Government college loans are the vehicle by which millions of students are able to afford the sky rocketing costs of attending an institution of higher learning, be it a two year, four year, trade or graduate school. The total cost of attending a four year university is quickly moving past thirty thousand dollars a year and many schools are above fifty thousand dollars for tuition, room and board, lab expenses, books and other related costs. These high costs are making college only a dream for many and if it were not for government college lending agreements even more students would only be dreaming of such an opportunity. For Americans of modest means, these programs are a lifeline. But like any other loan, there comes a day of reckoning.
The Stafford Loan is the first of a number of lending agreements available for students in certain economic situations. Two thirds of all Stafford Loans are awarded to the students whose families have a gross income under fifty thousand dollars. Another one fourth of all these lending agreements go to those households between fifty and one hundred thousand dollars of annual gross income and about one tenth go to those above one hundred thousand dollars a year in gross household income. These lending agreements are fixed amounts of one year loans that are dependent upon the student's academic designation. Freshmen students are allowed up to thirty five hundred dollars of loan money while sophomores are allowed forty five hundred dollars of loan allocation. Juniors and seniors are allowed fifty five hundred dollars in one year Stafford government college loans. Medical students are allowed eighty five hundred dollars a year for subsidized lending agreements and up to thirty thousand dollars a year in unsubsidized Stafford government college loans.
Subsidized Stafford government college loans are awarded on financial need. With a subsidized lending agreement, the US government pays the interest on the loan until the deferment ends. Interest charges begin usually after graduation or after the student ends schooling. An unsubsidized Stafford loan is not based on financial need. Any student who qualifies can get a loan, but interest begins as soon as the money is deposited into a school's account. A federal Perkins loan is also available at five percent interest, and is a lending agreement in which both the government and the school of choice contribute up to four thousand dollars each year for undergraduate work.
Parent Plus government college loans are available for parents who have very good credit histories with no loan repayments more than ninety days in arrears. This particular lending agreement allows parents to borrow the entire amount of a student's education. Tuition, books, lab expenses, room and board and other costs are able to be funded by this lending agreement. Parents are able to co-sign these government college loans with their children to help their children actually begin building a good credit history for themselves. Up to forty thousand dollars can be loaned each year at a modest eight and a half percent interest. There can be no wage garnishments, tax liens, repossessions, foreclosures or write-offs in the parents borrowing history over the five years prior to application of a Parent Plus loan.
Graduate students are eligible to borrow government college loans through the Graduate Stafford loan program. Graduate students may borrow up to twenty thousand dollars a year and no more than eighty five hundred dollars can be subsidized each year. The total amount that can be loaned to grad students is one hundred and thirty eight thousand dollars with no more than sixty five thousand dollars being subsidized. This total debt limit for grad students does include undergraduate work. 21st century America worships those academicians with degrees and accomplishments but Solomon said the counsel of God is the education that will last. "There are many devices in a man's heart; nevertheless the counsel of the Lord, that shall stand." (Proverbs 19:21)
There is always a day of reckoning, even with lower interest government college loans. They must be repaid and many students with today's high loan values are discovering the great weight an educational loan can be when beginning life after college. Some loans do offer graduated repayment plans which start at lower payment amounts as the graduate is getting started and increase over time as, hopefully, the earnings also increase. Extended repayment plans are offered for Stafford Loans, stretching all the way out to twenty five years. If the students or parents pay on time for forty eight payments the loan can be reduced in interest rate by as much as two or three percent.
No matter how easy these federal loans are to secure, the student must remember that a repayment day is coming. Parents will have to do some long term calculations to see how large loans will affect retirement, savings and other issues. Bankruptcy laws have made it very difficult for students to default on federal student loans and students may want to work a year or so and save money to pay for some of their anticipated expenses. The traditional paradigm of going straight from high school into college may have to change as the cost of higher education continues to soar. And the old adage that everyone must go to college to succeed is also being challenged on many fronts. Many entrepreneurs are espousing the idea that making a living is more about living out a passion in life and there are times when an expensive college education can actually get in the way of developing and making a living with that passion. Having to pay many years on a student loan may hinder some from really pursuing that passion.
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