Are Student Loans Still a Good Bet?

The federal government should encourage more citizens to attend and graduate from college.In the 1960 mid-and late, no doubt among public policy makers of America that the federal government should encourage more citizens to attend and graduate from college.

Based on the popular success of the GI Bill, which paid the school fees for veterans, student loans, the federal government has been hailed as a "GI Bill for all Americans." These loans with low interest rates has enabled poor students to attend college in unprecedented numbers. The rate of college graduation, which had hovered around 7 to 8 percent, rising steadily to the current rate of almost 30 percent.

Support the idea that higher education is almost universally better than the job market straight out of high school were statistics that showed that college graduates on average would receive as much as $ 1,000,000 more in lifetime earnings that students not graduate from post-secondary education.

At the same time, however, the cost of college education began to rise significantly faster than inflation, which means that families began to spend more of their total revenue to pay for college. The annual tuition fees go up in tens of thousands of dollars, college costs have exceeded income also generous, and the students had to turn to more college loans to pay for their education.

Today, about two-thirds of college students take student loans to pay for their education. Students leaving university with an average of $ 23,186 of student debt, according to

This figure is lower than the average cost of a new car in 2010 (29 217 $), and new car loans are paid in five or six years, with interest rates comparable to the rates on federal student loans.

So why do so many people concerned about the cost of student loans?

In other words, all student loans are created equal.

Federal education loans are provided directly to the federal government and its fixed rate and flexible repayment period and a series of options to postpone or reduce monthly payments based on financial situation. Federal college loans are typically low-cost, low-loans.

Private loans for education, by contrast, are issued by the government but by banks, credit unions and other private lenders are loans to variable rate based on credit costs are generally higher rates and federal counterparts. Private student loans also offer far less, if all options for borrowers in financial difficulties to defer or reduce payments.

A big difference between a new car loan and student loan deferment. With a car loan, principal payments begin immediately. A portion of each payment applied to reduce the outstanding balance.

Instead, all federal education loans and many private education loans allow students to defer payment when they are still in school. repayment of the loan may be delayed for years, when the student leaves the school - without delay, interest expense, however.

With the exception of federal loans to students - that the Government covers the interest while the student is in school and is granted only to students who have demonstrated the greatest economic need - the interest begins to accumulate in loans higher education, loans are granted immediately, even if the student does not suspend payment.

This accumulation may occur in the months or years without the vibration of the balance of the debt of a student at school ready to alarming levels.

Families affected by the excessive accumulation of student loan debt can always refuse to go on a student loan. federal student loans in the package student financial aid is always optional, students can make these loans down if they have different financial resources and not wanting to take the debt of student loans.

Students give their federal student loans available at the beginning of the school year, however, could spend public money on this to show your financial situation change unexpectedly in mid-semester. In such cases, students may be forced to rely on private student loans to overcome the financial deficit.

A good strategy for students is to first find scholarships and grants and to maximize available federal student loans before considering private student loans. Private loans should be seen as a last resort and only for financial emergencies that arise during the semester that other sources of funding can not cover.

The student must develop a clear and detailed plan of how they are going to pay for college each year attending classes, especially if they intend to calculate the federal school loans for their financial aid packages.

Have a backup plan in place to cover unexpected financial emergencies can also help reduce the need for student loans and the overall cost of university education.