Best Student Loans in Arizona of 2024

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ByChristopher Boston
Edited byJonathan Ramos

Updated: December 28, 2023

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The cost of higher education in Arizona is on an uphill climb, making the dream of a degree seem like a steep mountain to scale. But don't let this deter you. With the right tools and knowledge, you can navigate this terrain smoothly.

MoneyGeek found that Risla provides the best student loans in Arizona. The best lender for the lowest interest rates is College Ave, whereas the ideal option for students with bad credit is Funding U. International students may fare best with Discover, while students who need a co-signer may consider PNC.


Understanding Student Loans

Student loans are a type of financial aid designed to help students cover the cost of higher education, including tuition, room and board, books and other related expenses. They play a pivotal role in making college and university education accessible to those who might not otherwise be able to afford it.

The basic mechanics of a student loan are straightforward. A student borrows money from a lender, which is then used to pay for their education. This borrowed amount, known as the principal, accrues interest over time. Once students complete their education or drop below half-time enrollment, they enter a grace period before repayment begins. The repayment plan outlines how the borrower will repay the loan over a specified period.

Student loans generally fall into two categories:

  • Federal student loans: Funded by the U.S. government, federal student loans often come with lower interest rates and more flexible repayment options. They also offer benefits such as income-driven repayment plans and loan forgiveness for those who work in certain public service jobs.

  • Private student loans: Private student loans allow you to borrow more, but they often come with higher interest rates and less flexible repayment options. They also require a credit check. Having a co-signer may be necessary to get approved or secure a lower interest rate.

Both federal and private student loans have their place in financing higher education. The key is understanding your unique financial needs and circumstances to determine the best option for you.

Best Private Student Loans in Arizona

Private student loans are a type of educational financing offered by private lenders like banks and credit unions. Unlike federal student loans, which are funded by the government, private student loans are based on the borrower's creditworthiness and often require a co-signer.

This type of student loan is worth considering if you're attending a private or out-of-state school, where tuition and associated costs may exceed federal loan limits. Additionally, if you're a graduate student or a professional pursuing advanced degrees, private loans might offer higher borrowing limits that align better with the cost of these programs.

It's worth noting that while private student loans allow you to access higher loan limits, they often have higher interest rates than federal loans, especially if you have less-than-stellar credit. They also lack the flexible repayment options and protections federal loans offer, such as income-driven repayment plans or loan forgiveness programs.


Federal Student Loans in Arizona

The U.S. government provides federal student loans to help students pay for their education. These loans are often a preferred choice for many students due to their borrower-friendly terms and protections.

Some of the critical benefits of federal student loans that Arizona students may take advantage of include:


How to Apply for Federal Student Loans in Arizona

Applying for federal student loans isn't just about filling out a form; it's about understanding your financial needs, exploring your options and making informed decisions. We broke down the important steps you need to take to pursue an application in Arizona.


Complete the Free Application for Federal Student Aid

The first step in applying for federal student loans is to complete the Free Application for Federal Student Aid (FAFSA). This is used to determine your eligibility for financial aid, including federal student loans.


Review your Student Aid Report

After you submit your FAFSA, you'll receive a Student Aid Report (SAR). This informs you of your eligibility for federal student aid. Review your SAR carefully to ensure all the information is correct.


Evaluate your financial aid offer

Once your FAFSA is processed, you'll receive a financial aid offer from the schools you listed on your form. Take time to understand each component of your offer, such as the types and amounts of financial aid you're eligible for.


Accept your loan

If you decide to take out federal student loans, you'll need to accept them. This is typically done through your school's financial aid office. Make sure to only take out what you need to cover your educational costs.


Complete entrance counseling and sign a Master Promissory Note

Before receiving your loan, you'll need to complete entrance counseling, which educates you about your obligations as a borrower. You'll also need to sign a Master Promissory Note (MPN), in which you promise to repay your loans and any accrued interest and fees to the Department of Education.


Receive your loan

Finally, your federal student loans will be disbursed, typically by being applied to your tuition, fees, room and board and other school expenses.

The Types of Federal Student Loans Available in Arizona

In Arizona, the available federal student loans include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans and Direct Consolidation Loans.

  • Direct Subsidized Loans: These are loans made to eligible undergraduate students who demonstrate financial need to help cover higher education costs at a college or career school. With this loan, you aren’t responsible for paying interest while you’re in an in-school, grace or deferment period.

  • Direct Unsubsidized Loans: These are loans available for eligible undergraduate, graduate and professional students. You don’t have to demonstrate financial need to qualify for the loan. However, you’re responsible for paying the interest on a Direct Unsubsidized Loan during all periods.

  • Direct PLUS Loans: These loans can be accessed by graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.

  • Direct Consolidation Loans: These allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer. This can simplify repayment if you are making separate loan payments to different servicers.

Student Loan Forgiveness in Arizona

Student loan forgiveness cancels a borrower's student loan debt. This means the borrower is no longer obligated to repay some or all of the loan amount. This program is often available to individuals who work in certain fields or meet specific criteria.

