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What Is Meant By Financial Aid When It Comes To College Education Loans?

By: Donald Saunders

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Over the past 25 years the cost of college education has gone up greatly. Increases in tuition fees in excess of 6% per year are commonplace today. Just as one example, in 1973 the cost to register at UCLA (University of California, Los Angeles) was just over $200 per quarter while today it is more than $2,000 per quarter.

A tenfold increase is not at all abnormal and lots of things cost ten times more than they cost back in the 1970s. Incomes, by contrast have increased about three times in the same period from about $15,000 - $30,000 per year to approximately $39,000 - $42,000 per year. These figures vary according to age, gender and more although as a guide a three times increase is just about right.

Now there is some good news. There are far more types of financial assistance available today to both students and parents than there has ever been. As the name suggests, financial aid is money which parents and students get from grants, loans and scholarships issued by both Federal and private lenders to assist students to pay for their college education.

At one time, students were dependent almost completely 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 are needs based and represent a small proportion of college costs today. Stafford loans are similarly needs based but can range from 25% to 40% of the average cost of school these days. Another type of aid is Perkins loans which are similar to Stafford loans but which are reserved for the lowest income families.

Happily, PLUS loans (Parent Loans for Undergraduate Students) are also available these days and these were not around a few 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 for PLUS loans are average and there are a few restrictions and fees levied but they often form an important part of the student's overall package of college funding.

A word to the wise about fees. Most loans are for a specific amount of money like $6,000 per year disbursed in several payments (typically once per semester). But it's not uncommon for fees of up to 4% to be deducted from the loan amount before any funds are disbursed. This 4% fee on your $6,000 equals $240 which you will not see but which you have to repay. When you are seeking a loan make sure that you do your homework and look for a low-fee or no-fee loan.

Though Federal loan programs such as the subsidized Stafford loan program have low fees and interest is paid by the government, they are not the only type of financial aid today and are not necessarily the best option.

Finding the money to cover the cost of a college education today is a complicated undertaking and the majority of students will have to put together a package of funding which includes scholarships, grants, government loans and private financing.

Fortunately, there are now many more sources of finance available than ever before and competition in the open market from private lenders in particular means that you can obtain funds at a price which is not necessarily going to put you into lifelong debt.

It is also lucky that you live in an age where finding the information which you need to make good decisions about the options which are available to you is also fairly simple.

Article Source: http://depositarticles.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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