Ourview
Loan
rates provide relief
For those of you lucky enough to have parents
that can afford to pay your full tuition
to attend college, we are all envious. For
the rest of us that need to incur thousands
of dollars of loans to expand our brain
power, the new drop in federal college loan
rates is a blessing within a curse.
The
interest rate on Stafford loans is expected
to drop from 4.06 to 3.42 percent, the lowest
since the program began in 1965. The rate
for the Parent Loan for Undergraduate Students
will likely fall from 4.86 percent to 4.22
percent.
While
that may not seem like a lot, every dollar
counts. If we save $8 a month, we could
save almost $2,000 in 20 years.
The
new rates for the coming school year would
apply to loans taken out after July 1, 1998
and those who borrowed earlier would see
savings based on when their loans were issued.
This
rate adjustment comes just at the right
time, as tuition increases plague college
students across the nation.
Every
state has raised tuition at four-year schools
this year. According to The National Center
for Public Policy and Higher Education,
16 schools have increased costs by more
than 10 percent.
Here
at Cal State Long Beach we are told to be
grateful because our tuition is so much
lower than the average four-year university.
But this hardly seems to be the case.
BeachPride.com,
a Web site devoted to providing meaningful
information to students, reported, “The
total cost for attending a CSU is at the
national average. The most dangerous myth
is that the CSU is cheap to attend. Despite
fees, the total cost of attending a CSU
is nearly equal to the national average
for U.S. four-year public college or university.
National average for room and board off
campus is $13,463. The CSU average is $13,631.”
With
the rate increase (thanks Gov. Davis), loans
will be increasing, which means we will
owe more money during the time when we are
trying to find a job in a market where there
are virtually no jobs.
The
problem with the lower interest rates is
that schools may begin encouraging taking
out more loans instead of emphasizing the
alternatives such as grants and scholarships.
In
2001-2002, approximately 62 percent of all
undergraduates who received financial aid
took out a student loan; the amount of the
average loan was $4,841. Of the 49 percent
of CSU students who received financial aid
46,031 of them were dependents of families
whose total income was less then 36,000
per year, BeachPride reports.
“Everyone
is borrowing more, and we really don’t talk
about that very much,” Patrick Callan, the
College Board’s president, said. “We don’t
ask questions like, ‘At what point are we
hurting the ability of young families to
buy a house?’ We are oblivious to that.
Loans are kind of the easy way out.”
So
we are damned if we do and we are damned
if we don’t. The fact is, we need an education
if we don’t want to work at the gas station
— some of us even want an education just
for the sake of knowledge, but that’s a
different story — so we need to take out
student loans. The rate drop is a good thing.
If we consolidate our loans before our grace
period is over we could save even more.
Happy debt managing, everyone.
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