Once you’ve been accepted to your dream college, you may feel like you’re floating on Cloud 9 — especially if it’s in Colorado, thanks to the state’s high elevation. If you’re seriously thinking about going to school in Colorado or the Mile High City, read on for answers to some key financial questions.
Before you hit the books, it could be helpful to consider the Colorado college grants, loan repayment programs, scholarships and Colorado student loan programs available to you.
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Average student loan debt in Colorado
If you’re considering attending college in Colorado, you may want to learn a bit more about the state’s student loan debt statistics. In 2017, 52% of Colorado college attendees had student loan debt. They owed an average of $26,530 per borrower. Which brings us to their loan default rate.
As of 2015, which is the most current information available from the federal government, Colorado had a default rate of 11.6%, with over 12,000 loan borrowers in default. Additionally, there were over 103,743 borrowers who entered repayment on their student loans. Student loan debt has grown substantially in Colorado over the last decade — at a growth rate of 132% — to an estimated $26.5 billion between 2008 and 2018.
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Colorado student loans
If your goal is to attend school in Colorado and you’re looking at ways to finance your education, you have options. And both federal and private student loans may be worth considering when researching how to pay for your college degree.
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Federal student loans
Federal student loans are all provided by the U.S. Department of Education’s William D. Ford Federal Direct Loan (Direct Loan) Program. If you take out a federal loan, the U.S. Department of Education is your lender.
To see which type of loan you may qualify for, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA®) form to apply for financial aid for college or grad school. You can review your state’s deadline and the federal FAFSA deadline here.
You should also review the deadlines for each college you are considering, as each college may consider the date that they receive your FAFSA form, or the date your FAFSA form is processed, as their final deadline. FAFSA will then offer you a financial aid package, dependent on your college, that may include grants, work-study opportunities and federal student loan options. It is important to note that not every student will qualify to receive federal aid.
There are four types of direct loans available:
Direct Subsidized Loans: For eligible undergraduate students who demonstrate financial need these loans help cover the costs of higher education at a college or career school. The federal government pays the interest on Direct Subsidized Loans while a student is in school at least half-time, and interest starts accruing on these loans only after a six-month grace period once students graduate, or if they drop below half-time enrollment.
Direct Unsubsidized Loans: Eligible undergraduate, graduate and professional students may qualify for these loans. Eligibility is not based on financial need. Interest on these loans begins accruing immediately after funds are disbursed.
Direct PLUS Loans: These loans are for graduate or professional students, and parents of dependent undergraduate students who need help paying for education expenses not covered by other financial aid. Eligibility for this loan is not based on financial need, but requires a credit check.
Direct Consolidation Loans: This type of federal loan combines all of your eligible federal student loans into a single loan, with one loan payment. Students generally use this loan if they have taken out multiple federal loans and want to combine them into one loan for repayment. The interest rate on these loans are the weighted average of the interest rates on all of the loans that a student is consolidating, rounded to the nearest one-eighth of 1%.
NOTE: All federal student loans have fixed interest rates, and generally they have lower interest rates than private loans.
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Private student loans
Private loans are funded by private organizations such as banks, online lenders, credit unions, some schools and state-based or state-affiliated organizations. Federal student loans have interest rates that are regulated by Congress. Private lenders follow a different set of regulations, so their interest rates can vary widely.
Private lenders may (but don’t always) require you to make payments on your loans while you are still in school, whereas you don’t have to start paying back your federal loans until after you graduate, leave school, or change your enrollment status to less than half-time. Their rates will usually differ too. Private loans have variable or fixed interest rates which may be higher or lower than federal loan interest rates, which are always fixed.
Unlike federal loans which can only be applied for within certain deadlines (once a year, and states have their own deadlines), private loans can be applied for on an as-needed basis. Even if you suspect you may need to take out a private loan, it’s still a best practice to submit your FAFSA before applying to see what federal aid you may qualify for first.
If you’ve missed the FAFSA deadline and you’re struggling to pay for school throughout the year, private loans can potentially help you make your education payments — as long as you have enough lead time for your loan to process and for your lender to send money to your school.
For more information on private loans, you can check out our article: Private student loans 101
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Scholarships & grants
Who doesn’t love a gift? You may sometimes hear grants and scholarships referred to as “gift aid.” That’s because while grants or scholarships may have certain academic or other requirements to keep them, you usually don’t have to pay them back like you would with a loan.
There are a few instances where you may have to pay back grant money, but typically only if certain requirements aren’t met. Generally, grants are need-based and scholarships are awarded based on merit.
There is no one-size-fits-all grant or scholarship amount or requirements, and both scholarships and grants can come from a variety of entities (including private organizations and federal or state governments).
