What Is Meant By Financial Aid When Talking About Student Loans?


Education:

As is the case with just about everything else the cost of education has increased greatly. Tuition increases in excess of 6% a year are common nowadays. For instance, in 1973 the price to register at UCLA (University of California) was about $200 a quarter and now it is well over $2,000 a quarter.

A ten times increase is not too abnormal and many things now cost ten times more than they did back in the 1970s. On the other hand, wages have increased approximately threefold in this same period from about $15,000 - $30,000 a year to approximately $39,000 - $42,000 a year. The numbers vary according to age, gender and a great deal more but as a rough guide a threefold increase is about right.

Fortunately there is some good news. There are far more types of financial help available today to parents and students than there has ever been. Financial assistance, as its name suggests, is money which students and their parents receive from scholarships, loans and grants granted by Federal and private lenders to aid students to pay for their education.

Formerly, students were dependent almost entirely on Pell grants and Stafford loans to finance the cost of their education and living expenses. Nowadays Pell grants are still issued but they are need based and represent a small percentage of college costs today. Stafford loans are also 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 particularly low income families.

Happily, PLUS loans (Parent Loans for Undergraduate Students) are also available these days and these loans were not an option 25 years ago. PLUS loans are provided for parents rather than students to help parents in paying for their child's education. The interest rates for PLUS loans are average and there are certain restrictions and fees to pay but they often form an important part of the student's overall package of funding.

One quick note on fees. A lot of loans are for a specific amount of money like $6,000 a year to be disbursed in several payments (normally one payment per semester). But it's not uncommon for fees of up to 4% to be taken from that amount before the funds are disbursed. This 4% fee on a $6,000 represents $240 which you will not see but which you have to repay. Whenever you are searching for a loan ensure that you do your homework and look for a low or no-fee loan.

Although Federal loan programs like the subsidized Stafford loan program charge low fees and the government pays the interest, they are not the only source of financial assistance today and are not always the best option.

Funding the cost of education today is a complicated operation and most students will need to assemble a package of funding which includes grants, scholarships, government loans and private financing.

Happily, there are now far more sources of finance available than we have seen for a long time and market competition between private lenders especially means that you can find funds at a price which will not necessarily run you into unmanageable debt.

You are also lucky to be living in an age where finding the information which you need to make reasoned decisions about the choices which are available to you is also fairly simple.

TheStudentLoansCentre.com provides a wealth of information for students covering everything from an introduction to college loan financing to a detailed look at student loan consolidation


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