A survey by the National Council of Higher Education Loan Programs (NCHELP) confirmed that student loans continue to be the largest source of student aid, with approximately $29 billion for the 1995-96 federal fiscal year provided to students to meet their postsecondary educational costs. Private lenders financed over 68 percent of the total, or an estimated $19.8 billion, under the Federal Family Education Loan Program (FFELP - formerly Guaranteed Student Loans), according to the National Council of Higher Education Loan Programs (NCHELP) survey.
The most popular form of financial aid for students is Student Loans. While there are a variety of loan programs available, the largest programs are the Subsidized Federal Stafford Loans and the Unsubsidized Federal Stafford Loans.
Subsidized Federal Stafford loans are Big Business and Big Profit for a huge number of banks and finance corporations in America. While you are attending school, the Federal Government (read: The Taxpayers) pays the interest charges that accumulate on your loan.
If you have a subsidized loan, you do not pay this accumulated interest back. If your loan is unsubsidized, the accumulated interest must be paid during the term of the loan, or it can be "deferred" until you begin making payments.
For both subsidized and unsubsidized loans, most students do not make any payments on the principle OR the interest until six months after they graduate, leave school, or drop to less than half-time. If you attend school for four years and do not begin repayment until six months after you graduate, assuming you received a maximum loan every year, this can be as much as $5,200 that the Government has paid to the bank to cover your interest charges. With a subsidized loan, this is also a SAVINGS of $5,200 of the total interest charge that you would pay.
The average college undergraduate leaves school $10,000 in debt, an increase of 15 percent from last year, says the nation's largest student loan guarantee agency. The Indianapolis-based USA Group attributes the increase to higher college costs, expanded loan eligibility and the growing amount of student aid offered through loans rather than grants. Education Daily - August 14, 1996 by Rebecca S. Weiner