Some scholarships or grants can be for a small amount that may help you pay for your books or research supplies, but others can cover the entire cost of your education. Who knew parking passes could be so expensive?
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Colorado scholarships & grants
There are grants for college students in Colorado to consider before taking out loans. There are even specific Colorado scholarships you can apply for if you’re a Colorado resident. Here are a few of those options.
Colorado Student Grant
The Colorado Student Grant is awarded by the Colorado Department of Higher Education with amounts ranging from $500 to $5,000 annually. Awards are determined based on the student’s financial need.
Colorado Graduate Grant
The goal of this program is to provide need-based student financial aid to Colorado residents who are pursuing post-secondary education. Award amounts range from $500 to $5,000 annually based on the student’s financial need.
Dependent Tuition Assistance Program
Awards from this program can help cover tuition and on-campus room and board for dependents of Colorado law enforcement, fire, or National Guard personnel killed or disabled in the line of duty. Dependents of prisoners of war or service personnel listed as missing in action may also be eligible.
Colorado National Guard Tuition Assistance Program
This program pays up to 100% of tuition costs at state-supported institutions for members of the Colorado National Guard.
Partner Colorado Foundation Scholarships
The Foundation’s scholarship program offers grant money to those pursuing a degree in the field of their choice at an accredited educational institution. High school, college and graduate school students may apply. The minimum scholarship amount is $1,000.00 per recipient, per year.
CollegeInvest 529 Scholarship
Eligible students (looking to go to college or vocational school for the first time) may be awarded $2,000 for the 2019-20 school year and up to four years total. Financial restrictions apply for applicants.
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Colorado student loan repayment & forgiveness programs
If you’ve taken out student loans to attend a school in Colorado, it is never too early to start thinking about your repayment plan. And guess what? You have quite a few repayment options at your disposal.
Take a deep breath — you’ll have time to pay off your loans once you leave school. The standard student loan repayment term is 10 years, but allowances are made for eligible loan borrowers who need more time to pay off their loans (up to 25 years).
Federal student loan interest rates vary based on what year you receive the loan, and change annually in July. Between July 1, 2018, and July 1, 2019, interest rates for federal student loans ranged from 5% to 7.6%, depending on the type of loan.
For private loans, terms and conditions such as interest rates are set by the lender and vary due to many factors. Federal student loans typically offer the lowest interest rates and more flexible repayment options as compared to private student loans.
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Federal student loan repayment options
Just like there are several types of loans to explore, there are also different kinds of repayment plans. You can learn more about your repayment options for federal student loans here, but the following high-level summaries can give you an idea of which repayment plan may work for you.
Standard Repayment plan
Most borrowers are eligible for this plan and may often pay less over time than with other plans because the loan term is shorter (typically, less interest accrues over shorter loan terms than longer ones if payments are made in full and on-time). There is a 10-year repayment period with this plan.
Graduated Repayment plan
Most borrowers are eligible for this plan, which allows them to pay their loans off over a longer period than the Standard Repayment Plan. Payments start relatively low, then increase over time (usually every two years).
Extended Repayment Plan
To qualify for this plan, there are income thresholds for certain loan types to qualify, and you won’t qualify for Public Service Loan Forgiveness (PSLF) if you choose this loan. Monthly payments are typically lower than under the 10-year Standard Plan or the Graduated Repayment Plan, and borrowers may have a longer period to pay them off (and therefore make more interest payments).
Revised Pay As You Earn (REPAYE)
Direct Loan borrowers (and all Consolidation Loan borrowers) with eligible loan types may be able to choose this plan. Monthly payments are 10% of discretionary income, and any remaining loan balance will be forgiven after 20 years (for undergraduate studies) or 25 years (for graduate or professional studies).
Pay As You Earn (PAYE)
To qualify for this plan, borrowers must have a higher debt relative to their discretionary income. Payments for this plan are capped at 10% of discretionary income (and never more than what would be paid on the Standard Repayment Plan), and any remaining balance will be forgiven after 20 years.
Income-Based Repayment (IBR)
IBR is designed for borrowers who have a high debt relative to their income in order to qualify. Monthly payments will not usually be higher than the 10-year Standard Plan amount. Generally, however, borrowers may pay more over time than under the Standard Plan.
Income-Contingent Repayment (ICR)
Direct Loan borrowers with an eligible loan type may want to consider ICR. This plan is different from IBR because there is no financial hardship requirement. But, it may cost more over time when compared to the 10-year Standard Repayment Plan, and any remaining balance will be forgiven after 25 years.
Borrowers can expect to pay more over time than under the 10-year Standard Plan. Monthly payments are based on annual income, but loans will be paid in full within 15 years. This repayment plan is only available for FFEL Program loans, which are not eligible for PSLF.
