The cost of higher education in Arkansas is on a steady incline, transforming the dream of a degree into a financial challenge for many. But don’t be discouraged. You can navigate this financial landscape smoothly with the proper knowledge and resources.
MoneyGeek’s analysis found that the best student loans in Arkansas are from PNC. Borrowers looking for the lowest interest rates may find Earnest as the best option, while students with bad credit may fare best with Funding U. International students can get the best deal from Ascent, whereas students who need a co-signer should consider College Ave. Ultimately, the best lender for you will depend on your particular needs and circumstances.
Understanding Student Loans
Student loans serve as a financial bridge, allowing students to cover the costs of their post-secondary education, including tuition, books, supplies and living expenses.
Obtaining a student loan involves borrowing money from a lender, which you then use to pay for your college expenses. This borrowed amount, known as the principal, accrues interest over time. After graduation or when you drop below half-time enrollment, loan repayment begins. Note that you're responsible for repaying the principal amount and the accrued interest.
There are two primary types of student loans:
Federal student loans: The federal government funds federal student loans. These loans often come with lower interest rates and more flexible repayment options compared to private loans. The government determines your eligibility by the information provided on the Free Application for Federal Student Aid (FAFSA).
Private student loans: Private entities such as banks, credit unions and other financial institutions fund these loans. Although private student loans often have higher interest rates and less flexible repayment options, they can be a good option for those who have exhausted all other forms of financial aid.
Understanding the differences between federal and private student loans is critical to deciding which type of loan best suits your financial needs and circumstances.
Best Private Student Loans in Arkansas
Unlike federal student loans, private student loans are not based on need and often require a credit check. They can be a solid option for students attending a part-time program or a non-traditional school that doesn't qualify for federal aid.
With private loans, you can have higher loan limits, which can be beneficial if you pursue degrees in high-cost fields, such as medicine or law. However, expect higher interest rates and fewer repayment options. You may also need a co-signer to get approved or receive a lower interest rate.
- PNC
- 2.99%–9.89%Fixed APR Range
- 1.09%–8.19%Variable APR Range
- $1,000–$50,000Loan Amount Range
- AllowedCo-signer
PNC
Best Overall
- Earnest
- 4.43% - 14.90%Fixed APR Range
- 5.32% - 16.20%Variable APR Range
- $1,000 upLoan Amount Range
- Allowed Co-signer
Earnest
Best With Lowest Interest Rates
- Funding U
- 6.99% – 12.49%Fixed APR Range
- 7.49% – 12.99%Variable APR Range
- $3,001 up to $20,000Loan Amount Range
- Not requiredCo-signer
Funding U
Best for Borrowers With Bad Credit
- Discover
- 3.99%–11.59%Fixed APR Range
- 1.79%–11.09%Variable APR Range
- $1,000 up to 100% of college expensesLoan Amount Range
- Optional Co-signer
Discover
Best for Parents
- Ascent
- 4.36%–14.08%Fixed APR Range
- 1.47%–11.31%Variable APR Range
- $2,001–$200,000Loan Amount Range
- Non-U.S. citizens and temporary residentsCo-signer
Ascent
Best for International Students
- College Ave
- 4.44% - 15.99%Fixed APR Range
- 5.09% - 15.99%Variable APR Range
- $1,000 minimum, no maximumLoan Amount Range
- Not requiredCo-signer
College Ave
Best for Borrowers That Need a Co-signer
Federal Student Loans in Arkansas
As a form of financial aid the U.S. government provides, federal student loans help students cover the cost of higher education. They often come with benefits that make them a more attractive option for many students, including:
Lower interest rates
Federal student loans typically have lower interest rates compared to private loans. This means that over the life of the loan, you'll end up paying less in interest.
Flexible repayment plans
With federal student loans, you have a variety of repayment plans to choose from, including income-driven repayment plans. These plans calculate your monthly payment based on your income and family size.
Loan forgiveness programs
In certain situations, you may be eligible to have some or all of your federal student loan debt forgiven.
Grace periods
Federal student loans often include a grace period after you graduate, leave school or drop below half-time enrollment before you begin repayment. This can give you time to get financially settled and select your repayment plan.
