Student Loans for Online Degree Programs
Francine L. HuffLoanBiz Columnist
Enrollment in online
degree programs is booming. In fact, nearly 3.5 million students were enrolled
in at least one online course in the fall of 2006, a 10% increase from the
previous year, according to the Sloan Consortium. And more student loans and
other financial aid are available to online students than ever.
Changes in the Law
More colleges and universities have begun offering online
courses since the repeal of the 50/50 Rule by the Higher Education
Reconciliation Act of 2005. Previously, schools could not receive federal
student aid if more than half their students were enrolled online or more than
half their courses were distance learning programs. The law change means students
enrolled in accredited online degree programs can qualify for federal student
loans and other aid such as grants and scholarships.
Federal Student Loans
By filling out the Free Application for Federal Student Aid
(FAFSA) online students can determine their eligibility for a variety of federal
student loans. The Perkins is a need-based student loan that is subsidized,
which means the federal government will pay all interest while a student is in
school and for the first nine months after leaving school. The financial aid
office at a student's school will determine how much aid will be received.
Stafford Loans can be unsubsidized or subsidized for
students who demonstrate financial need. Students who receive unsubsidized
loans can defer interest payments until they finish school. According to
FinAid, about 2/3 of subsidized Staffords go to students with a household
income under $50,000.
Private Student Loans
If federal student aid isn't enough, students can always
apply for a private student loan. They'll have to undergo a credit check and
will pay a higher interest rate than with federal student loans. However, many
people are turning to private student loans to pay for online education costs
because federal aid isn't enough. MSN Encarta took a sampling of online-degree
schools and found that earning an MBA or master's degree in education could
cost students anywhere from $15,000 to approximately $30,000. With tuition
costs continuing to rise each year, more people are likely to turn to private
student loans to pay for a college degree.
Online degree students can also apply for a variety of
grants and scholarships. As with campus-based degree programs students should
apply for as many sources of aid as early as possible to get the funds they
need.
Sources
Sloan Consortium
FinAid
MSN
Encarta
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
