Both undergraduate and graduate students from low-income households have a new strike in their favor. Government Stafford loans are being hiked to provide students with a greater chance of a college education. Freshmen loans have increased from $3,500.00 to $4,500.00 for an academic year, and sophomores $5,500.00 for the same period of time. Graduate students and independents also have a significant financial edge to look forward to receiving in the near future. This means that all undergraduate students have an additional $1,000.00 to work for them. In a time of rising expenses, this definitely means something.
Of course, when one considers the importance of producing future professionals in what has been referred to as the new recession, this makes sense. When expenses rise, loans and other benefits must rise also to compensate. If they don’t, more people fall into poverty and universities and other institutions of high learning eventually shut down because they cannot afford to stay open. The ongoing fleet of professional workers thins out until only a few overworked people remain. This is not a prospect that world societies like to face because economies need workers to keep it going. In essence, then, if college financial aid doesn’t respond accordingly to inflation, the entire world would be affected catastrophically. This is no exaggeration.
Then again, when one considers the fact that costs have increased with the amount of awarded loans, no additional flexibility really exists, since the students using the loans have just as much leeway with their expenses as those students before them had with comparatively lower expenses. Nothing has really changed except that monetary amounts are higher.
Of course, future college students will have a reduction in their interest rates: 6% on subsidized loans, to fall even more to 3.4% by the early-2010s. This means that student graduates will have less to pay off when it comes time for them to pay back the loans. With lower interest rates, the amount compounded to their loans over time will be significantly less financially crippling. This, perhaps, doesn’t change the restrictions placed on college expenses, but it is definite relief for the surviving professional.
This even affects those students who wind up in lower-paying jobs, like public service. The government will relieve debt owed by “forgiving” the outstanding balance on federal direct loans, which can be hefty burden for those who are struggling from month to month. Again, this makes a difference. In the end, this will help student graduates to survive easier regardless of their respective incomes.
Of course, the catch to the above-mentioned privilege granted is that such relief will only occur after 120 monthly payments are made. That’s six years, people. This it is why it may be important (if one can actually do it, and, yes, it isn’t always easy to do on a limited income) to make payments in full and on time, because after the 120th payment is made, the rest of the balance is eliminated. Considering the amount of college expenses that accrue in an age of inflation, that is no small amount.
Anyone who is planning on going to college or off to graduate school in the near-future is strongly advised to look into this. It could make a difference between struggling and financial cruising. Who wants to pay more than they really have to, especially on their student loans?
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