College Access Loan

For many students, a college access loan may be the key to meeting rising tuition costs. A college access loan usually originates with a state lender based on the credit score of the borrower and co-signer. These loans vary from state to state and act as supplemental financial aid granted in addition to federal funding. The federal government places a cap on the amount of money students can borrow from year to year. According to the National Center for Education Statistics, 50% of full-time students borrow federal aid, but many of these students may also need other loans. College access loans function as a state funded resource that students can use for this purpose. A college access loan can help a student fill the gap between federal funding and actual tuition costs.

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Often abbreviated as “CAL,” college access loans act as a funding resource for students that cannot cover additional tuition costs after exhausting federal funding.

College Access Loan Benefits

• Based on credit score rather than income
• State backed funding with low interest rates
• Supplements federally awarded aid
• Grace periods similar to federal loans
• Repayment benefits similar to federal loans

Because approval for a college access loan requires a high credit score rather than a low income, parents or students who make too much money to qualify for some types federal funding may find that these loans help defray tuition costs. For instance, the Hinson-Hazlewood College Student Loan Program in the state of Texas helps students cover the Expected Family Contribution (EFC) as determined by federal loan programs. These college access loans operate as a way for students and parents facing an unrealistic or unmanageable EFC to defray college costs after applying federal funding to overall tuition. In particular, parents with multiple students in college or other financial obligations that make their high income a burden when applying for federal financial aid can obtain these loans based on their credit ratings. College access loan programs uniquely serve student loan borrowers who have real financial need and a good credit history, but who may not have a low enough income to receive full federal funding.

A college access loan often carries many of the same benefits as a federal loan. Usually, these loans carry repayment grace periods up to six months after the student leaves college and offer a wide variety of options for students who face financial hardship. Most have a ten year repayment period and offer graduated repayment plans and deferment based on need. Unlike federal loans, these loans will carry origination fees and may have either fixed or variable interest rates. Because funding for these loans usually comes from the state, the state regulates variability by capping interest rates within 4 points of the rate at the time of origination in most cases. Interest rates generally stay within 6%-10%. Though not identical to a federal loan, a college access loan often remains comparable to federal funding because the granting institution remains the government.

Many states, including Texas, Iowa, and Colorado offer college access loans as a way for students to supplement federal funding. The loans help to fill the gap between federal funding and actual tuition costs. Due to the cap placed on the amount of money students can borrow each semester from federal aid sources, states and other lenders offer these loans because they recognize federal loans do not often cover the full cost of tuition. College access loans also help students whose income does not demonstrably prove financial need, but who have trouble paying for the full EFC as determined by the federal government.

Need a college access loan?
Find out if you qualify for college access loans now.