Have You Read These Student Loan Myths?
The amount of incorrect information regarding student loans is amazing. Part of the problem is that the mass media goes for a headline that will get viewers and it almost never is the whole story. You see it everywhere, some sensationalized headline screaming at you, but when you study the real article you find that there's little to support the headline. The news media has become all about ratings (read money).
The new student loan modifications that were included inside the Healthcare Reform Bill is really a good case in point. The reason it was included was to help offset the cost of healthcare. How? By taking the loan guarantees from the loan companies (thereby not needing to pay all the unpaid student loans) and directly collecting the interest from student loans. They basically took out the middleman who had been guaranteed to not lose money and got all of the profits from the interest on these loans.
And because of the interest rates being so small to banking institutions and other lenders (such as 1%) and now getting a guaranteed interest of at least 4-1/2%, that's a lot of income changing hands. The private loan companies get even more since their fees are sometimes double the government rates. Student loans are big business and even with a high default rate, it's nonetheless a robust area of activity regardless of the overall economy.
Ok, let's get to the biggest misconceptions about student loans now that the federal government has changed many of the essential rules. I'm not sure how these misconceptions ever got started given that the language is rather basic and easy to fully grasp in the new bill. And rumors and conjecture never tell the whole story.
Student Loans Will Now Be Much more Expensive!
The major modifications involved extending and lessening the amount of payments after graduation. The bill reduced the payments from 15% of discretionary income to 10% and loans might be forgiven now at 20 years rather than the 25 years as it had been before this bill. So these changes really made it less difficult and more inexpensive throughout the pay back period.
Readily available Financial Aid Will Be Reduced!
Financial Aid covers several areas from grants, private sponsored scholarships, college or university grants and discounts, and student loans. Due to the less than outstanding economy there has been a drop in private grants and related programs but that had absolutely nothing to do with any government student loan adjustments. Student loans have usually been the predominate technique of student financial aid and continue to be available just as they were before any modifications took place. You won't recognize what you might qualify for until you go to your university Financial Aid Office and let them review your specific circumstances.
I Can't Qualify For Financial Assistance Because of My Parents Income!
Some Financial Assistance is based on need and financial status of parents. But the majority of colleges evaluate the whole picture and not simply just the income levels. Even if the parents earn a good income they may have 3 kids in college or even higher medical expenses or other factors that reduce their ability to pay for college. And many scholarships are based on achievements, not monetary status. Private grants and subsidized programs are dependent on other criteria than financial needs (a great example is in the event you or your mother and father work for a company that provides financial aid for college). It's highly recommended that anyone who is attending college go to their Financial Aid Office and permit them to figure out what you qualify for due to the fact they are the most credible source.
The bottom line on financial aid is that every college may have unique programs and resources. And the best way to discover the facts is to go find out at your college's Financial Aid Office. The colleges are the best source for any kind of financial aid and will work with you to come across any that you qualify for from all possible sources.
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