Still not sure which payment plan is right for you?
For more information on repayment plans, check out our student loan repayment options article to help add some clarity.
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Student loan refinancing
Another option to potentially help accelerate student loan repayment is to refinance your student loans with a private lender. Some private lenders will let you consolidate and refinance both your federal and private student loans into one loan and interest rate.
Consolidating your loans (aka combining them) under one lender gives you the opportunity to refinance your loan and get a new term and interest rate. If you have an improved financial profile compared to when you took out your original loan, you may be able to lower your interest rate when you refinance — or even shorten your term to pay off your loan more quickly!
But, it is important to remember that if you refinance federal student loans with a private lender, you will lose access to federal programs such as the income-driven repayment plans mentioned above, as well as student loan forgiveness and forbearance options.
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Student loan forgiveness
At first glance, student loan forgiveness looks appealing. But it may not be as easily attainable as one might think. For example, 98% of applicants who applied to the Public Service Loan Forgiveness (PSLF) Program were denied due to issues such as not meeting the program requirements or mistakes made on their forms.
That being said, there are state-specific and federal Public Service Loan Forgiveness programs that certain student loan borrowers may be eligible for.
Before you review your options, it’s important to know that the terms forgiveness, cancellation and discharge essentially mean the same thing when it comes to federal student loans, but are applied in different scenarios. For example, if you are no longer required to make loan payments due to your job, that could fall under forgiveness or cancellation.
Or, if the school you received your loans at closed before you graduated, this situation would generally be called a discharge.
Even if you don’t complete your education, can’t find a job, or are unhappy with the quality of your education, you must repay your loans. But there are circumstances that may lead to federal student loans being forgiven, canceled, or discharged. Here are some of those options:
Public Service Loan Forgiveness (PSLF)
The PSLF Program may forgive the remaining balance on eligible Direct Loans after making 120 qualify monthly payments under a repayment plan (and working with a qualifying employer).
Teacher Loan Forgiveness
Those who teach full-time for five complete and consecutive academic years in a low-income school or educational service agency (amongst other qualifications) may be eligible for forgiveness of up to $17,500 on select federal loans.
Perkins Loan Cancellation
Cancellation for this specific loan is based on eligible employment or eligible volunteer service and the length of time applicants were in such a position, among other factors.
Total and Permanent Disability Discharge
Qualification may relieve eligible borrowers from repaying a qualifying Direct Loan, a Federal Family Education Loan (FFEL) Program loan, a Federal Perkins Loan or to complete a TEACH Grant service obligation.
Due to the death of the borrower or of the student on whose behalf a PLUS loan was taken out, federal student loans may be discharged.
Certain eligible borrowers may have federal student loans discharged if they file a separate action during bankruptcy, known as an “adversary proceeding.”
Closed School Discharge
Borrowers who were unable to complete an academic program because their school closed might be eligible for a discharge of Direct Loans, Federal Family Education Loan (FFEL) Program loans, or Federal Perkins Loans.
False Certification of Student Eligibility or Unauthorized Signature/Unauthorized Payment Discharge
Due to a variety of circumstances, borrowers may be eligible to discharge Direct Loans or FFEL Program loans due to issues such as identity theft or mistakes made by a school.
Unpaid Refund Discharge
Certain borrowers may be eligible for partial discharge of Direct Loans or FFEL Program loans if they withdrew from school, but the portion of a loan that the school was required to return to the borrower wasn’t returned.
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Colorado specific student loan forgiveness programs
Federal loan forgiveness programs are a logical place to start, but it can be smart to also consider other student loan forgiveness programs, too. There are forgiveness programs tailored to loan borrowers who live in certain locations, or have an in-demand and service-based vocation.
Colorado Health Service Corps
Licensed and eligible health care practitioners in practice in a Health Professional Shortage Area (HPSA) that are delivering health care services to underserved patients may qualify for this program. Awards can go as high as $90,000 depending on your field of study and time commitment.
Colorado’s Law Loan Repayment Assistance Program
This LRAP program provides partial loan repayment awards to alumni who choose qualifying public interest work. Recipients may receive up to $5,500 each year.
Rural Essential Access Provider (REAP) Loan Repayment Program
If your medical care practice is located in a rural or frontier county and is in a Health Professional Shortage Area (HPSA), you may qualify for this loan repayment program (awards of up to $30,000). You must have provided care to patients for at least two years prior to application, among many other pre-qualifications.
State Dental Loan Repayment Program
General dentists, pediatric dentists and dental hygienists may qualify. Applicants must work at a public, nonprofit, or private dental practice in Colorado, among other requirements for this program.
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