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What Constitutes Financial Assistance When It Comes To College Loans And Grants?
By Credit Watcher | February 19, 2008
As with everything else the cost of education has gone up significantly. Average tuition increases in excess of 6% per year are commonplace these days. Just as one example, back in 1973 the price of registration at The University of California, Los Angeles (UCLA) was a little over $200 per quarter while today it is in excess of $2,000 per quarter.
A ten times increase in cost is not too abnormal and lots of things cost ten times more than they did 20 or 25 years ago. By contrast, incomes have increased roughly threefold in this same period from in the region of $15,000 – $30,000 per year to about $39,000 – $42,000 per year. These numbers vary by gender, age and a great deal more although as a rough guide a three times increase is about right.
Happily it is not all doom and gloom. There are far more forms of financial assistance available nowadays to parents and students than there has ever been. Financial aid, as the name suggests, is money which parents and students get from scholarships, loans and grants granted by both Federal and private lenders to assist students in paying for their education.
A few years ago, students depended almost completely on Stafford loans and Pell grants to finance their education costs and living expenses. These days Pell grants are still issued although they are needs based and represent a very small percentage of college costs today. A Stafford college loan is similarly needs based but can meet 25% to 40% of the average cost of college today. Another form of aid is Perkins loans which are similar to Stafford loans but which are reserved for particularly low income families.
Fortunately, PLUS loans (Parent Loans for Undergraduate Students) are also available these days and these were not around 25 years ago. Although they are known as student PLUS loans are provided for parents and not students to help them in paying for their child’s education. Interest rates on PLUS loans are reasonable and there are some restrictions and fees charged but they often form part of the student’s overall package of funding.
A very quick note on fees. Many loans are for a specified amount of money such as $6,000 per year disbursed in several payments (usually one payment each semester). However it is not uncommon for up to 4% in fees to be deducted from that amount before any funds are disbursed. That 4% fee on your $6,000 represents $240 which you will never see but which you have to repay. Whenever you are looking for a loan ensure that you do your homework and see if you can find a low-fee or no-fee loan.
Although Federal loan programs such as the subsidized Stafford loan program have low fees and the government pays the interest, they are not the only type of financial aid today and are not always the best option.
Meeting the money to cover the cost of a college education today is a complicated operation and most students will have to assemble a funding package which includes scholarships, grants, government loans and private financing.
Luckily, there are now far more funding options available than ever before and competition in the open market from private lenders especially means that it is possible to obtain funds at a price which is not going to break the bank.
You are also fortunate to be living at a time when finding the information which you need about college loans and grants to make wise decisions about the choices available to you is also fairly simple.
Topics: School Loans | 1 Comment »
February 27th, 2008 at 1:08 am
[...] sam wrote an interesting post today onHere’s a quick excerptThese days Pell grants are still issued although they are needs based and represent a very small percentage of college costs today. A Stafford college loan is similarly needs based but can meet 25% to 40% of the average cost of college … [...]