Answers to Your College Questions
Blog posts tagged in Student Loans
1. “How much can my family and I afford to pay for college each year?”
Unfortunately, many young people go about their college search as if financial aspects are a nonissue. These students are often disappointed in the end, when they learn that their number-one college choice is unaffordable. Determining the amount you and your family can afford before beginning your applications will prevent this and allow you to find a school within your budget.
2. “How can I use net price calculators to estimate the amount each college will cost me?”
Every college in the country has a net price calculator on its website. A college’s net price calculator helps you to estimate the amount you will have to pay, or your net price, at that school. Net price is defined as the sticker price minus any grants and/or scholarships provided. It is important to understand your net price because this price is what your family will actually have to pay. If it matches what you have determined you can afford, that school is a financial fit.
This will be an incredibly big week for college students and their parents, since it appears as though Congress will vote on the latest bipartisan proposal to solve the student interest rate issue. As of July 1, interest rates on subsidized student loans (those designed for the neediest students) increased from 3.4% to 6.8%.
If this increase is left as is, the current student debt crisis—a crisis that has been written about and discussed for several years now, a crisis that has seen student debt grow to more than 1 trillion dollars (surpassing credit card debt), a crisis that has led many young people to postpone major post-college life decisions, such as marriage, that they can’t afford, and that has led many other young people to forgo college altogether—will only get worse.
Your interest rates for subsidized Direct student loans could increase this year. In 2008, a law was enacted to temporarily reduce interest rates on these loans from 6.8% to 3.4%. However, on July 1st, this bill is set to expire. Without further action from the government, increased interest rates could end up creating thousands of dollars in additional payments for students—particularly students in great financial need.
To understand the issue at hand, one needs to better understand how student loan interest rates function today. With the Direct loan (also commonly referred to as the Stafford loan), all dependent students in pursuit of an undergraduate degree may obtain $5,500 during their freshman year, $6,500 during their sophomore year, and $7,500 in each of their junior and senior years.
Now that we are well into spring, it is that time of the year for seniors and their parents to receive college financial aid award letters. Of course, with the costs of colleges as they are, these official award letters offer critical pieces of information to help families determine their final college choice—a decision that must be made by May 1st.
Follow these five steps as you read your college award letter (or look to the sample award letter provided below) to ensure that you understand the exact amount each college will cost.
There has been a great deal written about rising student loan debt. According to the Institute for Student Access and Success, the average student debt in 2011 was $26,600. In 2010, it was reported that the average debt parents were taking on to support their students was approaching $35,000. Thus, one could argue that the real debt per family for four years of college is now averaging more than $60,000.
I do not recommend taking on excessive loan debt. The following ten loan options, when used wisely, can make it possible to take on manageable debt to help you pay for college.