“A new site called edLaunchPad.com has come out with a tool that shows students what they’ll have to pay out of pocket to attend college.” Two years ago, the U.S. Education Department (ED) mandated U.S. colleges and universities to include net-price calculators on their websites by October 2011. But these calculators do not always account for additional factors that play a role in the cost of higher education like financial aid eligibility or scholarship criteria like high school grade point average and standardized test scores.
So you need help paying for college. What now?
Loans for college students are the most common type of financial aid. Unfortunately, loans are borrowed money and unlike scholarships and grants, they require repayment with accumulated interest. The repayment (or default) of student loans affects a person’s credit rating, so it is important to be fully informed about different types of loans and repayment options before borrowing loans for college students.
As a result of this year’s mid-term elections, republicans will control the House of Representatives next year for the first time since 2006. While Democrats will still control the Senate by a small margin, this shift in party control could have a great impact on issues of higher education. Many republicans in Congress have long opposed an increase of federal aid to students, and the Obama administration’s attempt to provide additional federal student loans may be short-lived, forcing students to borrow even more money from private lenders in the future.
A new federal law mandating that all universities supply a net-cost calculator on their website intends to reveal the hidden costs of higher education. Experts predict that comparing college costs online will one day be similar to comparing the cost of a flight between different airlines.
A decade ago, only 5 percent of students had to apply for loans from private lenders, which are loans borrowed after a student’s federal allowance has been expended. But today, about 25 percent of students are borrowing private loans to fund their higher education either at a ground or online school. The average amount of debt that a student graduates with has reached $25,000.
For-profit colleges and universities have been splashed across national newspapers and the Internet for the past several months amidst continuing reports of dishonest recruiting tactics, poor graduation and job placement rates and rising student loan defaults. While many for-profits, both ground and online, have reviewed their recruiting and financial practices and modified or enhanced them accordingly, the majority are still fighting back against what they say is a “retroactive crackdown.”
The University of Phoenix, one of the most well-known online universities and largest by enrollment figures, amassed $1 billion in federal grants during the 2009-10 school year. The University of Phoenix was the first education institution (both non and for-profit) to receive such a significant amount of federal financial aid- and because of this the U.S.D.E has decided to take action.
As state’s slash funding for higher education, tuition at two- and four-year colleges and universities is increasing. Recent data shows a 24% tuition increase at public colleges over the last 5 years, a 17% tuition hike at private colleges, and an 11% increase at public 2-year colleges in the same time period. In 2010 alone, tuition and fees at public and private colleges have seen hikes spanning from 4.5 to 8%. Luckily for students, with an increase in tuition comes an increase in financial aid
Increasing tuition and enrollment have caused student loans to be a larger part of the American debt load than ever before. As students consider taking on tens of thousands of dollars in loans, it’s important that they know exactly what they’re getting themselves into, and have a plan for getting back out.
If asked, most Americans would guess that credit card debt is the number one source of debt for Americans. They would be wrong. For the very first time student loans have topped credit card debt as the number one source of debt in the nation.