What Is Financial Aid When Considering College Education Loans?
As is the case with just about everything else the cost of college education has increased considerably. Increases in tuition of more than 6% per year are commonplace today. Just as one example, back in 1973 the cost to register at UCLA (University of California, Los Angeles) was just over $200 per quarter and now it is well over $2,000 a quarter.
A ten times increase in cost is not too unusual and lots of things cost ten times more than they did back in the 1970s. Salaries, by contrast have risen about three times in the same time period from in the region of $15,000 – $30,000 a year to around $39,000 – $42,000 per year. These numbers vary according to age, gender and a great deal more although as a rough guide a threefold increase is about right.
Luckily there is some good news. There are a lot more forms of financial assistance available now to both parents and students than ever before. Financial assistance, as its name suggests, is money that parents and students receive from grants, loans and scholarships issued by Federal and private lenders to assist students in paying for their college education.
At one time, students were dependent almost totally on Stafford loans and Pell grants to finance their education costs and living expenses. These days Pell grants are still issued but they are need based and represent a small proportion of college costs today. Stafford loans are similarly need based but can meet 25% to 40% of the average cost of school nowadays. Another form of aid is Perkins loans which are similar to Stafford loans but which are issued only to the lowest income families.
Luckily, PLUS loans are also available these days and these loans were not around 25 years ago. PLUS loans are provided for parents rather than students to assist parents in paying for their child’s college education. Interest rates for PLUS loans are average and there are a few restrictions and fees to pay but they often form an important part of the student’s overall package of funding.
A quick word to the wise on the subject of fees. Most loans are for a specified amount such as $6,000 per year disbursed in several payments (normally once per semester). But it’s not uncommon for up to 4% in fees to be deducted from that amount before the funds are disbursed. That 4% fee on your $6,000 represents $240 that you will never see but that you have to repay. When you are seeking a loan ensure that you do your homework and try to find a low or no-fee loan.
Although Federal loan programs like the subsidized Stafford loan program have low fees and interest is paid by the government, they are not the only source of financial aid today and are not necessarily the best option.
Meeting the cost of college today is a complicated undertaking and most students will have to assemble a package of funding which includes scholarships for college, college grants, government loans and private student college loans.
Happily, there are now far more sources of finance available than ever before and market competition between private lenders especially means that you can get funds at a price that is not going to run you into unmanageable debt.
It is also lucky that you live in an age where getting hold of the information that you need to make wise decisions about the options that are available to you is also relatively simple.
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