What Is Meant By Financial Assistance When It Comes To Student Loans?
Over the last 25 years the cost of education has gone up dramatically. Increases in tuition fees of more than 6% a year are commonplace these days. For instance, in 1973 the cost of registration at UCLA (University of California, Los Angeles) was about $200 a quarter and now it is more than $2,000 per quarter.
This tenfold increase is not at all abnormal and many things now cost ten times more than they cost back in the 1970s. Wages, by contrast have risen approximately three times in this same time period from about $15,000 – $30,000 per year to about $39,000 – $42,000 a year. These figures vary by age, gender and more although as a rough guide a threefold increase is just about right.
However it is not all bad news. There are many more forms of financial assistance available now to both students and parents than ever before. Financial assistance, as its name suggests, is money which parents and students receive from scholarships, loans and grants issued by Federal and private lenders to help students in paying for their education.
Once upon a time, students depended almost completely on Stafford loans and Pell grants to finance their education costs and college living expenses. Today Pell grants are still issued although 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 financing school these days. Another form of financial aid is Perkins loans which are similar to Stafford loans but that are given only to the lowest income families.
Fortunately, PLUS loans are also available nowadays and these loans were not an option 25 years ago. PLUS loans are given to parents rather than students to assist parents to pay for their child’s college education. The interest rates for PLUS loans are average and there are certain restrictions and fees to pay but they often form part of the student’s overall package of funding.
A very quick note about fees. A lot of loans are for a specified amount of money such as $6,000 per year disbursed in several payments (often one payment per semester). But it is not uncommon for fees of up to 4% to be deducted from that amount before any funds are disbursed. That 4% fee on your $6,000 represents $240 that you will never see but which you have to repay. If you are seeking a loan ensure that you do your homework and see if you can find a low-fee or no-fee loan.
Though Federal loan programs like the subsidized Stafford loan program charge low fees and interest is paid by the government, they are not the only source of financial aid today and are not always the best option.
Funding the cost of education nowadays is a complicated operation and the majority of students will have to put together a package of funding which includes college scholarships, grants, Federal loans and private student college loans.
Happily, there are now many more funding options available than ever before and market competition between private lenders in particular means that it is possible to get funds at a price that is not necessarily going to run you into unmanageable debt.
You are also lucky to be living in an age where finding the information which you need to make sensible decisions about the choices which are open to you is also relatively simple.
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Tags: , college funding, student loans, pell grants, scholarship, college loans, college grants
