What Constitutes Financial Assistance When Considering Student Loans?

As with everything else the cost of education has risen significantly. Tuition increases of more than 6% per year are commonly seen today. As an example, in 1973 the price to register at UCLA (University of California) was approximately $200 per quarter and today it is more than $2,000 per quarter.

A tenfold increase is not at all unusual and many things cost ten times more than they cost 25 years ago. On the other hand, salaries have risen 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. These numbers vary according to gender, age and more although as a rough guide a threefold increase is about right.

But it is not all gloom and doom. There are many more types of financial aid available today to both parents and students than ever before. Financial assistance, as its name implies, is money which parents and students receive from grants, loans and scholarships issued by both Federal and private lenders to aid students in paying for their education.

A few years ago, students could depend almost entirely on Pell grants and Stafford loans to finance the cost of their education and living expenses. Nowadays Pell grants are still issued although they are needs based and meet a very small proportion of the education cost today. Stafford loans are also needs based but can range from 25% to 40% of the average cost of financing school these days. Another form of aid is Perkins loans that are similar to Stafford loans but that are issued only to the lowest income families.

Fortunately, plus loans are also available now and these were not around a few years ago. plus loans are given to parents and not students to help parents to pay for their child's education. Interest rates on PLUS loans are average and there are some restrictions and fees levied but they often form part of the student's total package of funding.

A very quick note about fees. A lot of loans are for a specific amount like $6,000 per year to be disbursed in several payments (typically one payment each semester). But it is common for up to 4% in fees to be taken from the loan amount before the funds are disbursed. That 4% fee on a $6,000 represents $240 that you never see but that you must repay. If you are seeking a loan ensure that you do your homework and see if you can find a low or no-fee loan.

Though Federal loan programs like the subsidized Stafford loan program have low fees and the government pays the interest, they are not the only source of financial assistance today and are not always the best choice.

Funding the cost of education today is a complicated operation and most students will need to assemble a package of funding that includes scholarships, grants, Federal loans and private borrowing.

Luckily, there are now far more sources of finance available than ever before and market competition between private lenders especially means that it is possible to get funds at a price that will not necessarily break the bank.

You are also fortunate to be living in an age where finding the information that you need to make reasoned decisions about the choices open to you is also quite easy.

TheStudentLoansCentre.com provides a wealth of information for students covering everything from an introduction to student loans to a detailed look at student loan consolidation