Wednesday, November 01, 2006

When Is Financial Aid Not Financial Aid?

Ronald Reagan did us a great disservice, round about 1984, by shrinking the amount of true financial aid and funneling needy students into the wild and woolly world of the loan industry. Sure, student loans tend to be at lower rates and are backed by the government, but it's not really financial aid.

When you suggest that student loans are financial aid, you are really tricking the students to feed the loan servicing industry. As students make decisions about how they pay for college, when they decide to accept a loan they are betting on themselves (usually a safe bet).

But, in doing so amplifying the cost of their education dramatically; not unlike how the W, Rove and Co is paying for their much loved war in Iraq. Sooner or later, the pay back bites back.

As government aid has declined, loans from banks and other private lenders have soared, climbing to 20 percent of all education borrowing last year, up from 12 percent five years earlier.

The result is towering debt. The same bachelor’s degree will cost a student borrower far more than a student who can afford to pay. That’s not a path to greater equality.

1 comment:

100Student said...

Hello,

I recently published an article on the dangers and benefits of student loans and other forms of college financial aid – here is a quote from it, in case you are interested:
Student loans repayment can be a real nightmare without adopting some strategies that would help the new graduates to organize their social and financial life. Here are some strategies they can use to do this:
- An additional part-time job;
- Freelancing is another option (meaning that they can do particular pieces of work for different organisations, without working all the time for a single organisation);
- They should try to keep their living expenses as low as possible (live in a smaller apartment, live with a roommate to share some of the expenses, find an apartment that is closer to the job, to eliminate the extra-expenses for transport etc.);
- To apply for forbearance (this is an immediate solution for hard times when the new graduate is in impossibility to re-pay the amount of money and the need for student loan consolidation becomes apparent; it is a temporary period, when the graduate can postpone or delay his or her re-payments until a later time on a federal or direct loan after the beginning of the re-payment, and when the student doesn’t qualify for deferral). The forbearance must be applied through the lenders of the loans.
- To consolidate the payments.
If you feel this helps, please drop by my website for additional information, such as federal student loans information or additional resources on private student loans .

Regards,

Michael