Do Not Fall For These Student Loan Myths


The quantity of incorrect information and facts regarding student loans is amazing. Part of the problem is that the press goes for a headline that will grab viewers and it rarely is the full story. You notice it almost everywhere, some sensationalized headline screaming at you, but whenever you read the actual article you see that there's very little to sustain the headline. The press has become all about ratings (read money).

The new student loan modifications that were included within the Healthcare Reform Bill is a great example. The reason it was added was to assist to counteract the cost of healthcare. How? By taking the loan guarantees from lenders (therefore not having to pay all of the delinquent student loans) and directly obtaining the interest from student loans. They basically took out the middleman who was guaranteed to not lose money and obtained all the income from the interest rates on these financial loans.

And because of the interest rates being so low to banks and various other lenders (like 1%) and currently obtaining a guaranteed interest rate of at least 4-1/2%, that's lots of cash changing hands. The private lenders get even more given that their rates are quite often double the federal government fees. Student loans are big business and even with a high default rate, it's nevertheless a strong area of activity regardless of the economy.

Okay, let us get into the biggest misconceptions about student loans now that the government has changed several of the basic regulations. I'm not really certain how these misconceptions ever got started given that the language is really simple and easy to understand inside the new bill. And rumors and controversy never tell the complete story.

Student Loans Will Now Be Much more Expensive!

The most significant changes included extending and reducing the amount of repayments following graduation. The bill decreased the payments from 15% of discretionary income to 10% and loans could be forgiven now at 20 years instead of the 25 years as it was previous to this bill. Consequently these modifications really made it less difficult and much more affordable during the pay back period.

Available Financial Assistance Will Be Decreased!

Financial Aid includes several areas from grants, private subsidized scholarships, college or university grants and discounts, and student loans. Because of the less than stellar economic climate there has been a decline in private grants and similar programs but that had absolutely nothing to do with any government student loan modifications. Student loans have always been the main method of university student financial aid and will still be offered just as they were before any modifications took place. You will not realize what you might be eligible for until you go to your college Financial Aid Office and permit them to examine your particular circumstances.

I Can't Qualify For Financial Aid Due to My Parents Income!

Some Financial Aid is dependent on need and economic status of your parents. But the majority of colleges evaluate the whole picture and not simply the income levels. Even if the mother and father make a very good salary they may possibly have 3 kids in college or even high medical expenses or other aspects that limit their capability to pay for college or university. And a lot of scholarships are based on achievements, not financial status. Private grants and subsidized programs are based on different considerations than monetary needs (a great example is should you or your parents work for a business that offers financial assistance for college). It is really recommended that anyone who is attending college go to their Financial Aid Office and allow them to determine what you meet the requirements for since they're the most reliable source.

The most important consideration on financial aid is that every college might have distinct programs and resources. And the very best way to find out the specifics would be to go find out at your college's Financial Aid Office. The schools are the best source for any kind of financial aid and will work with you to discover any that you qualify for from all possible resources.

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