit isn’t enough, you’ll have to rely on private student loans or consider other options, like outside scholarships or a work-study position. You could also pay down some federal student loans to borrow more from the federal government, possibly taking a semester off to earn enough money.

Attending community college can be a powerful way to save money on higher education. And with its lower price tag, you can more easily cover tuition and fees with a combination of savings, scholarships and grants, and student loans.

At, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.

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