In Arizona, there are several student loan forgiveness programs designed to alleviate the financial burden of student loans for certain professionals:

Arizona Teacher Student Loan Program

The Arizona Teacher Student Loan Program encourages individuals to enter and continue in the teaching profession. Applicants eligible for this program are U.S. citizens and Arizona residents enrolled in an undergraduate or graduate teaching program within Arizona. They must also commit to teaching in an Arizona public school that serves low-income families.

This program offers loan forgiveness of up to $7,000 per academic year for a maximum of three years. To apply, individuals must complete the Arizona Teacher Student Loan Application, which is typically due in late spring.

Public Service Loan Forgiveness (PSLF) Program

The Public Service Loan Forgiveness (PSLF) Program is a federal program that allows your student loan to be forgiven after you have made 120 monthly payments while working for a qualifying public service employer.

In Arizona, qualifying employers include government organizations at any level, tax-exempt non-profits and other types of non-profit organizations that provide certain types of qualifying public services.

Tips for Managing Student Loans

Managing your student loans effectively is crucial to maintaining financial health during and after college. Here are some key strategies to help you navigate this process.


Scholarships and Grants as Alternatives

Scholarships and grants are types of financial aid that can help you pay for your education. Unlike loans that need to be paid back with interest, scholarships and grants don't require repayment.

Typically, scholarships are awarded based on merit, such as academic or athletic achievement. In contrast, grants are awarded based on the student's financial need. Because they don't need to be repaid, scholarships and grants can make higher education more affordable.

Here's a step-by-step guide to help you increase your chances of securing scholarships and grants in Arizona:


Start your research

Begin by researching the various scholarships and grants available in Arizona. You can use online scholarship databases, visit the financial aid offices of the schools you're interested in or check with local community organizations.


Check eligibility requirements

Once you have a list of potential scholarships and grants, check the eligibility requirements for each one. These may include academic performance, financial need, field of study or specific skills and talents.


Gather necessary documents

Most scholarship and grant applications require certain documents, such as transcripts, financial information or letters of recommendation. Gather these documents ahead of time to ensure you're prepared.


Complete the application

Fill out the application carefully, answering all questions completely and accurately. If an essay is required, take the time to write a thoughtful, well-written response.


Submit your application before the deadline

Missing a deadline can result in your application being disqualified, so it's a good idea to aim to submit your application well before the due date.

The Impact of Student Loans on Credit

If managed well, student loans can help you build a strong credit history. This is because payment history is the most significant factor in calculating your credit score. Making your student loan payments on time every month can demonstrate to lenders that you're reliable and can manage your debts responsibly. Over time, this can help improve your credit score.

However, making late payments or missing them altogether can harm your credit score. Late or missed payments are reported to the credit bureaus and can stay on your credit report for seven years. This can lower your credit score and make it more difficult to qualify for other forms of credit, such as credit cards or auto loans.

Moreover, if you default on your student loan, you may face consequences such as a significant drop in your credit score or wage garnishment, which takes money directly from your paycheck to repay the loan.

Frequently Asked Questions

We have addressed common inquiries regarding student loans in Arizona, offering valuable insights to guide your application process.

In Arizona, the eligibility requirements for student loans can vary depending on whether the loan is federal or private. For federal student loans, you generally need to be enrolled at least half-time in an eligible degree or certificate program and demonstrate financial need (for most programs), among other requirements. Private student loans, on the other hand, often require a credit check.

You can apply for a federal student loan in Arizona by completing the Free Application for Federal Student Aid (FAFSA). The information you provide will be used to determine your eligibility for financial aid, including federal student loans. For private student loans, you must apply directly with the lender, which could be a bank, credit union or other financial institution.

The key difference between subsidized and unsubsidized federal loans lies in who pays the interest during certain periods. For Direct Subsidized Loans, the U.S. Department of Education pays the interest while you're in an in-school, grace or deferment period. For Direct Unsubsidized Loans, you're responsible for paying the interest during all periods.

Interest on student loans is calculated as a percentage of the unpaid principal amount or the amount of money borrowed. It begins adding up from the day your student loan is disbursed. The interest rate varies depending on the type of loan and when it was disbursed.

Some of the repayment options available for student loans include the Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plan and various income-driven repayment plans. The right plan for you depends on your income, family size and loan type.

If you can't repay your student loan, it's important to take action right away. You may be able to change your repayment plan, defer payment or even get a loan modification. If you don't make payments and your loan becomes delinquent, you risk going into default, which can have serious consequences, including damage to your credit score and wage garnishment.

Student loan forgiveness is a program that cancels a portion or all of a borrower's student loan debt. These programs are often available to individuals who work in certain fields or meet specific criteria.

For instance, the Public Service Loan Forgiveness (PSLF) Program allows your student loan to be forgiven after 120 monthly payments while working for a public service employer.

About Christopher Boston

Christopher Boston headshot

Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.

Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.

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