Student Loan Debt
It is a norm and expectation in society today for students to pursue higher education after graduating from high school. College tuition is on the rise, and a lot of students have difficulty paying for their tuitions. To pay for their tuitions, most students have to take out loans and at the end of four years, those students end up in debt. Student loan debts are at an all time high with so many people graduating from college, and having difficulties finding jobs in their career fields, so they have difficulties paying off their student loans and, they also don’t have a full understanding of the term of the loans and their options if they are unable to repay.
There are different types of financial aid available to students such as grants, scholarships, and loans. There are a lot of these types of financial assistant available for students to have access to. There are many websites available online that have all different types of scholarships. Some scholarships have certain requirement such as race, GPA, demographic, parent’s income, etc. Others require students to write an essay and others only require students to only apply. Grants are given to students and are money that is not required to be repaid. Most grants are federally and state funded. Loans are money borrowed and is required to be repaid and in most cases with interest.
There are two major different types of student loans; they are Federal and Private Loans. Federal loans are loans offered by the government. There are three different types of Federal Student Loans and they are Federal Stafford Loan, Federal Plus Loan, and Federal Perkin Loan.
There are two major Stafford loans: Subsidized and Unsubsidized. To be eligible for these loans, students must be registered as a full time or part time student in an institution that is a part of the Direct Loan Program. Another requirement is that student must be in a program that will eventually lead to a certificate or degree. Subsidized Loans are offered to students’ based on individual needs, and this is decided based on the information given when completing FAFSA. Paul Basken states, “The federal government offers subsidized loans to college students both directly from the Education Department and indirectly through banks and other private lenders.” These loans are offered without a credit check or cosigner. There is a limit to the amount that can borrow each year, and that amount varies based on if the student is a dependent or independent. The interests on subsidized loans are paid by the government while students are still enrolled in school. This means the amount that is borrowed, is the amount to be repaid. Interest starts to accumulate after students graduate or drops out and the repayment terms begin.
Unlike Subsidized Loans, Unsubsized Loans are not offered to students based on need. It also differs from Subsidized Loans because as soon as the loan is paid out to the schools, interest immediately starts to...