What is a Student Loan?
Students who are pursuing a higher education rely on student loans to obtain their degree. It is rare if the student or their family has the funds to pay cash for college, so the majority of students turn to a student loan. Students of any age going to college or a university can obtain a student loan.
Student loans help to pay off educational expenses such as the college tuition, textbooks, and living expenses such as rent and food. The student must be responsible with the funds they obtain through their student loans and budget wisely, so they do not run out of funds before they reapply for the following semester.
These loans are an ideal way to pay for a higher education because the interest rate is low and the student does not have to pay on this loan until they get their degree.
Process of Obtaining a Student Loan
The student needs to research ways in which to start their student loan process and since approval for a student loan does not happen overnight, the student needs to allow plenty of time to work through the process, such as during the senior year of high school.
This form sets into motion the specific loans the student qualifies. FAFSA forms start online on in the counselor’s office.
Popular Student Loan Programs
Interest rates can range from just under 2% to just over 7%, depending upon if the loan is a Direct PLUS, unsubsidized or subsidized loan. These rates do change about every two years.
Some interest rates fluctuate while others programs offer a fixed rate of interest. Interest rates also depend upon the level of education the student is at, at the time they apply for their student loan. Students must pay these loans back after the student graduates.
Payback of these loans calculates to a certain sum of money every month.
What Does the Average Student Pay, for their College Education?
The real cost of a higher education depends on the type of college the student attends. The average is at least $40,000 per year at an Ivy League school, and less at other colleges.
Private colleges project just over $130,000 for four-year tuition. A public in state college runs much less, at $40,000. If the student goes to a college outside of their resident state, the tuition can be at least twofold.
If the student attends their local community college for two years plus two years at a private college the tuition is about $78,000. College tuition figures are not stable and expect to increase at least to 5% every two years.