Financing

Stafford loans are made under two federal programs: the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. Whereas community colleges have more widely used the FFEL Program in the past, students and colleges are becoming more aware of the Direct Loan Program as another option. This article explains the Direct Loan Program, shows how Direct Loans compare to other Stafford loans, and discusses how the Direct Loan program may become the dominant, if not exclusive, college lending program.

What Students Should Know About Direct Loans

The Direct Loan Program was created in 1993 to offer subsidized and unsubsidized Stafford loans. Under the Direct Loan Program, students borrow directly from the Department of Education rather than private lenders. On a subsidized loan, the federal government pays the interest while the student is in school. The interest on an unsubsidized loan is accumulated until the student begins repaying the loan. The Direct Loan Program also offers PLUS (Parent Loan for Undergraduate Students) loans.

To apply for a Direct Loan, a student must submit the Free Application for Federal Student Aid (FAFSA), available online or at student financial aid offices. A student must also sign a promissory note, the Direct Loan Electronic Master Promissory Note, which sets forth the terms and conditions of the loan.

Before June 30, 2006, the interest rate varied but could not exceed 8.25 percent. A reduction in the maximum interest rate for Stafford loans is being phased

As the market steadily slows, and credit, banks, and loan institutions are forced to tighten their budgets, students and schools express concern about affording community college, especially in light of the rising cost of tuition paired with the plummeting availability of funds.

Andy Rosen, in his article “Students, Colleges Prepare for the Private Loan Slowdown,” further explores this issue in asserting: “Area colleges and students are concerned that it will get harder to bridge the gap between federal financial aid and the total cost of education, as a troubled credit market threatens to make private loans harder to get.”

Since many lenders are becoming increasingly cautious about student loans, intuitions are striving to prepare students with additional tools and resources to obtain funds for the school.

This video shares a student's opinion about student loans.

Can I Obtain Loans When Attending Community College Next Year?

If you’re seeking funds to attend college next year or in the upcoming future, it is still relatively uncertain as to how much support students will have access to tuition costs. Essentially, as Rosen reveals, “Nobody really knows the magnitude of the problem because many students have already secured their financing for this year.”

Since an economic recession has been predicted for quite some time, many students held onto anticipatory savings; however, this may not be the case in the upcoming semesters over the next few years. As

When the economy slows down, individuals across the country struggle to cope with layoffs. Even after the economy begins to grow again, it takes some time for employment levels to rebound. As a result, many workers find that their once-desirable resume is no longer up to par in a fiercely competitive job market.

To help unemployed workers stay at the forefront of training, some states offer free community college tuition. Specifically, states such as Kentucky and New Jersey are seeking to stimulate their community’s knowledge and job application appeal by providing free classes and affordable tuition to workers in need. Depending on each school’s programs, laid-off employees can either benefit from completely free tuition or significant tuition discounts.

This video shows a student explaining how he went to community college tuition-free.

Kentucky Community Colleges

The Kentucky Community and Technical College System offers extra tuition support to Kentucky residents who have recently encountered job loss. Dubbed the “Career Transitions Initiative,” the program seeks to provide workforce training in high-demand, high-wage jobs. Set into motion with the support of Governor Steve Beshear, newly laid-off workers are provided with a 50 percent tuition reduction for up to 6 credit hours each semester. This discount is available at 16 colleges and 67 campuses throughout Kentucky and students can utilize it for a full year of education or training. Additionally, this program is designed to help provide newly

Although community colleges are significantly more affordable than four-year institutions, tuition, administration fees, living costs, and book expenses can add up quickly. Unfortunately, according to 2008 research conducted by the Project on Student Debt, one out of 10 community college students cannot access federal student loans. For these students, Pell Grants often become the primary source of education funding.

However, if your community college offers federal student loans – which the majority of large, public, non-rural campuses do – then you may want to consider federal work-study (FWS) programs, which are also known as Formula Grants.

Unlike other forms of financial aid that are strictly given as grants and loans, the work-study program helps fund your education through your working efforts. The federal government provides your community college with specific grants, and then your campus works with community and nonprofit organizations to create job opportunities for qualified students. You are paid an hourly wage for your work, which is typically higher than the minimum wage.

The advantages of work-study programs

Garnering real-life experience

Attending community college prepares you for the real world, and with a work-study program, you can take that preparation to the next level. Due to the supply of work-study jobs, you are essentially “guaranteed” a job if you qualify for the FWS program. Due to employers' significant incentives, you are more likely to be hired for your job of choice under the FWS program.

Graduating from college with a degree is no longer sufficient for

The College Cost Reduction and Access Act of 2007 ("CCRAA" or the "Act") was enacted to make college more affordable for low- and moderate-income students by phasing in increases in government grants. For example, in 2007, the maximum Pell Grant was limited to $4,310, whereas the maximum for 2012 was $5,400. The Act also decreases interest rates on government-backed loans and even cancels outstanding debt in certain situations. The favorable terms for grants and loans represent an important step in achieving universal access to higher education. This report examines the problem of inadequate college assistance, the enactment of the Act, the major provisions affecting college student borrowers, and the funding of the new benefits.

The Rising Cost of Higher Education Leads to Massive Student Loan Debt

Federal student aid has not kept pace with the escalating cost of higher education and the reduced state support of public colleges and universities. As a result, some students decide that a college education is out of their reach. Other students and their families borrow more to pay tuition and other expenses. Students who graduate with unpaid loans are burdened with thousands of dollars of debt that they must usually begin repaying shortly after graduation. Studies show that about 39 percent of college graduates under 35 say paying off their loans will take more than ten years. For graduates with low- or moderate-paying jobs, the monthly principal and interest due may far exceed their ability to pay.

Attending a community