The soaring cost of higher education has placed a pronounced burden on students and their families nationwide. Like many states, Arizona has responded to this challenge by implementing various policies and legislative measures aimed at mitigating the financial impact of student loans.
In this comprehensive guide, we delve into Arizona’s critical student loan initiatives to navigate the financial challenges of securing a higher education. By the end of this guide, you’ll have valuable insights into the various options available so you can make an informed decision.
Before proceeding, estimating your student loan payments with a student loan calculator is paramount so you can figure out how to budget toward your current and future loan payments. Regardless of your chosen loan option, remember to calculate the monthly payment so you are better prepared to tackle your upcoming bills.
State Government Initiatives in Arizona
- AZ529 Arizona’s Education Savings Plan
The AZ529 is a tax-advantaged college savings plan designed to help families save for future education expenses. The contributions to the plan are tax-deductible. You can open an account for as little as $15 a month, and your earnings will grow tax-free. Withdrawals are exempt from state and federal income tax if you use the funds to pay for qualified higher education expenses, including K-12 tuition.
There’s no application fee for opening an account. Also, Arizona residency is not mandatory for opening an account.Anyone above the age of 18 is eligible for opening an account. The AZ529 plan offers a wide range of investment options, such as target-date funds, age-based portfolios, and individual bond and stock funds. You can select the option that aligns with your risk tolerance and specific investment style.
The savings can be applied to many educational expenses, including fees and tuition, supplies, books, equipment (including Internet access and a computer), up to $10,000 in student loans, and K-12 private school tuition.
- The Arizona Promise Program
The Arizona Promise Program is a guaranteed scholarship program for eligible low-income Arizona students. The program covers all fees and tuition for eligible students at Arizona’s public universities. This is the state’s first financial aid program aimed at making higher education affordable and more accessible for Arizona students and their families.
The promise scholarship is applied after all other scholarships, aids, and grants are used. Meal plans, housing, books, or parking are not covered under this program.
To qualify for this scholarship, you must be an Arizona resident and a high school graduate with a 2.5 GPA or higher. You must complete and submit the FAFSA by May 1 of your senior year and must receive a federal Pell Grant award. Plus, you must enroll at a public university in Arizona.
- Arizona student loan forgiveness programs
An average graduate in Arizona leaves school with $35,583 in student loans. If you are among those with student loan debt, you might be under a lot of stress. Fortunately, Arizona has several student loan forgiveness programs to ease the burden on students. If you participate in these programs, you might get a portion of your student loan balance forgiven.
The top two student loan forgiveness programs in Arizona are:
1. Arizona Teacher Student Loan Program
In Arizona, loan forgiveness and no-cost tuition programs are available for students wanting to become teachers in the future. Students at UArizona, NAU, or ASU can apply to the Arizona Teachers Academy and benefit from tuition coverage by agreeing to teach in Arizona schools. You can also take advantage of this program if you are attending a private college.
If you qualify for this program, you might receive up to $7,000 in forgiveness each year for three academic years.
2. Arizona Department of Health Services Loan Repayment Program
Depending on your employment status and the type of services you provide, you could receive up to the amount of your balance in loan forgiveness through the Arizona Department of Health Services.
To qualify for this program, you must be a fully licensed medical professional with a two-year commitment to work in Arizona’s Medically Underserved Areas or Health Professional Shortage Areas.
After that initial two years, it is possible to get up to $65,000 in loan forgiveness. You may receive additional forgiveness in the subsequent years.
Federal student loan programs
To help cover the cost of education, the US Department of Education offers low-interest loans to eligible students. You can rely on these federal student loan programs in addition to Arizona’s state-level initiatives.
The various benefits offered by these programs are:
- Subsidized & unsubsidized loans – Available to eligible graduate and undergraduate students. Subsidized loans do not accrue interest while you are enrolled in school at least half-time. The interest is paid by the US Department of Education. As for unsubsidized loans, you have to pay the accrued interest. However, to secure the loan, you don’t need to demonstrate any financial need but educational expenses that are not covered by other types of financial aid.
- Direct PLUS loans – Available to graduate students and parents of dependent undergraduate students. The loan helps pay for educational expenses. They have a fixed interest rate.
Private student loans
Federal student loans are generally preferred because of their lower interest rates and flexible repayment options.However, they might not cover all the education-related expenses, and this is where private student loans come in handy.
Private student loans are the loans you can get for your education through a private lender, such as a bank. These loans are not funded by the federal government. When considering a private student loan, you must:
- Shop around and compare rates and terms from different lenders.
- Understand repayment options and the potential for forbearance or deferment periods.
If you have difficulty qualifying for a private student loan on your own, you might need a cosigner with a good credit score.
Conclusion
The escalating cost of higher education is a cause of worry among students and their families. Thankfully, Arizona has responded to this challenge by introducing several statewide initiatives and policies to relieve some of the burden on the students. You can consider the AZ529 plan and the Arizona Promise Program for potential financial assistance. Find out whether you are eligible for the loan forgiveness programs in Arizona, such as the Arizona Teacher Student Loan Program or the Arizona Department of Health Services Loan Repayment Program. You can also check your eligibility for the diverse federal loan options at your disposal before thinking about securing a private student loan.
By understanding the options available to you in Arizona, you can make an informed decision and effectively navigate the complexities of higher education costs.
