Education Loan What You Need To Know
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Education Loans: What You Need to Know
Overview
"The strength of the United States is not the gold at Fort Knox or the weapons of mass destruction that we have, but the sum total of the education and the character of our people." - Claiborne Pell
Education loans are among the most important types of financial assistance, as they help transform students into informed, responsible citizens who can make significant contributions to society.
The Importance of Education
Statistics show that American college graduates earn approximately $1 million more over their lifetime than those with only a high school diploma. This highlights the immense value of higher education, despite the significant expenses involved.
Education Loan Options in America
The U.S. Federal Government offers various student aid and loan programs for both undergraduate and graduate education, often at low interest rates. Here are some key options:
1. Federal Perkins Loan: With a low interest rate of 5%, this loan is offered through schools. Students can borrow up to $4,000 annually as undergraduates and $6,000 annually as graduates, with total limits of $20,000 and $40,000, respectively. There are no additional charges except for potential late fees.
2. William D. Ford Federal Direct Loan Program: Under the FSA, this program includes Stafford Loans for students and PLUS Loans for parents, with the Department of Education serving as the lender.
3. Consolidation Loans: These allow borrowers to combine direct loans into a single loan, simplifying repayment with lower monthly bills.
4. Private Banks: Many banks offer loan schemes similar to federal programs.
Determining How Much to Borrow
Students and parents should carefully plan the amount to borrow. You can calculate the necessary loan amount using online calculators or by doing your own calculations. Here are some tips:
1. Course and College Selection: Public colleges typically charge about a quarter of what private colleges do for a four-year degree and half for a two-year degree.
2. Out-of-District State Charges: Expect additional charges of approximately $7,000 for four-year public colleges if you're out of district.
3. Additional Expenses: Budget around $10,000 for books, board, and other miscellaneous costs.
Once you’ve calculated the necessary amount, visit the lender's website or office for details on documentation and how to apply.
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