This article has been updated to reflect 2026 data and recent developments.
Embarking on a community college experience can be overwhelming for many students. After all, rising costs of education can quickly eat away at your savings or your earnings from a part-time job. For this reason, a loan may be just the answer you've been looking for. An educational loan can help you pay for community college, allowing you to work towards your degree without the added stress of wondering how you will pay for it. A student loan can be repaid over time, once you've completed your education.
It is important to keep in mind that borrowing money is expensive, even if it is in the form of a government-subsidized loan at a relatively low-interest rate. If you have any money saved or are able to work and attend community college part-time, these may be some great options to avoid having a large amount of debt upon graduation. Only you, your parents, and possibly a financial advisor can determine the borrowing/savings scenario that is ideal for you. For additional information about current costs and financial aid options, see How to Afford Community College in 2026.
Types of Loans
There are a number of different education loans available, each one uniquely tailored to address the needs of certain individuals. When the federal government offers loans to students, these loans usually have low-interest rates. The Stafford Loan is now officially known as the Direct Loan, although Stafford Loan is still sometimes used to describe these loans. Direct Loans are further broken down into two subcategories through the U.S. Department of Education's Federal Student Aid office:
- Subsidized - In this case, the interest on your loan is paid by the government while you are still in school at least half-time. Direct Subsidized Loans are given based on the demonstrated financial need of the student.
- Unsubsidized - Although payments on the loan can be deferred while you are enrolled at least half-time, the interest is added on to the loan balance, therefore increasing the size and the cost of the loan. No financial need must be demonstrated in order to qualify for the Direct Unsubsidized Loan.
Federal Student Aid confirms that Direct Subsidized Loans are available to undergraduate students with financial need, while Direct Unsubsidized Loans do not require demonstrated financial need. For loans first disbursed from July 1, 2026, through June 30, 2027, the undergraduate interest rate is 6.52%.
This video explains what a Stafford Loan is.
You can take the first step to apply for either version of the Direct Loan by filling out the Free Application for Federal Student Aid. In addition, many students are able to combine the subsidized and unsubsidized portions of the loan in order to afford their community college education. Keep in mind that, regardless of whether your Direct Loan is subsidized or unsubsidized, the standard repayment period is generally ten years, although other repayment plans may provide different repayment periods. Students can learn more about current application requirements in FAFSA Changes in 2026: What Community College Students Need to Know.
Another type of student loan was the Perkins Loan. The Federal Perkins Loan Program has ended, and no new Perkins Loans are being made. Students who previously received Perkins Loans should contact their loan servicer or financial aid office for information about repayment.
Perhaps your family situation is such that your parents would like to take out a loan in order to pay for your community college education. In this case, they may be eligible for the PLUS (Parent Loan for Undergraduate Students) Loan. Here are some other points to consider when looking at a PLUS Loan as a college financing option:
- Your parents may be eligible for the PLUS Loan if they do not have an adverse credit history, if they claim you as their dependent, and if you are enrolled at least half-time
- PLUS Loans are not subsidized
- Payments can generally be deferred while you are enrolled at least half-time if the parent requests deferment
- Beginning July 1, 2026, new federal borrowing limits apply to Parent PLUS Loans for many new borrowers. The U.S. Department of Education's Federal Student Aid office provides current information about these limits and the limited exception for certain borrowers
For more information about the availability of federal loans at two-year institutions, see Short End of the Stick: Why Some Community College Students Can't Get Federal Loans.
This video explains Parents Plus Loans.
Your parents, together with their financial advisor or accountant, should be able to determine if a PLUS Loan is the best option for them, versus another financing method such as a home equity loan. Since the federal government limits the amount of money it loans to each student toward their college education, many students turn to private education loans in order to help pay for community college. Since private lenders offer private education loans, your credit score plays a big part in your eligibility for such loans. Even with a great credit score, you may pay a higher interest rate on a private loan than you would on a government loan. The Consumer Financial Protection Bureau notes that private student loans generally do not offer the same flexible repayment terms and borrower protections available with federal student loans. Nevertheless, such private loans can be a way to help finance your community college education and your future.
