What Is Financial Aid When Looking At College Education Loans?

As with everything else the cost of education has gone up significantly. Average tuition increases in excess of 6% a year are commonplace today. Just as one example, back in 1973 the cost to register at UCLA (University of California) was round about $200 a quarter and today it is well over $2,000 a quarter.

This ten times increase is not at all unusual and lots of things cost ten times more than they cost back in the 1970s. On the other hand, incomes have increased approximately threefold in the same period from about $15,000 - $30,000 a year to approximately $39,000 - $42,000 a year. These numbers vary according to age, gender and a great deal more but as a guide a three times increase is just about right.

Fortunately there is some good news. There are a lot more forms of financial assistance available nowadays to parents and students than there has ever been. As its name implies, financial assistance is money which parents and students get from grants, scholarships and loans issued by Federal and private lenders to help students to pay for their education.

A few years ago, students could depend almost completely on Stafford loans and Pell grants to finance their education costs and living expenses. These days Pell grants are still issued but they are need based and represent a small proportion of the education cost today. Stafford loans are similarly need based but can meet 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.

Luckily, PLUS loans (Parent Loans for Undergraduate Students) are also available nowadays and these were not around a few years ago. PLUS loans are given to parents rather than students to assist parents to pay for their child's education. Interest rates for PLUS loans are average and there are a few restrictions and fees to pay but they often form part of the student's overall package of funding.

One quick note on the subject of fees. Most loans are for a specified sum of money such as $6,000 a year to be disbursed in several payments (often once per semester). However it is not uncommon for fees of up to 4% to be deducted from the loan amount before the funds are distributed. That 4% fee on your $6,000 represents $240 that you not see but that you must repay. When you are looking for a loan make sure that you do your homework and look for a low or no-fee loan.

Despite the fact that Federal loan programs such as the subsidized Stafford loan program charge low fees and the government pays the interest, they are not the only type of financial assistance today and are not necessarily the best option.

Meeting the cost of a college education today is a complex operation and most students will have to assemble a package of funding that includes scholarships, grants, government loans and private financing.

Luckily, there are now a lot more more funding options available than we have seen for a long time and competition in the open market from private financial institutions especially means that you can find funds at a price that is not necessarily going to break the bank.

You are also lucky to be living at a time when finding the information that you need to make good decisions about the choices available to you is also relatively easy.