Revelations Regarding Student Loan Myths

Incorrect information about student loans is rife in the halls of academia and the homes of kids preparing for their next big step – college. A good deal of these myths have arisen due to the media grabbing great headlines, but never really telling the whole story. Evident almost everywhere, sensationalized newspaper headlines, story-at-ten television news, scream out warnings and upon further investigation the story in no way supports the headlines. Yes, even the media is bowing to ratings (read money) and hard news takes a back seat.Anyway, student loans are big business, and even with the high default rate as compared to other lending instruments, it is a strong area of the financial industry in spite of the recession. Some myths regarding how legislation, such as the Health Care Reform Bill, has changed some of the governmental ground rules, need to be laid to rest.Myth – Student Loans Now Cost MoreExtending and reducing the amount of payments after being graduated are one of the changes pushed by the government. No actual increase has occurred. Legislation has actually caused loans to cost less over the long run. The amount of repayment has dropped from 15% of a discretionary income of a borrower to 10%. Loans can be forgiven after twenty years rather than twenty-five as imposed by earlier legislation.Myth – Student Aid Will Be DisappearingGrants, private subsidized scholarships, college or university discounts and grants, private and public student loans are all part of assistance offered to students. Indeed, due to these recessionary times, some private grants and related programs have fallen off, but this in no way has affected all the other programs. Always a predominant method of student financial aid, loans and other student aid are still available. In fact, it would be prudent for students to go to the financial aid office at their schools, they may be surprised at the plethora of financial aid available to them.Myth -- Rich Parents Mean Poor StudentsSome financial aid is based on need and the financial statues of parents. Understand though, most colleges and universities examine the whole financial picture and not just how much parents pull in. Parents who were relatively well off prior to having children in college may qualify. Perhaps the family is experiencing high medical costs or other factors that are limiting their ability to pay for higher education expenses. Do not forget, many scholarships are based on academic achievement and not financial status of parents. Subsidy programs and private grants are based on facts other than financial need. (Perhaps parents work for a company that offers financial aid for higher education.) Again, a trip to the financial aid office of the education institution will help students and parents identify programs for which they may be eligible.The Real StoryEvery college and university has a distinct array of financial and other aid programs available for its students. The best way to get the information on these is to knock on the door of the financial aid office at each. Even the prospect of landing a part-time job can be facilitated through the institution. So, do not listen to myth or conjecture – not even news headlines. The landscape regarding student aid has not changed that dramatically over the last decade.