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What Constitutes Financial Assistance When We Talk About College Loans?

As is the case with everything else the cost of education has risen greatly. Increases in tuition fees in excess of 6% per year are commonly seen nowadays. For instance, in 1973 the cost of registration at The University of California, Los Angeles (UCLA) was in the region of $200 per quarter and today it is more than $2,000 per quarter.

That ten times increase in cost is not too abnormal and many things now cost ten times more than they did 20 or 25 years ago. Wages, on the other hand have risen roughly threefold in this same time period from in the region of $15,000 - $30,000 per year to around $39,000 - $42,000 per year. These numbers vary by gender, age and a great deal 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 aid available nowadays to parents and students than there has ever been. Financial assistance, as its name suggests, is money that parents and students get from grants, scholarships and loans issued by Federal and private lenders to aid students to pay for their education.

Previously, students were dependent almost entirely on Stafford loans and Pell grants to finance their education costs and living expenses. These days Pell grants are still issued although they are need based and represent a very small proportion of college costs today. Stafford loans are similarly need 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 issued only to particularly low income families.

Happily, PLUS loans are also available today and these loans were not around a few years ago. These are loans given to parents rather than students to assist parents in paying for their child's education. Interest rates on PLUS loans are reasonable and there are certain restrictions and fees charged but they often form an important part of the student's overall package of funding.

A very quick note about fees. Many loans are for a specified sum of money like $6,000 per year disbursed in several payments (often one payment per semester). However it's common for fees of up to 4% to be deducted from the loan amount before any funds are distributed. That 4% fee on a $6,000 equals $240 which you will never see but which you must repay. When you are searching for a loan make sure 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 form of financial assistance today and are not always the best choice.

Funding the cost of college today is a complicated operation and most students will have to put together a funding package which includes scholarships, grants, Federal loans and private borrowing.

Happily, there are now far more sources of finance available than ever before and market competition from private financial institutions especially means that you can obtain funds at a price which is not necessarily going to run you into unmanageable debt.

It is also lucky that you live at a time when getting hold of the information which you need to make reasoned decisions about the options open to you is also quite simple.

Article Source: http://blisspublisher.com

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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