Eligibility for federal student aid is determined when a student submits his application for aid to the federal government. Having a degree like an associate's may affect how much a student can borrow at the undergraduate level. Availability to additional funding often depends on how much the student borrowed previously from the government and how long it took to attain the associate's degree.
First Year of Undergraduate
You are still allowed to file your federal application for student aid (FAFSA) even after you receive an associate's degree. You are eligible to receive federal student aid for a subsequent undergraduate degree as long as the institution you are attending is accredited and recognized by the federal government. As of January 2011, the total amount in federal student loans you are able to receive as a dependent student in your first year of an undergraduate program is $5,500. If you are an independent student without parental support this amount increases to $9,500.
Second Year of Undergraduate
Your ability to borrower higher amounts in student loan money from the federal government increases as you accumulate college credits. These increases in student loan funding are determined by credit eligibility. This means just because it's your second year in school doesn't mean you're a sophomore unless you have enough credits to qualify. The maximum amount you can borrow from the federal government as an official sophomore in an undergraduate program is $6,500 if you're considered a dependent. An independent student without parental support may borrow up to $10,500 in her credit-eligible sophomore year.
Third Year and Beyond
Student loan borrowing for an undergraduate program caps in your third year of undergraduate at $7,500 if you're a dependent student and $12,500 if you're considered independent. If you choose to pursue a graduate degree your eligibility for federal student aid changes. As a graduate student you my borrow up to $20,500 per year in federal student loan money up to a total of $138,500 as of January 2011. Once this total is reached you are no longer eligible for federal student aid at the graduate level.
Federal Pell Grants
If you have an associate's degree and are planning on working toward an additional undergraduate degree, you are eligible for a federal Pell Grant. Eligility is determined by your expected family contribution or EFC, calculated from the information on your FAFSA application. As January 2011, The Student Aid and Fiscal Responsibility Act or SAFRA has changed the thresholds for Pell Grant eligibility from $4,167 to $5,273. This means if your EFC falls below this mark you may be considered eligible for a Pell Grant. The amount of aid is determined on a sliding scale depending on your EFC. This is student aid you are not required to pay back and it does not affect your eligibility for a federal student loan. As of January 2011, the maximum amount for a federal Pell Grant is $5,550.
Ramifications of an Associate's Degree
Getting an associate's degree cannot hurt your ability to get federal funding for student aid unless you borrowed from the federal government to fund your community college experience. The money you borrowed to attain your associate's degree is applied to the maximum allowable amount for an undergraduate degree which is $31,000 as of January 2011. Since an associate's degree takes only two years to complete, the money spent to attain it shouldn't significantly impact your ability to borrow the maximum allowable amount from the federal government.
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