Students look for student loans to fund higher education expenses

College seniors attending public universities graduated with approximately $20,200 worth of student loan debt in 2010

Between paying for classes, buying groceries, purchasing textbooks, and worrying about rising rent costs student’s have a lot to think about when it comes to were they get their money.

College students must often bear a financial burden to achieve higher education, borrowing money and accumulating debt to pay for tuition, books, housing, and the other financial requirements associated with a college education.

According to the Office of Financial Aid, last year about $20 million in federal and Stafford loans and $1.2 million in private loans financed degree-seeking students at Georgia College.

“There are lots of good options out there. Budgeting is the most important suggestion for students with loans or considering a loan,” said Director of Financial Aid, Cathy Crawley.

Most commonly, two basic categories of loans support students in furthering education: federal direct Stafford loans and private loans.

Federal loans are financed by the government rather than a bank or other financial institution, so the interest rates and payment plans are regulated and monitored by the federal government through the Department of Education. Because these loans are part of a Federal Aid program, the cost to students is generally low.

Private loans from banks or other financial institutions must adhere to banking laws and regulations, but not by direct government involvement, so competition generally drives the interest rates and payment plans for these loans.

Also, federal student loans may be either subsidized–meaning that the loan does not accumulate interest while the student is in school and the loan is established by a need-based calculation–or unsubsidized–meaning that any student can qualify but that interest does accumulate during the years the student is enrolled in school.

“My first semester I received $3,000 from a subsidized Federal Stafford loan,” said senior political science major Jessica Stilwell. “It’s nice not to have to worry about interest—at least until after graduation.”

“Because I don’t have HOPE, I needed more money in loans, so I received both subsidized and unsubsidized federal loans,” said freshman marketing major Chloe Frew. “I’ve already put some money toward the unsubsidized loan, so that won’t be as bad, but it’s worth it to go to college.”

Student loans support huge numbers of both undergraduate and graduate students nationwide. More than $100 billion in federal education loans and $10 billion in private student loans finance students’ education each year, according to FinAid, a public service providing comprehensive student financial aid information and statistics.

A study conducted by the U.S. Department of Education found that college seniors at public universities graduate with an average student loan debt of $20,200. At Georgia College, seniors graduated with about the same amount of debt last year, owing an average of $23,000, according to Crawley.

“I graduated with about $80,000 in student loans, but the Department of Education can be really helpful if you work with them. They can take you through it step-by-step to help you get on the right payment program,” said Associate English professor Eddie Zipperer.

“Part of our job is to be the professional office on campus. We try to suggest applying for free money first and then we counsel students on borrowing only what they need,” Crawley said of the Financial Aid Office.

Georgia College students generally sit below the average default rate, meaning that most students succeed in repaying their loans, however difficult it may be. On average, Georgia College students repay their loans on a payment plan of about $300 per month.

The inability to repay a loan could damage one’s credit, involve collection agencies, or even the seizure of tax refunds.

“The most important thing is deciding how much you need to borrow by looking at your current funds and knowing your current financial situation,” Crawley said.

Posted by Caitlin Renn on Feb 3 2011. Filed under Close Up, Special Sections. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.