What Is Meant By Financial Assistance When Considering College Loans?

By Author: Donald Saunders
Total Articles: 84
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As is the case with everything else the cost of college education has gone up considerably. Tuition increases in excess of 6% per year are commonplace nowadays. Just as one example, back in 1973 the price of registration at UCLA (University of California, Los Angeles) was approximately $200 per quarter and today it is well over $2,000 per quarter.

A tenfold increase in cost is not at all abnormal and lots of things cost ten times more than they did back in the 1970s. On the other hand, wages have increased roughly three times in the same period from about $15,000 - $30,000 per year to around $39,000 - $42,000 per year. The figures vary by gender, age and more although as a guide a threefold increase is about right.

But it's not all bad news. There are many more types of financial help available today to both students and parents than ever before. Financial assistance, as its name suggests, is money which parents and students get from grants, scholarships and loans issued by both Federal and private lenders to assist students in paying for their college education.

A few years ago, students were dependent ...
... almost entirely on Pell grants and Stafford loans to finance the cost of their education and college living expenses. Today Pell grants are still issued although they're need based and represent a very small proportion of college costs today. Stafford loans are also need based but can meet 25% to 40% of the average cost of financing school nowadays. Another form of aid is Perkins loans that are similar to Stafford loans but that are issued only to the lowest income families.

Luckily, PLUS loans are also available these days and these loans were not an option 25 years ago. These are loans provided for parents and not students to assist parents in paying for their child's college education. The interest rates on PLUS loans are average and there are a few restrictions and fees to pay but they often form part of the student's total package of college funding.

A quick word to the wise on the subject of fees. A lot of loans are for a specific amount like $6,000 per year to be disbursed in several payments (usually once per semester). But it's common for fees of up to 4% to be taken from that amount before the funds are disbursed. That 4% fee on your $6,000 equals $240 that you never see but that you have to repay. Whenever you are seeking a loan make sure that you do your homework and try to find a low-fee or no-fee loan.

Although Federal loan programs such as the subsidized Stafford loan program charge low fees and the government pays the interest, they are not the only type of financial assistance today and are not always the best choice.

Finding the funds to cover the cost of education today is a complex undertaking and the majority of students will have to put together a funding package that includes grants, scholarships, Federal loans and private financing.

Fortunately, there are now far more sources of finance available than ever before and competition in the open market between private lenders especially means that you can obtain funds at a price that will not necessarily put you into lifelong debt.

It is also lucky that you live at a time when finding the information that you need to make reasoned decisions about the choices open to you is also fairly simple.