What Do We Mean By Financial Assistance When We Are Considering College Loans and Grants?
As is the case with everything else the cost of college education has increased dramatically. Average tuition increases in excess of 6% per year are commonplace today. As an example, back in 1973 the price to register at UCLA (University of California) was in the region of $200 per quarter and now it is well over $2,000 per quarter.
A ten times increase is not too unusual and many things cost ten times more than they cost 20 or 25 years ago. On the other hand, wages have increased about three times in the same time period from in the region of $15,000 – $30,000 per year to approximately $39,000 – $42,000 per year. The figures vary according to age, gender and a great deal more although as a guide a three times increase is about right.
Fortunately it is not all bad news. There are far more forms of financial help available today to students and parents than ever before. Financial assistance, as the name suggests, is money that students and parents get from scholarships, loans and grants issued by Federal and private lenders to assist students to pay for their college education.
A few years ago, students could depend almost totally on Stafford loans and Pell grants to finance the cost of their education and college living expenses. Today Pell grants are still issued although they are needs based and represent a small proportion of college costs today. A Stafford college loan is also needs based but can meet 25% to 40% of the average cost of school these days. Another form of financial aid is Perkins loans that are similar to Stafford loans but that are reserved for the lowest income families.
Happily, PLUS loans are also available today and these loans were not around a few years ago. Despite the fact that they are known as student PLUS loans are provided for parents rather than students to help them in paying for their child’s college education. The interest rates on PLUS loans are reasonable and there are some restrictions and fees to pay but they often form part of the student’s overall package of funding.
A very quick note about fees. A lot of loans are for a specific sum like $6,000 per year disbursed in several payments (usually one payment per semester). But it is not uncommon for up to 4% in fees to be taken from the loan amount before the funds are disbursed. This 4% fee on your $6,000 equates to $240 that you will never see but that you have to repay. If you are seeking a loan ensure that you do your homework and see if you can find a low-fee or no-fee loan.
Though Federal loan programs such as the subsidized Stafford loan program charge low fees and interest is paid by the government, they are not the only source of financial assistance nowadays and are not necessarily the best option.
Funding the funds to cover the cost of education nowadays is a complex undertaking and most students will have to assemble a funding package that includes grants, scholarships, government loans and private borrowing.
Luckily, there are now a lot more more funding options available than ever before and competition in the open market between private financial institutions in particular means that you can get funds at a price that will not necessarily break the bank.
You are also fortunate to be living at a time when getting hold of the information that you need about college grants and loans to make good decisions about the options available to you is also relatively easy.
