Student Loans in the US

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Should we all be surprised with the recent rise in the debt rates and defaults in student loans?
A college or student loan is a pretty common term for everybody these days. As we all understand, a student loan is just like your everyday ordinary loan. It is designed to support students with little or no funds to support school. Ideally, a student loan should cover the expenses for books, tuition, and living expenses.

Although a student loan is just another loan at its core, there are some differences between a regular loan and a student loan. One would be the interest rate. Unlike standard loans, student loans have very small interest rates. Another difference is found in the repayment schedule. A student loan is not to be repaid as long as the student is still in school.

Although these things may sound perfect, a person about to make a student loan should be aware of certain facts and figures. In the US, there is a total amount of $830 billion worth of debt due to student loans. A college student requires paying around $11,000 for college education and there are about 14.5 million undergraduates that enroll every year.

The figures above are nauseating at the very least. It’s a big wonder how the state keeps on existing with such a big debt due to education loans. Not only that but more and more are getting enticed in making student loans because of the advantages they offer over regular loans. As mentioned above, a student loan offers a lower interest rate and the repayment terms are more flexible.

When deciding to make a student loan, you can either take a federal or private student loan. Federal student loans are those that are provided not by banks and private institutions but by the government. The FLDP or the Federal Direct Student Loan Program is one such institution that offers low interest student loans to assist college students or their parents in paying for college education. The FLDP is run under the U.S. Department of Education. It must be also remembered that there was another government funded loan program called the FFEL or the Federal Family Education Loan. It was funded through a private/public partnership. The FFEL was dissolved on March 2010 making the FLDP the only remaining government funded loan program in the US.

Everyone must remember that college is an “investment” and not a waste of money. When you try to see the return of investment of college education, every amount you spend for college education becomes worthwhile. Recent changes in education and society have had impacts on the view of college education as an “investment”. Nowadays, students and parents sometimes refuse to see the value of college education thinking that the ROI is not worth it and has substantially diminished over the past few years. Will the consideration of public education over private education change this recent view?

This debate can go on for ages with no clear answer. It would be rather hard to come up with a solid answer that can apply to everybody when considering their financial situation and life objectives. Nevertheless, student loans continue to help people that want to strive to have a better life. To them, money, or the lack of it, is never a hindrance to move forward.

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