How to Apply for Federal Student Loans in Arkansas
Applying for federal student loans in Arkansas involves a series of steps that are similar to those in other states. Here's a detailed guide to help you navigate the process:
Complete the FAFSA
Start by filling out the FAFSA. This form collects information about your financial situation and is used to determine your eligibility for federal student aid.
Review your Student Aid Report
After submitting your FAFSA, expect to receive a Student Aid Report (SAR). This report summarizes the information you provided on your FAFSA and indicates your Expected Family Contribution (EFC), which the government uses to determine your financial need. Review it carefully to ensure all the information is correct.
Evaluate your financial aid offer
If you're accepted to a college or career school, you'll receive a financial aid offer from the school. This letter details the federal and non-federal financial aid options you're eligible for. Compare the award letters from different schools to understand how much aid you can receive at each one.
Accept the financial aid
Once you've reviewed your financial aid options, you'll need to accept the aid you want to use. This usually involves signing and returning the aid offer to the school's financial aid office. Make sure to only accept the aid you need.
Complete entrance counseling and sign a Master Promissory Note
If you're a first-time borrower of federal student loans, you must complete entrance counseling to ensure you understand your responsibilities and obligations. You also need to sign a Master Promissory Note (MPN), a legal document in which you promise to repay your loan and any accrued interest and fees to the Department of Education.
Receive your loan funds
Your school will typically receive your federal student loan funds and apply them to your tuition, room and board, fees and other school charges. If any loan funds remain, the school will return them to you.
The Types of Federal Student Loans Available in Arkansas
Federal student loans are a common form of financial aid for students in Arkansas, with the following options available:
Direct Subsidized Loans: These loans are available to undergraduate students with financial need. The government pays the interest on Direct Subsidized Loans while the student is in an in-school, grace or deferment period.
Direct Unsubsidized Loans: With Direct Unsubsidized Loans, you don't need to demonstrate financial need to be eligible. You only need to be an undergraduate, a graduate or a professional student. Note that you'll be responsible for paying the interest during all periods.
Direct PLUS Loans: These loans are available to graduate or professional students and parents of dependent undergraduate students. A credit check is required to qualify for this loan, which means borrowers with bad credit must meet additional requirements to be eligible.
Direct Consolidation Loans: This type of loan lets you combine all your eligible federal student loans into a single loan with a single loan servicer. This helps simplify repayment if you are currently making separate loan payments to different loan servicers.
Depending on your educational and financial situation, you may select one or more loan types to fund your academic journey.
Student Loan Forgiveness in Arkansas
Student loan forgiveness is a program that cancels a portion or all of your federal student loan balance. If your loans are forgiven, you are no longer obligated to make payments on the forgiven amount.
In Arkansas, there are several student loan forgiveness programs available, particularly for teachers and public service workers:
Arkansas State Teacher Education Program (STEP)
The Arkansas State Teacher Education Program provides loan repayment assistance to teachers in subjects or geographic areas with a critical shortage. Eligible teachers can receive up to $3,000 per year for a maximum of three years.
To qualify for this program, you must meet these requirements:
- Be an Arkansas resident.
- Have a federal student loan.
- Be a licensed teacher in a public school district in Arkansas.
- Teach in a subject or area with a critical shortage.
You can apply by submitting an application to the Arkansas Department of Higher Education, which administers the program.
Public Service Loan Forgiveness (PSLF) Program
The Public Service Loan Forgiveness (PSLF) Program is a federal program that cancels the remaining student loan debt after 120 qualifying payments while working in public service.
In Arkansas, qualifying employers include government organizations at any level, not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code, and other types of not-for-profit organizations that provide certain types of qualifying public services.
To be eligible for this program, you must meet the following criteria:
- Work full-time for a qualifying employer.
- Have Direct Loans (or consolidate other federal student loans into a Direct Loan).
- Repay your loans on an income-driven repayment plan.
- Make 120 qualifying payments.
To apply, you must submit the PSLF form to the U.S. Department of Education after making 120 qualifying payments. You should also submit this form annually or whenever you change employers to ensure you're on track to receive forgiveness.
