What Constitutes Financial Assistance When We Talk About College Education Loans?
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As with everything else the cost of education has increased considerably. Increases in tuition of more than 6% per year are commonplace these days. Just as one example, back in 1973 the price to register at UCLA (University of California, Los Angeles) was in the region of $200 per quarter while today it is well over $2,000 per quarter.
That tenfold increase is not at all abnormal and lots of things cost ten times more than they did 25 years ago. Wages, by contrast have increased roughly threefold in the same period from about $15,000 - $30,000 a year to around $39,000 - $42,000 per year. The numbers vary by age, gender and more although as a guide a threefold increase is just about right.
Fortunately there is some good news. There are far more forms of financial aid available now to parents and students than ever before. As its name suggests, financial assistance is money which parents and students receive from grants, loans and scholarships issued by Federal and private lenders to assist students in paying for their education.
A few years ago, students were dependent almost completely on Pell grants and Stafford loans to finance the cost of their education and living expenses. Nowadays Pell grants are still issued although they’re need based and meet a very small percentage of the education cost today. Stafford loans are also need based but can meet 25% to 40% of the average cost of college nowadays. Another form of financial aid is Perkins loans which are similar to Stafford loans but which are issued only to the lowest income families.
Luckily, PLUS loans (Parent Loans for Undergraduate Students) are also available today and these loans were not an option a few years ago. These are loans given to parents and not students to assist parents to pay for their child’s college education. Interest rates for PLUS loans are average and there are some restrictions and fees levied but they often form an important part of the student’s overall package of college funding.
One quick note on the subject of fees. Most loans are for a specific amount of money like $6,000 a year disbursed in several payments (normally once per semester). But it’s not uncommon for fees of up to 4% to be taken from that amount before the funds are distributed. This 4% fee on a $6,000 represents $240 which you will never see but that you must repay. If you are looking for a loan ensure that you do your homework and see if you can find a low or no-fee loan.
Though Federal loan programs such as the subsidized Stafford loan program have low fees and interest is paid by the government, they are not the only type of financial assistance today and are not necessarily the best option.
Funding the cost of education nowadays is a complex operation and most students will need to put together a package of funding which includes college scholarships, college grants, Federal loans and private student college loans.
Happily, there are now far more sources of finance available than we have seen for a long time and competition in the open market between private lenders especially means that it is possible to get funds at a price that will not necessarily put you into lifelong debt.
It is also lucky that you live in an age where getting hold of the information which you need to make reasoned decisions about the choices which are available to you is also relatively easy.
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