Facts

Tuition costs have gone up 945 percent since 1980.

According to Daniel Lin, Professor of economics at American University, there are two major contributing factors for this. First is the basic economic principle of supply and demand, and second is, government subsidies. In the current job market, a college education greatly increases demand for an education, but most universities are limited in the total number of students they can accommodate. This creates high demand and low supply. This is answered by rising tuition costs. Government attempted to alleviate the problem by making college more affordable by Subsidizing loans. They did make student loans cheaper to consume but the result was more demand, which in turn caused tuition to rise faster. A final factor is the lack of basic budgeting and real world money applications that is absent from our high schools.

If you haven’t saved, planned or prepared for a college education, financial aid options include private loans, federal loans, grants and scholarships according to Student Aid Ed Gov. Private loans derive from banks or other private financial institutions. These usually involve higher interest rates and more detailed underwriting. Federal loans include two types, subsidized and unsubsidized loans. Direct Subsidized Loans have slightly better terms to help out students with financial need. They are available to undergraduate students who have been determined to have financial need based on criteria set forth by the government. Your school determines the amount you can borrow and the U.S. Department of Education pays the interest while you’re in school at least half-time, for the first six months after you leave school and during a period of deferment where your payments are deferred. The Direct Unsubsidized Loans are available to undergraduate and graduate students. There is no requirement to demonstrate financial need and your school determines the amount you borrow based on your cost of attendance and other financial aid you receive. You are responsible to paying the interest on a Direct Unsubsidized Loan during all periods. If you choose not to pay the interest while you are in school, a forbearance period will mean that your interest will accrue and be added to the principal of your loan. Grants and scholarships are free money to help pay for college or career school. They are derived from the federal government, state government, college or private or nonprofit organizations.