Tips for Managing Student Loans
Effectively managing student loans is an important part of maintaining financial health during and after your college years. Here are some essential tips to help you navigate this process:
Borrow only what’s necessary
Remember that student loans are not free money; you need to pay them back with interest. The more you borrow, the more you'll have to repay and the longer it might take you to become debt-free. Before accepting any loan, consider your future monthly payments and how they will fit into your post-graduation budget.
Understand your grace period
A grace period is a set period of time after you graduate, leave school or drop below half-time enrollment before you must begin repayment on your student loan. For most federal student loans, the grace period is six months, but this can vary depending on the type of loan.
Consider making payments during school or during the grace period
While it's not required, making payments on your student loans while you're still in school or during your grace period can reduce the overall cost of your loan. This is especially true for unsubsidized and PLUS loans, which accrue interest from loan disbursal.
Keep track of your loans
Keeping track of your loan documents and payment schedules is crucial to managing your student loans effectively. You can do this by storing your student loan documents in one place and setting reminders for payment due dates.
Scholarships and Grants as Alternatives
Scholarships and grants are types of financial aid that can help you pay for your education. Unlike loans, they don't need to be repaid, which can significantly reduce the cost of your education and decrease the amount you need to borrow in student loans.
Scholarships are typically awarded based on merit. This could be academic achievement, athletic ability, artistic talent or other areas of excellence. Conversely, grants are usually need-based, meaning they're awarded based on your family's financial situation.
Here are some steps you can take to find and apply for scholarships and grants in Arkansas:
Complete the FAFSA
Start by completing the FAFSA, which the government uses to determine your eligibility for federal grants, work-study funds and loans. Many Arkansas state and institutional aid programs also use the FAFSA to award aid.
Check with your school's financial aid office
Your school's financial aid office is an excellent resource for finding scholarships and grants. They can provide information about opportunities available specifically for students at your school.
Search for Arkansas State Aid Programs
The Arkansas Department of Higher Education offers several scholarships and grants for Arkansas students. Check their website for a list of programs and their eligibility requirements.
Look for local and private scholarships
Local businesses, organizations and foundations often offer scholarships for students in their community. Check with your high school guidance counselor or use a scholarship search tool to find these opportunities.
Apply for scholarships and grants
Start the application process once you've identified scholarships and grants you're eligible for. This typically involves completing an application form and may require additional materials like an essay, letters of recommendation or proof of eligibility.
The Impact of Student Loans on Credit
When managed correctly, student loans can be a tool for building a robust credit history. This is because your payment history is vital in determining your credit score. Consistently making your student loan payments on time each month can showcase your reliability and responsible debt management to lenders, which can improve your credit score over time.
On the flip side, late or missed payments can negatively impact your credit score. These payment mishaps are reported to the credit bureaus and can linger on your credit report for up to seven years. As a result, your credit score may drop, and you may experience difficulties when applying for other types of credit, such as credit cards or auto loans.
If you default on your student loan, you may encounter repercussions. These consequences may include a substantial decline in your credit score or wage garnishment, a process that deducts money directly from your paycheck to repay the loan.
Frequently Asked Questions (FAQs)
Navigating the world of student loans in Arkansas can be complex, and you may have several questions about the process. We addressed some frequently asked questions to help you understand student loans in Arkansas better.
About Christopher Boston
sources
- Federal Student Aid. "Public Service Loan Forgiveness (PSLF)." Accessed August 8, 2023.
- Arkansas Department of Higher Education. "State Teacher Education Program (STEP) Rules and Regulations." Accessed August 26, 2023.
- Federal Student Aid. "Apply for Aid." Accessed August 26, 2023.
Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone and have not been reviewed, endorsed or approved by any bank, credit card issuer, hotel, airline, or other entity. Learn more about our editorial policies and expert editorial team.
Advertiser Disclosure: MoneyGeek has partnered with CardRatings for our coverage of credit card products. MoneyGeek and CardRatings may receive a commission from card issuers. To ensure thorough comparisons and reviews, MoneyGeek features products from both paid partners and unaffiliated card issuers that are not paid partners.