Can you use student loans for online degrees?

By: James M. Tobin, Edited by: Marie Custodio Collazo

Published: June 9, 2025

Student loans for online degree programs

You can get federal student loans for online programs as long as your program leads to a recognized educational credential. These include:

• Certificates
• Vocational degrees
• Academic and professional degrees

The institution that hosts the program must be accredited by an agency recognized by the U.S. Department of Education (ED). You can check a program's accreditation standing using this ED tool.

Private lenders maintain their own eligibility rules, which vary among providers.

Types of lenders for online degrees

Your two main loan source options include federal student aid programs and private lenders. Both offer unique advantages and their own limitations and drawbacks.

Federal student loans

The ED's Federal Student Aid office issues federal loans to students in eligible face-to-face, hybrid, and online programs. To secure one, you must meet the general eligibility criteria and complete the Free Application for Federal Student Aid (FAFSA).

Federal Student Aid operates three main loan programs:

• Subsidized direct loans: Subsidized direct loans provide funding to undergraduates with demonstrated financial need. The federal government covers your interest payments while you're enrolled, in deferment, or in your grace period.
• Unsubsidized direct loans: Unsubsidized loans accumulate interest throughout the loan period. However, they have higher borrowing limits, are available to all students, and borrowers do not need to demonstrate financial need.
• Grad PLUS loans: If you're in a graduate or professional degree program, you can get a PLUS loan to cover funding shortfalls. These loans require credit checks.

Private student loans

Consider a private loan if you have exhausted all other aid options but you still need funding, or if you're not eligible for federal aid.

Private lenders may release funds directly to you, or to your school. They tend to apply stricter repayment terms, though, so manage these loans cautiously.

Other options that can help you pay for online degrees

It's wise to keep your borrowing to a minimum. Student loans accumulate interest and can lead to long-term debt.

Consider these supplementary funding strategies:

• Scholarships and grants: These aid sources do not require repayment. Schools, government agencies, philanthropic organizations, and private providers offer them based on need or merit.
• College savings plans: Most readily available as 529 Plans, registered higher education savings programs offer tax advantages and other benefits that make it easier and cheaper to save up for college.
• Payment plans: Many public and private institutions allow students to pay for tuition, fees, and other costs in installments. These payment plan programs spread out your educational expenses, making it easier to manage your budget.
• Tuition reimbursement programs: Some employers offer education funding or tuition reimbursement to employees who upgrade their academic credentials. However, these programs may have strings attached, such as length of tenure requirements.
• Income-sharing plans: Under these agreements, the education provider will cover your costs in exchange for a set percentage of your future income, which the school will collect for a set period. While income-sharing agreements make education accessible, you should review terms carefully and compare their potential costs to other options.