Just What Do We Mean By Financial Help When It Comes To College Loans?
As with everything else the cost of education has gone up dramatically. Increases in tuition in excess of 6% a year are commonly seen these days. As an example, back in 1973 the cost of registration at UCLA (University of California) was just over $200 per quarter while now it is well over $2,000 a quarter.
This tenfold increase in cost is not at all unusual and lots of things cost ten times more than they cost 20 or 25 years ago. By contrast, salaries have increased about threefold in the same time period from in the region of $15,000 - $30,000 a year to around $39,000 - $42,000 a year. These numbers vary according to age, gender and a great deal more although as a guide a three times increase is about right.
However it is not all gloom and doom. There are many more forms of college financial aid available now to parents and students than there has ever been. As its name suggests, financial assistance is money which students and parents get from grants, scholarships and loans granted by Federal and private lenders to aid students in paying for their college education.
Formerly, students were dependent almost entirely on Stafford loans and Pell grants to finance their education costs and college living expenses. Nowadays Pell grants are still issued but they are need based and meet a very small proportion of college costs today. Stafford loans are similarly needs based but can meet 25% to 40% of the average cost of school these days. Another type of financial aid is Perkins loans which are similar to Stafford loans but which are reserved for particularly low income families.
Luckily, PLUS loans are also available nowadays and these were not around 25 years ago. These are loans provided for parents and not students to help parents to pay for their child's education. The interest rates for PLUS loans are reasonable and there are a few restrictions and fees charged but they often form part of the student's total package of college funding.
A quick word to the wise on fees. Many loans are for a specific amount of money such as $6,000 per year disbursed in several payments (often once each semester). However it's not uncommon for up to 4% in fees to be deducted from the loan amount before the funds are disbursed. That 4% fee on your $6,000 represents $240 which you will never see but that you must repay. When you are searching for a loan make sure that you do your homework and see if you can find a low or no-fee loan.
Though Federal loan programs like the subsidized Stafford loan program levy low fees and the government pays the interest, they are not the only source of financial aid nowadays and are not always the best option.
Funding the cost of college nowadays is a complicated undertaking and most students will have to assemble a funding package which includes college scholarships, student grants, Federal loans and private student education loans.
Luckily, there are now a lot more more funding options available than ever before and market competition between private lenders in particular means that you can get funds at a price which will not necessarily run you into unmanageable debt.
It is also fortunate that you live in an age where getting hold of the information which you need to make wise decisions about the options which are available to you is also fairly simple.
