Education makes for a great investment. It prepares an individual for the challenges that lie ahead and provides an opportunity for personal growth. Having a good educational background could land you a job that with hard work and determination could set you out for life. However, the cost of education is not one thing that you can just dismiss. It could take a toll on your finances. If you are a parent and you are supporting your child through a college education, you cannot just rely on a meager income to help you tide things up.
Fortunately in the United States, financial aid could come in the form of scholarships, grants and student loans. Each year, almost 20 million American’s make their way to college and more than half of them are financed through student loans. A typical loan can be a combination of a federal loan and a private student loan. This means that part of the loan is subsidized. This means that interest on loans is paid by the government while the student is still in school. Subsidized loans are available for undergraduate students. The loan can be used for school-related expenses such as room and board, tuition, books and transportation.
Among the more popular educational loans are the Stafford loans and Perkins Loans. Subsidized Stafford Loans are available for citizens and eligible non-citizens who are enrolled at least half way through an eligible degree or certificate program. The maximum loan amount is $23,000. Repayment starts 6 months after graduation and may be postponed with forbearance. However, accrued interest is still owed and will capitalize if not paid during the said period. Repayment can be spread up to 10 years. Loan interest rate is fixed and is generally paid by the federal government while the student is in school and during an approved deferment period.
The issue on student loans takes center stage as the amount of delinquent student loans has increased over the years. And in the second quarter of 2015, it ballooned to $1.19 trillion. What is more alarming is that one third of the amount is delinquent or past due.
To deal with the matter, the federal government proposed an increase in the interest rate of student loans. This has caused a mass hysteria among borrowers who can barely keep up with their loan repayment much to make do with what is left of them to spend from their meager salaries. Read more about how this move of the federal government can affect loan borrowers and find out what you can do when you are struggling with loan repayments.
However, some politicians proposed ways to contend the debts incurred for higher education that is hurting the nation. Hilary Clinton is one of them. She is willing to spend as much as $359 billion for student loans and allow borrowers to refinance their loans at lower interest rates if she will be elected as the president of the country. Because of this, she was praised by loan borrowers and experts alike. Presidential candidate Bernie Sanders shared the same sentiments. He believes that the only way to improve the country’s system is through education. But he acknowledged that the cost of education has become a stumbling block for students to make it through. Hence, the system needs to be changed so students don’t have to be buried in debt just to finish their studies.
Bottom line is; student loans can serve their purpose best if repayment becomes more affordable for borrowers. And this can only be possible if the country is led by politicians with esteemed education to be of great importance.