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

Just like everything else the cost of education has gone up considerably. Increases in tuition fees in excess of 6% a year are commonly seen these days. For example, in 1973 the cost of registration at UCLA (University of California) was round about $200 a quarter and now it is well over $2,000 a quarter.

This ten times increase is not at all abnormal and lots of things cost ten times more than they did back in the 1970s. By contrast, incomes have increased approximately threefold in this same period from in the region of $15,000 - $30,000 a year to about $39,000 - $42,000 a year. These figures vary by gender, age and a great deal more but as a guide a three times increase is about right.

Fortunately there is some good news. There are far more forms of financial help available today to students and parents than there has ever been. As the name suggests, financial assistance 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.

Once upon a time, students depended almost completely on Stafford loans and Pell grants to finance the cost of their education and living expenses. Nowadays Pell grants are still issued but they're need based and meet a small percentage of the education cost today. Stafford loans are similarly need based but can meet 25% to 40% of the average cost of college nowadays. Another form of financial aid is Perkins loans which are similar to Stafford loans but which are given only to the lowest income families.

Luckily, PLUS loans (Parent Loans for Undergraduate Students) are also available now and these loans were not an option a few years ago. PLUS loans are provided for parents rather than students to help parents in paying for their child's education. Interest rates on PLUS loans are reasonable and there are certain restrictions and fees levied but they often form part of the student's total package of funding.

A word to the wise on the subject of fees. A lot of loans are for a specific sum like $6,000 a year disbursed in several payments (normally once per semester). However it is not uncommon for up to 4% in fees to be deducted from the loan amount before the funds are distributed. That 4% fee on a $6,000 equates to $240 which you will not see but which you have to repay. Whenever you are seeking a loan ensure that you do your homework and try to find a low or no-fee loan.

Although Federal loan programs such as the subsidized Stafford loan program carry 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 choice.

Meeting the cost of college nowadays is a complex undertaking and the majority of students will need to put together a funding package which includes grants, scholarships, government loans and private financing.

Luckily, there are now far more sources of finance available than ever before and market competition from private lenders especially means that you can find funds at a price which is not going to put you into lifelong debt.

You are also lucky to be living in an age where getting hold of the information which you need to make good decisions about the choices which are available to you is also quite simple.