Alternative Student Loans for Community College Students

Research on student loans for community college students suggests that each year more than 1 million students are denied access to federally funded loans. In most instances, this lack of coverage is due to the fact that community colleges do not participate in federally funded student loan programs, making it impossible for enrolled students to access low-cost loans. Statistics on this issue indicate that one in ten community college students does not have access to federal student loans. Lack of access becomes exacerbated for African American students as research indicates that one in five do not have access to federal student loan programs. In order to help pay for their education, many community college students must turn to alternative student loans.

Although alternative student loans can provide a viable source of funding for community college students, these loans represent risky ventures. In most instances, alternative student loans come with higher interest rates, which can impact the ability of students to repay these loans in the future. In addition alternative student loans often carry with them more processing fees, which can also increase the final cost of the loan. Thus, while alternative student loans meet an essential short-term need for the student, these loans can also create considerable long-term financial vulnerability.

While many community college students may feel as if they have few options for financing higher education, there is one silver lining which can help students avoid the use of alternative student loans: the low cost of attending a community college. Pell grants, which are made available to all low-income students, are often large enough to cover the cost of a year’s tuition at most community colleges. Thus, many community college students can avoid the pitfalls of alternative student loans by acquiring different types of federal student aid. Students must be aware of their options and work with financial aid advisers to ensure that the make the best decisions regarding higher education financing.

In the end, alternative student loans represent a viable resource for helping students to access higher education. However, these loans carry with them a number of specific nuances that must be understood by the borrower before signing the paperwork. Failure to understand these nuances before borrowing could result in long-term financial problems for the borrower, which can be difficult, if not impossible to overcome. Thus, students must have a clear understanding of all of the available options before making a decision about financing a college education.
 

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