How to get student loans for online school
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You can get student loans to pay for an online school. Here’s how. (iStock)
Online schools are an attractive option for many people seeking to earn a degree. Attending an online school is generally cheaper than attending on-campus school.
Still, they’re a big expense — the total cost for an online bachelor’s degree can top $60,000, according to U.S. News.
If you’ve exhausted your financial aid options, you may be wondering if you can get a student loan to pursue your online degree. The good news: Yes, it’s entirely possible. But it’s helpful to understand how different types of student loans work so that you can choose the best one for your situation.
Here’s what you need to know about getting a student loan for an online school.
Can I get a student loan for an online school?
Generally, yes — provided you, your school, and degree program meet all applicable eligibility requirements.
Whether you’re applying for federal loans or grants, or contemplating private student loans, the first step is the same: Complete the Free Application for Federal Student Aid (FAFSA) form. Remember, aid is limited, so check the FAFSA deadlines and submit your application on time. Your school’s financial aid office will determine how much assistance you qualify for.
If you need to apply for a loan, exhaust your federal student loan options before turning to private student loans to fill any funding gaps. Federal student loans offer advantages private student loans can’t, including more protections, and they typically feature lower interest rates.
You can compare rates from multiple student loan lenders using Credible.
How to get student loans for online degrees
If you still need to borrow money after you pursue grants and scholarships, here’s how to get a student loan for your online school.
1. Confirm your school is accredited
Your online school must hold accreditation from a federally recognized organization to be eligible for federal financial aid.
The Department of Education’s Federal School Code Search online tool allows you to search by school code to discover the accreditation status of any online school. To find out your school’s code, search "federal school code +your school’s name."
2. Confirm your degree program is accredited
The Council for Higher Education Accreditation makes it easy to search databases and directories of accredited institutions locally, nationwide, and worldwide. You can search its robust databases containing 8,200 schools and 44,000 programs to confirm whether your school and degree path are accredited.
3. Complete the FAFSA
The information you submit with your FAFSA application is what helps schools calculate your financial need. This figure is determined by subtracting your family’s expected financial contribution from your school’s estimated cost of attendance.
Submit your application before the deadline — the earlier, the better. You wouldn’t want to get less aid than you might be eligible for just because you missed the deadline.
The FAFSA deadline for the 2021-2022 academic year is 11:59 p.m. Central time on June 30, 2022.
4. Apply for federal student loans first
If you must borrow money to pay for your online school, you should use federal student loans over private loans because they offer more advantages, such as...
- Fixed interest rates
- Ability to apply without a cosigner
- No credit check necessary with most loans
- Potential to qualify for a subsidized loan
- Potential eligibility for loan forgiveness
- Flexible repayment plans
5. Comparison shop for private student loans
Often, federal financial aid only gets you so far. If the federal support you receive isn’t enough to cover tuition costs, you may need to take out a private loan to fill the gaps.
A general rule of personal finance is that you don’t want to pay a penny more than you have to. Make sure you compare multiple private student loan lenders to find a loan with a low interest rate, loan fees, repayment options, and eligibility requirements.
Comparison shopping for private student loan rates is easy when you use Credible.
Federal student loans for online schools: What to know
The federal loan program offers four types of federal student loans. Eligibility, loan limits, and loan terms vary depending on factors such as your grade level, dependent status, and the cost of tuition. Let’s examine the four different types of federal student loans.
Direct subsidized loans
With a subsidized loan, the federal government covers the interest if you’ve enrolled in school a minimum of half time, during your six-month grace period once you leave school, and during deferred payment periods.
Who’s eligible: Undergraduate students with financial need, based on their FAFSA application
Loan limits: $23,000 aggregate limit for both subsidized and unsubsidized loans
Loan terms: 10 to 25 years
Direct unsubsidized loans
Direct unsubsidized loans are nearly identical to direct subsidized loans with one key difference: Your eligibility is not dependent on financial need.
Who’s eligible: Most undergraduate and graduate students may qualify so long as they maintain at least half-time enrollment
Loan limits: $31,000 to $57,000 (the amount you qualify for depends on your dependent status)
Loan terms: 10 to 25 years
Direct PLUS loans
If you reach your maximum borrowing limit with subsidized and unsubsidized loans, you may still need additional resources to pay for your online degree program. That’s where Direct PLUS loans come in.
Who’s eligible: These loans are given to eligible graduate or professional students (Grad PLUS loan) or parents of dependent undergraduate students (Parent PLUS loan). To qualify for Direct PLUS loans, you’ll need a strong credit history, or a cosigner with good credit.
Loan limits: The maximum PLUS loan limit is the difference between the cost of attendance and your financial aid
Loan terms: Up to 30 years
Direct consolidation loans
As the name suggests, a direct consolidation loan allows you to join all your federal education loans into one loan, with a new interest rate equal to the weighted average of the interest rates on your old loans. Besides the convenience of making one monthly payment instead of multiple ones, your payment would likely be lower than the combined costs of your previous loans.
Who’s eligible: People who have graduated, left school, or dropped below half-time enrollment; the loans consolidated must be in repayment or in the grace period
Loan limits: No set limit
Loan terms: Up to 30 years
Private student loans for online schools: What to know
If your federal aid isn’t sufficient to cover your online school tuition and expenses, consider private student loans to pay for your online education. It’s common to use a mix of federal and private student loans as you pursue your degree online.
Private student loans for online schools work the same as if you’re attending in person. As with other types of loans, each lender has its own eligibility requirements, loan limits, and terms. Compare the terms and criteria for each lender to find the best private student loan for you.
Before you apply, confirm that the lender works with your school, as many lenders are selective in choosing partner schools.
How to find a private student loan
If you decide to apply for a private student loan, be sure to shop around for a loan that best suits your needs and situation. Credible makes this process easy. Just fill out one application and compare multiple lenders at once without affecting your credit score.
As you compare different lenders, pay close attention to the following factors:
Annual percentage rate (APR)
APR is a better indicator of a loan’s overall cost because it includes the interest rate and factors in any lender fees, such as origination fees, application fees, and late payment fees.
Your student loan’s repayment term is another factor in the overall cost of the loan, and most lenders offer repayment terms between five and 20 years. Typically, the longer the repayment term, the more affordable the monthly payments will be. But the longer you make payments, the more interest you’ll pay, and the total loan costs are usually higher.
Private student loan fees can vary from one lender to another. Many charge late payment fees, payment return fees, and forbearance and deferment fees, while others don’t.
Lenders can no longer charge prepayment fees, and many don’t charge origination fees.
Since excessive fees can offset lower interest rates, it’s wise to pay close attention to the APR, which combines fees and interest rates.
Lenders don’t charge prepayment penalties on either federal or private student loans. That means you can make extra payments or pay off your student loan debt entirely without paying a penalty.
Federal regulation does allow lenders to apply extra payments towards future loan installments. For that reason, you should instruct your loan servicer to apply any additional payment amount toward the principal balance on the loan so that you can pay it off sooner.
You can find personalized rates from multiple lenders with flexible repayment plans when you research private student loans on Credible.